Insignificance of Ethics in Leadership

The title of this post might invoke an outraged response, “How can that be?” to the “I knew it!” statement. We like to believe that we are inspired by a leader showing integrity, trust, fairness, and honesty. The premise of this post is that this belief is just a perception not based in reality. In practical life, employees are not really measuring leaders on their ethical behavior. The attribute Integrity is considered irrelevant in evaluating the effectiveness of a leader. I am playing a devil’s advocate here, and statingp my argument for making this statement in this post. I would welcome a counter argument about how ethics is relevant for effective leadership.

The general debate after the financial crises relates to- how could the crises occur when the financial institutions have such high profile leaders, professionally qualified risk managers, and a legal requirement for complying with corporate governance practices. This article would provide some insight on how the financial crises could occur, and there is a major probability of such crises occurring repeatedly, unless we start putting ethics and integrity on the leadership scorecard.

Ethics and integrity are two words that have different meanint to different people. The meaning of these two words also varies according to culture,  law, and individual perception and circumstances. Reading a number of books doesn’t help because each writer has given his or her own interpretation of them. To keep readers on the same page, I am furnishing here the literal meaning of the words as specified in Oxford Dictionary-

Ethic: The principles of conduct governing an individual or group, a set of moral principles and values, the moral uprightness of an action, judgment and the study of the nature and basis of moral principles and judgments.

Integrity: Uncompromising adherence to a code of esp moral or artistic values, the quality of state of being complete or undivided and formal an unimpaired condition; wholeness.

The question is, how were these two attributes or qualities considered by employees, co-workers and bosses when evaluating the effectiveness of a leader?

A. Leadership Effectiveness & Integrity: Wishful Thinking? (A research paper by Robert Hooijberg & Nancy Lane)

A study was conducted by Robert Hooijberg and Nancy Lane in 2005, regarding the significance of integrity in measuring effective leadership. Information regarding leadership styles, values, and effectiveness was collected from bureau chiefs and directors of a state government agency in United States. The bureau chiefs and directors dealt with federal and state regulations, members of state legislature, general public, and business representatives, hence they required a number of leadership attributes. Secondly, they constantly faced situations where integrity was required for decision making and performing their jobs, however could be hard to maintain due to perceived rewards and conflicting interests. The results were accumulated based on 360 degree feedback from juniors, co-workers and bosses. Leadership roles from Quinn’s (1988) Competing Values Framework (CVF) were used to examine the impact of leadership behaviors on effectiveness. Please click on the abovementioned link to refer to details of the report.

Quadrant 1: Task Leadership: Producer & Director Roles
Quadrant 2: Stability Leadership: Coordinator & Monitor Roles
Quadrant 3: People Leadership: Facilitator & Mentor Roles
Quadrant 4: Adaptive Leadership: Innovator & Broker Roles

The effectiveness of the participating managers was assessed on five parameters to assess overall performance: (1) overall managerial success; (2) overall leadership effectiveness; (3) the extent to which the manager meets managerial performance standards; (4) how well he/she performs compared to his/her managerial peers; and (5) how well he/she performs as a role model. These five items were measured on a five-point scale, with high scores indicating higher levels of effectiveness. The four rating groups were self, bosses, peers, and direct reports.

The summary results extract of the research is as follows:

Integrity as an attribute to the total  group of attributes showed 3% to 6% variance in leadership effectiveness. The variance is relatively very small in relevance, which indicates that the attribute is not considered valuable for evaluating leadership effectiveness. 

Secondly, in all four rating groups integrity is associated with honesty, however the rating groups attach other different meanings to integrity.

  • The managers in addition to honesty, also associate merit and fairness with integrity.
  • Bosses and peers also associate merit with integrity. However, they see fairness as more strongly associated with the Flexibility factor.
  • The direct reports, consider fairness as closely associated with integrity and honesty, but not merit. They see merit as more closely associated with the Flexibility factor.

The results indicate integrity and flexibility hold slightly different meanings to different respondent of groups.

For bosses, the goal-orientation leadership role had the strongest association with effectiveness, but there was no association with Integrity. It is further explained that reason one acts with integrity is not to be seen as effective by other parties, but to be able to maintain a degree of self esteem and self respect.

Managers hold different meanings of integrity at conceptual and practical day to day level. They do not consider it conducive to be completely honest without exceptions in the practical working organization. Bosses may not like to hear the truth. This sometimes puts direct reports position in jeopardy and damages relationships.

