In the aftermath of the recent earthquake in Japan and resulting Pacific tsunami, nuclear scientists in the country were initially slow to release details about the stricken nuclear power plant at Fukushima and downplayed the severity of the crisis they faced. But as information began to make its way out in media reports, scientists from around the world began talking, weighing the pros and cons of different approaches, and contributing to a collaborative solution to cooling down the damaged plant’s nuclear reactors, by drawing in water in from the ocean. In this case, collaboration helped to stabilize a disastrous situation and save lives.
Preventing an organization from falling prey to communications failures that in some cases are tantamount to ethical lapses—and their associated business and reputational costs—is not a simple task. Executives have an obligation to understand the intricate interplay between corporate responsibility, personal leadership responsibility and personal ethics and how they all interact with corporate culture, communication, and leadership.
A starting point is for executives to expand their view of ethics, accepting their obligation to fulfill all the responsibilities that come with their leadership positions, including opening up to other voices and certainly approaching communications about crises openly and honestly.
We’ve all read the commentary blaming the financial crisis and other business failures on personal greed and the collapse of individuals’ ethical standards, but more than personal ethics was at play. A first cousin to personal ethics is leadership responsibility. In that crisis I saw three “leadership responsibility factors” at play: 1) the knowledge to accurately assess the situation; 2) the power to correct the situation; and 3) an understanding of the breadth and depth of the duties inherent to their position. Many did not know enough to be a leader of financial institutions, many were confused about who had the power to fix the situation, and many were woefully ignorant of the duties of their positions including communicating fairly with all constituents.
In terms of how leadership should approach personal ethics and engaging in the right behavior, my Tuck colleague Paul Argenti, Professor of Corporate Communication, when addressing executive education participants, stresses the need for executives to understand the weight their actions and directives carry in the wider organization.
“The number one reason people get into moral dilemmas,” Argenti says, “is pressure to meet unrealistic business objectives. When an executive says to an employee, ‘We have to get sales up,’ they have to consider what that directive means to the person who is listening.”
Syd Finkelstein, the Steven Roth Professor of Management at Tuck, clearly sees the parallels between poor ethical choices and poor financial outcomes in the business world. “The higher up an executive travels within a company, the more vital it is to teach, reinforce, and emphasize corporate responsibility to their team,” says Finkelstein. “Yes, executives are equipped to be responsible leaders—they have the intellect, the background and the training—but the question is whether they actually will use their knowledge to do what’s right.”
Pino Audia, who is an Associate Professor of Business Administration and faculty director of Tuck’s Center for Leadership, thinks that the ability to collaborate with others is a key prerequisite of responsible leadership. He believes collaborative leaders who think broadly, have experience with different constituents, and are invested in delivering results to a variety of stakeholders—including employees, customers, suppliers, and investors – are best positioned to act responsibly.
“You have to concentrate on the right behaviors,” Audia says. “Being a responsible leader is about generating new ideas and solutions. Often, those solutions reside within relationships.”
Finkelstein calls the very public disasters of recent years, including the financial crisis, just the latest examples of the importance between good ethics and good business decisions. “Some companies have a culture that pushes and emphasizes ethics and corporate responsibility,” he says. “A poor culture can haunt you. Being closed-minded, not asking questions—those are right up there at the top for being an irresponsible leader.”
He points to a prominent example from the past from outside the business world—the decision by major league baseball’s Boston Red Sox to be the last to integrate its ballclub with African American players—as being particularly revealing. “It’s an unusual industry, but there’s no question the team’s ethical failure to integrate had significant implications on its ability to win in the years and decades that followed,” says Finkelstein. “The lessons are the same there as what went wrong at BP with their response to the 2010 Gulf of Mexico oil spill – they fell into traps that they should have seen coming, which had a very real impact on performance.”
Like Finkelstein, Argenti works with executives to approach moral issues with a framework in hand. He opens the discussion with seemingly disparate readings that set forth hard-hitting, real-life moral dilemmas. “In talking about the similarities in extraordinary examples,” he says, “as well as how we react to everyday situations, you start to see lessons that apply to the workplace—how we deal with stress, unexpected situations, a lack of integrated teams.”
“Those conversations around corporate responsibility are some of the richest conversations we have,” Argenti says. “It’s one of those killer sessions; the work is mind-boggling, exciting, difficult, but also rewarding. I get notes from participants who’ve directly applied a lot of the things we talk about.”
Audia says inevitably “the light bulb comes on” when people see the rewards. “Collaboration requires patience, and a time commitment. It takes a strong conviction—building trust through one-on-one meetings, seeking additional input that you think may not be totally necessary…Executives have to weigh the cost of time versus shortcuts that result in a more narrow approach to a problem.
I am often asked if ethics and leadership responsibility can be taught effectively, and I’m proud that Tuck helps raise students’ and executives’ awareness and sensitivity to the ethical issues that can arise in business situations, and we try to expand their view of ethics to encompass all of the responsibilities they will be taking on. Are we doing all we can to promote more responsible behavior? We are doing a great deal more than ever along these lines, and I believe that these issues of ethics and responsibility will only grow in importance.
Paul Danos has been dean of Tuck since 1995, enjoying one of the longest tenures as dean of a top-tier business school. Widely recognized as a preeminent expert in the field of business education, Dean Danos has served as director of several corporations, schools, and professional associations.