Leading with Ethics and Compliance

Over the last few decades we have witnessed many examples of unethical behaviour and this has brought their world into disrepute.

• Jeff Skilling created an environment at Enron in which unethical behaviour could flourish, based on his understanding of Darwinian evolution and the principle of “survival of the fittest.” Leaders are responsible for creating the environment in which their employees work; in this case, the environment readily enabled unethical behaviour.
• Lance Armstrong, whose decision to dope was enabled by an infrastructure of colleagues within his organization and now serves as a reminder that cheating can be a “slippery slope.”

Therefore, when it comes to organisation behaviour we should look to our leaders to lead on ethics & compliance and take responsibility for organisational behaviour. Philosophers have been discussing this aspect of ethical leadership for centuries but the topic is relatively new in the world of corporate training.

Leaders who lead ethically are role models, communicating the importance of ethical standards, holding their employees accountable to those standards, and crucially designing environments in which others work and live. Ethical leadership has been shown to cause a host of positive outcomes, and to reduce the risk of many negative outcomes. Leadership may therefore be the most important lever in an ethical system designed to support ethical conduct.

So, does Leading with Ethics & Compliance matter?

In major ways.

Followers who rate their leader as ethical have more favourable job attitudes such as job satisfaction and commitment. They are also less likely to leave their organization. This is because followers are attracted to ethical role models who care about them, treat them fairly, and set high ethical standards.

Ethical leadership is also associated with more helpful behaviour from employees, perhaps because ethical leaders model helpful behaviour Ethical leadership also reduces deviant or unethical behaviour in followers. Again, ethical leaders are role models, and followers learn how to behave by observing them

When unethical acts do occur in the social environment, employees who have an ethical leader are more likely to report the wrongdoing to management because ethical leaders create a psychologically safe environment and are trusted to handle reports fairly and with care.

Therefore business success today is not just about profit and Returns on Investment. Ethical principles now provide the foundations for various modern concepts for work, business and organisations, which broaden individual and corporate priorities far beyond traditional business aims of profit and shareholder enrichment. Ethical factors are also a significant influence on institutions and public sector organisations, for whom the traditional priorities of service quality and cost management must now increasingly take account of these same ethical considerations affecting the commercial and corporate world.

Also, due to the increasing number of regulations and the need for operational transparency, organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls. This approach is used to ensure that all necessary governance requirements can be met without the unnecessary duplication of effort and activity from resources.

Finally, a study summarized in Harvard Business Review reported that ethical & compliance leadership impacts the bottom line. Researchers found that CEOs whose employees gave them high marks for character had an average return on assets of 10% over a two-year period. That’s nearly five times as much as what those with low character ratings had; their ROA averaged only 2%.

Enroll today and take advantage of the benefits of “Leading with Ethics and Compliance”

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