The four hypothesis of the study show the following results:

Hypothesis 1: All groups – self, direct reports, peers, and bosses – will strongly associate performing multiple leadership roles with effectiveness. The results of the test confirmed this hypothesis.

Goal orientation, monitor and facilitator roles have a significant association with self’s perceptions of leadership effectiveness. That is three out of six roles.

Incase of bosses, peers and direct reports, two of six roles were considered related to effectiveness. However, the two roles were diffferent for all the three catories of statt.Goal orientation and innovator roles have significant associations with direct reports.  Innovator and facilitator roles are singificant for peers. Goal orientation and broker roles are cosndiered significant by bosses. Interestingly, no single leadership role is associated with effectiveness in all four groups. The list below indicates role wise analysis.

  • The Innovator role is positively associated with effectiveness for direct reports, and peers.
  • The Broker role is only positively associated with effectiveness for bosses.
  • The Goal Orientation role is positively associated with effectiveness for self, direct reports and bosses but not for peers.
  • The Monitor role is positively associated with effectiveness only for self.
  • The Facilitator role is positively associated with effectiveness for self and peers.
  • The Mentor role is not associated with effectiveness for any of the raters.

Hypothesis 2: Stated that Integrity has a positive association with effectiveness for all raters, is partially confirmed. Integrity has a positive association with effectiveness for managers and their peers; however, there is no positive association between Integrity and direct reports’ or bosses’ perceptions of effectiveness.

Hypothesis 3: Stated that direct reports will see an especially strong association between integrity and effectiveness, does not receive any support. The study did not find a significant association between integrity and effectiveness, but did find is a statistically significant association between flexibility and effectiveness.

Hypothesis 4: Stated that bosses associate goal-oriented behaviors but not integrity with leadership effectiveness, is confirmed. Indeed, bosses associate broker and goal-oriented behaviors with effectiveness but none of the three values.

Opinions on Leadership

I thought it would be worthwhile to study whether there has been any shift during the centuries in opinions on leadership attributes. The renowned philosophy of Machiavelli and the present day management gurus was worth a look.

In the 15th century, Niccolò Machiavelli in his philosophy of political power and leadership in “The Prince” stated that a leader should appear to be fair and honest and does not dismiss morality, instead, it politically defines “Morality”—as in the criteria for acceptable cruel action—it must be decisive: swift, effective, and short-lived. It states one cannot be simultaneously be loved and feared, so in such a situation it is better to be feared than loved. Machiavelli was aware of the irony of good results coming from evil actions. Prince made the word “Machiavellian” a byword for deceit, despotism, and political manipulation (Extracted from Wikepedia)

Peter F. Drucker stated- “Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.” This very clearly indicates that he considered leadership as goal orientation role instead of a facilitator or mentor role.

Tom Peters in his book “Essentials of Leadership- Inspire, Liberate, Achieve” has listed out 50 good leadership attributes. The 28th attribute “Leaders Engender Trust” is the only one remotely connected to ethics and integrity. He has stated that leaders need to be credible & trustworthy, and he considers it the hardest attribute to acquire. Further on he has stated “I’d not go as far as to say that “Good Leaders”…”never tell a lie”. Roosevelt lied like hell as he evaded the Constitution and edged the United States into World War II. To make it through the maze on the way to the top, leaders must exhibit…shrewdness.” This indicates that Peter’s considers ethics a flexible and adaptable scenario where means to achieve the greater good of the people should not be questioned.

In the last few centuries it appears that leadership attributes for measuring effectiveness have remained the same. However, as now the leaders are more accountable to the public and employees, the overall image of the leader has to be ethical. Considering the USA political scenario of the last decade, Clinton’s image was damaged for personal infidelities, and Bush’s image took a beating for initiating war in Iraq on incorrect grounds while being fully aware that Iraq did not have nuclear weapons. In my opinion, neither was above lying to the public for maintaining personal power and position and both were considered effective leaders.

Case Study on British Petroleum

In the recent past we have seen the financial crises which raised questions on the ethical practices of well reputed organizations and the moral character of C-suite executives. The present debacle of BP Deepwater Horizon oil spill due to an explosion in one of the wells on 20 April 2010, caused the largest environmental damage, raises a question on the ethical practices followed by the organization. Reactions of Tony Hayword, CEO can best be described as ducking responsibility, complacent, downplaying the incident. Public outrage and President Obama’s intervention got the senior management to present a more concerned public image and thereby issuing politically correct statements.

