“Business ethics” and “ethical leadership” can be seen as buzzwords to your average executive. Almost every business claims that it strictly adheres to these practices.
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But in the frenetic world of work, where C-suite executives are held hostage to the bottom line that they must convey to their shareholders, how many executives are truly making each decision with ethics as their north star?
How many have been trained?
Where do they even start?
First, it is important to understand that ethical leadership and decision-making are not just the right thing to do. According to Greenly, “Research consistently shows that companies who adopt ethical policies and practices see better long-term financial results and tend to be more successful.”
Today’s up-and-coming workforce demands to work at companies where ethical leadership and corporate social responsibility (CSR) are the main tenets.
On the other side of the coin, customers often devote their loyalty to companies and brands that operate in accordance with their own value systems.
Business News Daily states, “Ethical leadership in your company helps create a positive work culture, improve brand image and reputation, foster employee and customer loyalty, and increase productivity.”
We can and must train everyone from our C-suite executives down to an organization’s first level of decision-makers, but the truth is that courses need to begin as early as middle school.
There are already many great guides on how to teach and implement ethical leadership from quick guides on sites like BetterUp or online courses from such vaunted institutions as Harvard Business School. But what is often missing in even the best of courses is the on-the-ground experience that leaves an indelible mark, accentuating the understanding of why ethical leadership and ethical decision making are so important.
Let’s face it – Business and political decisions are often made on the top floor without really understanding what is actually happening on the ground. Those hoping to lead with ethics at the forefront need to have spent time in the trenches to truly understand the full ramifications and far-reaching effects of their decisions.
One company that struggled with ethics issues is the Sweden-based furniture giant IKEA, which by the 1990s was heavily reliant on its 2,300 suppliers from across 70 different countries. When a Swedish documentary highlighted the use of child labor in Pakistan’s rug industry, IKEA began to address this significant flaw in its supply chain. While the company ended its contracts with Pakistani rug manufacturers, IKEA soon realized that suppliers in other countries were also reliant on child labor.
As IKEA executive Marianne Barner said, the documentary was “a real eye-opener” that led the firm to switch from merely meeting suppliers at urban offices to visiting actual production sites. IKEA additionally put in place an institutional partnership with Save the Children with a goal of realizing children’s rights to a healthy and secure childhood, which includes a quality education.
At Save the Children’s suggestion, IKEA hired an independent consultant to monitor their suppliers’ compliance and partnered with UNICEF to combat child labor in its supply chain. Then IKEA and Save the Children developed IWAY, a mandatory code of conduct for IKEA suppliers that set “clear expectations and ways of working for environmental, social, and working conditions, as well as animal welfare.”
The two then developed a program that moved nearly 150,000 Indian children out of child labor into classrooms, trained nearly 4,000 teachers and education aides that provided 1,800 villages with skilled educators.
These steps not only saved IKEA’s global reputation but brought worldwide positive attention to an issue that had given the company a black eye. When confronted with an ethical challenge, IKEA’s C-Suite team not only dealt with the immediate problem but took giant steps to change the workforce culture throughout its entire supply chain.
Those early steps taken by IKEA bode well in a post-Covid world in which consumers are increasingly focused on ethical sourcing. Forbes reported in 2021 that 81 percent of respondents said they preferred ethically sourced products, with a fourth of them admitting ethical sourcing had not been on their minds but one year earlier.
For the record, IKEA revenues have grown every year in the 21st Century (except the Covid year 2020) to a record 47 billion euros in 2023, up from just 10 billion euros in 2001.
At The William G. McGowan Charitable Fund, the McGowan Fellows Program incorporates a social impact project where its fellows experience a human-centered societal problem firsthand and then collaborate with partner organizations to try and solve that issue.
One group spent time with a medical center before helping to make recommendations on the delivery of healthcare to patients suffering from mental illness. Another group of McGowan Fellows visited Chicago homeless shelters in the dead of winter and helped volunteers count and assist the number of unsheltered individuals experiencing homelessness that night. That time on the ground inspired them to launch a social awareness campaign addressing the intersection of jobs and youth homelessness that included launching a website for sharing youth voices at the state and federal levels.
The numbers on their spreadsheets will no longer be just numbers but represent those they met on that frigid night. The boots-in-the-trenches approach humanizes and brings the ethical ramifications of each decision made to the fore.
These experiences, combined with multiple symposiums, guest speakers from those who have exhibited ethical leadership at the highest levels, and working sessions, all combine to help shape tomorrow’s ethical leaders.
Finally, creating a close-knit community where members feel free to be vulnerable and supportive of one another is also essential. The McGowan Team has achieved this through an alumni network of those who have been through their program and are eager to serve as peer mentors to those coming through the program.
This creates a virtuous cycle – young leaders are exposed to a culture of accountability, while also having quick access to older leaders they can speak to when facing a tough decision. Those young leaders, in turn, become mentors to the next generation, keeping the principles of ethical leadership at the forefront of every business leader’s mind.
You can read all the material and take all the courses, but unless you walk a mile in the shoes of those who are affected by the decisions you make, you won’t have the imprint of what it truly means to lead with ethics at the very core of every strategic move you make.
For any leader, tough decisions must be made. No decision will satisfy every employee, customer, or shareholder.
But when you have a framework buttressed by ethics and values, you have a guide to handle those tough decisions and to place humanity first and the bottom line second.
Oftentimes, the bottom line is better because of it.