With British petroleum it is not the first time a problem has occurred, and previously has been named as a most polluting company. Various charges included, illegal dumping of hazardous wastes, contravention of human rights, environmental and safety concerns.

2007–2010 Refinery safety violations (extract from wikepedia) : Under scrutiny after the Texas City Refinery explosion, two BP-owned refineries in Texas City, Texas, and Toledo, Ohio, were responsible for 97 percent (829 of 851) of willful safety violations by oil refiners between June 2007 and February 2010, as determined by inspections by the Occupational Safety and Health Administration. Jordan Barab, deputy assistant secretary of labour at OSHA, said “The only thing you can conclude is that BP has a serious, systemic safety problem in their company”

BP Code of Conduct   available on their site is titled: Our Commitment to Integrity. The relevant extracts are as follows:

The BP code of conduct stands for a fundamental BP commitment– to comply with all applicable legal requirements and the high ethical standards set out in this code – wherever we operate. To help us meet this commitment, the code defines what BP expects of its businesses and people regardless of location or background. It provides both guidance in key areas and references to more detailed standards, instructions and processes for further direction.

The BP compliance and ethics programme- The BP code of conduct is more than just a description of our business conduct standards. It is the centre-piece of a group-wide compliance and ethics programme supported by our directors and senior leadership to promote a positive, ethical work environment for all employees.

It is abundantly clear from the past and recent incidents, that British Petroleum ethics and compliance practices were paper driven instead of being truly implemented in spirit. The top management did not hold itself accountable to practices laid out in its code of ethics, hence the possibility of juniors holding it in high regard is low.

Considering the wide variety of scenarios, it appears that integrity and ethics as attributes are not considered valuable for leadership effectiveness. These attributes may not add anything significantly to the career graph, and may also be considered a deterrent for growth to C-level. The challenge is that if leaders are not measured for these attributes, there is no motivation for incorporating them in their professional behavior or within the organization. Hence, the possibility of public viewing failures periodically due to unethical practices followed by leaders is high.

The trend needs to be changed and maybe the public needs to show some tough love to their leaders. Of course we could ask the management gurus to influence the leaders and hold ethics in higher regard as an attribute. How do you believe that leaders can be held accountable for integrity and ethics? Welcome your thoughts on the subject.

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20 comments on “Insignificance of Ethics in Leadership

  1. Hi Sonia,
    You precisely highlight the problem when you write, “The challenge is that if leaders are not measured for these attributes, there is no motivation for incorporating them in their professional behavior or within the organization.”

    Regarding ethics and integrity of leadership, there are two linked problems that reveal a basic disconnect. First, there’s a gap between intent and action. Intent is expressed on paper but action is not mandated. The reason for this is the way in which the reward system is set up. The reward system usually rewards the bottom-line, not adherence to ethics and integrity.

    For the situation to change, the reward system needs to change and start rewarding adherence to ethics and integrity. Management is only one part of the problem. The bigger problem is the entity to whom management reports. This is the entity that sets the agenda. This can be a board, major shareholders and the like. Based on abundant available data, what kind of management actions is a board likely to reward? Probably actions that put more money in their pocket. I doubt adherence to ethics and integrity puts more money in their pockets.

    This conundrum brings us to society at large because only society can change this impasse. If society truly values ethics and integrity, it should demonstrate this by forcefully repudiating this status quo. It needs to bring pressure to bear, and mandate that ethics and integrity of the management be judged and used as a basis for reward. How can such a change be mandated? How about society speaking with its wallet and boycotting products from companies it deems unethical and lacking in integrity?

    The problem is that both companies and society are guilty of lip-service. With management, intent doesn’t translate to action because it’s not mandated. With society, the debate remains in the realm of rhetoric and pontification. If society wants change, it itself needs to change and its actions need to match its purported values. This requires active participation by every one of us. After all, the one thing we do have is strength in numbers. With the advent of social media and other internet-enabled interactive technologies, we have a rare moment of opportunity in mobilizing and leveraging this strength more proactively and intelligently. Otherwise cut throat capitalism will remain the only game in town for the foreseeable future until we trash ourselves into extinction.

    Kind Regards,
    Kamala

  2. Dear Sonia,

    Great post; I was looking forward to reading it, kudos for it… now the comments.

    You and Mr. Drucker are being practical when it comes to measuring leaderships’ effectiveness. It matters not what labels we use, leaders are going to do by whatever means necessary including and especially sacrificing the flock, to achieve their “personal” goals. The “management gurus,” historians or simply cheerleaders will concoct any apologetic explanation to justify their behavior.

    Having read Machiavelli’s “The Prince” twice, all I can say is that it always leaves a bad taste in my mouth for it has a truly hideous outlook on human essence. And for any “C” level aspiring minion, “The Prince” is mandatory reading.

    But I believe your essay falls short, as do most “management books” with regards to what I am now calling the “Cult of Leadership” which is a very nefarious one indeed. This tendency analyzes “leaders” in a vacuum; intended or non intended consequences, be… ignored. To me this is a grave mistake.

    All in all thank you for your post. It is a good attempt at putting the fire to the feet of a lot of myths.

    Cheers,

    Balam

    • Hi Balam,

      Thanks Balam for your feedback.

      Agree with you that Prince has a negative outlook on Politicis, but see the politics of India, Pakistan etc. same perspective is applied here, whether people are loosing life over religious riots or starvation, the leaders do not loose their leadership positions and are re-elected.

      And I agree with you that somewhere we are measuing leadership in a vacuum without considering the emotional aspects of it.

      Sonia

  3. Hi Sonia,

    And Hi Balam :-)
    Good to see you here.

    I wanted to continue this discussion some more, and run by you some thoughts I’ve been considering for a while now.

    We have numerous potential choices in life. As social animals, the kinds of societies we build encourage or circumscribe these choices. Thus, depending on the society we grow up in, we will manifest certain tendencies and not others, and make certain choices rather than others. This is the invisible sub-structure of our lives.

    When cut throat capitalism is the dominant economic structure, the more pro-social tendencies get curtailed, and the “each man for himself” “dog eat dog” type of choices in many of life’s decisions are encouraged. This is not just an issue with leadership in such societies but pervasive all throughout the different layers of society. In other words, my idea is that the consensus of the majority itself, codified as public opinion, likely hews to a certain set of choices, and the leadership of the society merely reflects those choices, and perhaps only exaggerates them.

    Sonia, you mention Gandhi. By now, at least in India, given his stature, it’s impossible to consider him and his actions objectively. As for myself, I see him as a political genius. He understood the power of symbolism, and achieved most of his goals through shrewd application of emotional pressure, particularly by engineering acts that sought to publicly shame the British rulers of India. His success with such tactics is now legendary. It seems to me that these tactics are timeless. As individuals and as societies, we like to believe certain things of ourselves. When manifest evidence is presented to the contrary that belies those beliefs, the shame is great indeed. With the help of the internet, evidence of shameful practices can potentially spread virally around the globe in a matter of hours. In that sense, I believe that we are on the cusp of an enormous opportunity. How do we leverage new technologies to tap more intelligently and effectively into primordial emotions like shame to influence society and individuals into making choices that are more equitable and just? Any ideas?

    Kind Regards,
    Kamala

    • Hi Kamala,

      Interesting that you have brought Gandhi’s philosphy in it. One may question his various personal practices, but he definitely walked the talk. His thinking of being able to walk the high moral ground despite all situations is which made people realise that their will be no compromise on fundamental principles and values.

      In the present world, however, if you see the recent scandal of Tiger Woods, Gore, TV anchors, Italian & French presidents….and I can carry on here, none of them have felt even a sense of shame or apologetic for their acts. Their concern has been how to salvage the media image to ensure continued income, and not get prosecuted. So I think now over the last century people have lost their sensitivities.

      People may condemn Hitler, but follow his practices in a smaller way and people may appreciate Gandhi, but think all his practices are going to make life more difficult.

      Although, I would say if we can bring Gandhi philosphy on ethics in the corporate world, we would have lessor problems to deal with.

      Sonia

  4. Hi Sonia,

    I agree with Kamala and Balam on the kind of posts which is put here is a practical question.
    I like the definitions on ethic and integrity, their difference as well.

    Today the leadership group is more focused towards making money rather than displaying ethical values…. and some call it smart work…. I disagree to this

    Some explanations which i have heard of are like “Being honest does not help you be productive”, “Fraud is when a person does something which no one knows, if a group of leaders know then it is not a fraud” , “do smart work instead of doing hard work, People don’t care if you go the shortcut”

    I have seen in my experience that Integrity and ethics are not on list of priorities for some management groups…..There is HR & Internal Audit groups to have it on their priority list.

    About Gandhi…. Yes he not only walked his talk….he was the only man whom i know had controlled the entire nations aggressive behavior by fasting…….One of the best quotes which i have heard from this man “There is no God higher than truth” just shows what kind of ethical values he lived……(I have actually stuck this quote on my workstation)

    Overall if I (as each individual) follow the path of the right at all times and spread the behavior it will definitely influence leadership.

    Jacob

    • Thanks Jacob for sharing your insight. You are right, the saying power corrupts and absolute power ocrrupts absloutely, applies to those who wish to corrupted. A person who refuses to be corrupted cannot be done so with little or absolute power.

  5. Sonja,
    I found your exploration of how Peters and Drucker defined ethics into their definitions of leadership. It is as if people assume or understand that great leaders show integrity and ethics more often than not. It makes me wonder if we have developed a measure that allows for a certain number of lapses in ethics before being penalized.

    As you point out, if asked everyone would say they have ethics. Certainly both President Clinton and Bush would answer that way and a closer examination of their decisions would indicate that, more often than not, they displayed them in their decision making. What I would offer is a situational observation of ethics. When we are in situations of low stress and the absence of any threat to things that we value, it is easy to be ethical and make ethical decisions. It is when the stakes get high (stress and/or perception of a threat to things we value) that it gets easier for most to put some of their core beliefs behind them. In the United States back in the 80’s or 90’s there was a movie called Wall Street. One of the characters was an up and coming trader and as soon as he was overcome by the threat of losing his place on the A team of his mentor and leader, he cheated through insider trading. Only a movie, but it depicted how many begin to see ethics as guiding and not binding.

    As our world speeds up, the amounts to lose become greater, and the perception of success steers away from the likes of Ghandi and Mother Theresa and towards the star athletes, the billionaire business owners, the millionaire traders, or the political leaders – ethics will continue to be a problem regardless of what is written on the walls of the boardrooms. Personally, I just want to be like my father and my grandpa – focused on raising a good family, caring and connected to my neighbors and community, and leave a legacy of someone who cared enough to stop and talk to/listen to people who he encountered. However, I did just return from a client with a dry erase marker that I forgot to remove from my pocket after a training event – I think I had better return it. :)

    Thought provoking and well researched. Thanks for the post.

    • Hi Scott,

      Thanks for the compliments. You have pointed it out well, the measure of ethics and character of a person is under stress. When the going is good most people can portray themselves as good. If things turn bad, most start compromising on their ethics, and rationalizing their behavior.

      Kind regards,

      Sonia

  6. Hi Sonia,

    I totally appreciate your concern for our nation; i think we needed Gandhiji post independence , what is your opinion ?

    Best Regards

    Vinayak

  7. Sonia
    I’m afraid I have to disagree with some of the arguments you post. It should be remembered that the Texas refineries were acquired by BP from Amoco and the management teams, employee behaviours and under-investment was very much an acquired state. It was being addressed, possibly too slowly, but it was being tackled in line with BP’s stated aims on SHE and their code of ethics.
    To describe the behaviour of the US Senators who did the TV lynching of a PR-inept CEO as having integrity would be somewhat stretching the definition of the word – likewise when one considers the comparative behaviours towards Union Carbide over Bhopal and Exxon over the Exxon Valdez incident then I’m afraid that these two incidents raise far more questions about ethics and integrity than the payout of $billions by BP already with much more to come. The TV coverage of the Senate hearings was laughable as at least one of the senators could not even adequately read out the carefully scripted speech that he had been given to read.
    I think that the tragedy of 11 lives lost in the Gulf of Mexico disaster has been badly exploited by both politicians and indeed for premature case studies to support particular points of view – there is far too much still to be learnt for sound-bite treatment to be justified.

    To have ethics and behave with integrity means doing simply that – I do wish that people would do a whole lot more of it.

    Regards
    Hamish.

  8. Hamish,

    I agree with you that tragedies have been dealt with badly. For example, the Bhopal one is still going and the victims are still suffering without much recourse.

    BP case, the Texas one is not the only incident, it has had a number of incidents in the last decade where the inspection officers have categorically stated in the rpeorts that BP is not giving adequate attention to environment protection and safety norms. So while I agree with you that there is a lot of media coverage and some just to catch TRP’s, there is justification behind the case.

    And yes, your last line says it all, completely agree with it. It is simply that……..however people have different perceptions about it. As per Buddhism good and evil remains the same irrespective of the circumstances. However, modern society determines the act as good and evil depending on the situation.

    Sonia

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