Ethical Leadership in a Time of Suspicion and Transparency

Ethical Leadership in a Time of Suspicion and Transparency

It has become much more challenging to lead organizations — from large multinationals to local non-profits — as a result of two growing dynamics: suspicion and transparency. Suspicion has been brought on primarily by the unethical and sometimes illegal behavior of certain leaders; the transparency is the result of the Internet, the proliferation of a wide variety of news outlets, new regulatory requirements, and other information and comment reporting mechanisms. This new reality demands that leaders practice ethical behavior and openly demonstrate that behavior — thereby treating transparency as a leadership opportunity.

A Time of Suspicion

Never before have there been such high levels of suspicion of people in leadership positions. Approval ratings of elected officials have plummeted on all sides of the political spectrum in the United States, if not elsewhere. In June 2009, the editor of the Harvard Business Review wrote that “the public’s trust in business leaders has never been lower”, and cited a statistic that trust levels had dropped from 58% to 38% in one year.

What has happened? Automobile companies and banks receiving government bailout money; financial institutions selling questionable (perhaps fraudulent) investments; elected officials’ dubious relationships with lobbyists; corporate CEOs laying off thousands of workers while increasing their own compensation packages. All this and more have increased the extent to which people are deeply suspicious of people in leadership positions.

Whether these leaders may have brought this upon themselves is not the point in this commentary. That may very well be true; real scandals, many of them criminal, have filled our newspapers in recent years. The point is that the deeds of some leaders have brought upon others a gaze of suspicion that makes effective leadership more difficult. Consider these questions:

  • How much harder is it to engage employees when they suspect your motives or question your integrity?
  • How much energy is spent validating what in the past was trusted?
  • How much more difficult is it for a mid-level manager to gain buy-in for an operational change when her employees are highly suspicious of senior management?
  • Can anyone expect employees to work harder for the same or less money when they wonder what senior management is thinking?

The headwinds are strong indeed.

An Age of Transparency

At the same time, it has never been easier for interested people — employees, prospective employees, investors, concerned citizens, voters, community members — to learn more about organizations, their leaders, the impact of their activities (e.g., labor practices, carbon footprint), and other details.

In The Naked Corporation, Don Tapscott and David Ticoll describe the challenges that organizations are facing as a result of the proliferation of information, primarily on the Internet. “Transparency is being done to organizations, whether they like it or not. No firm can safely protect any secret, particularly any that angers stakeholders. Increasingly corporations are naked.” Leaders react to transparency as a threat or respond to it as an opportunity. Some fight it and others cooperate with it. The authors of The Naked Corporation argue organizations will be more successful if they openly align their business with the interests of stakeholders. In other words, use transparency to their advantage.

It is not necessarily a bad thing that so much information is available to so many people. Nor is it wrong that suspicion of leaders has been heightened— as noted above in many cases if we are not suspicious we are probably not paying much attention. It is simply harder to lead effectively as a result.

So What to Do?

Tell the truth to your people and to the marketplace. If they don’t already know the truth they are going to find it out soon anyway. Customers and business partners/vendors know when you slip up. Own it, move on, and they’ll trust you more for it. Certainly organizations will do their best to craft their messages and time their communications to ensure the most positive impact, but disclosure is a given- so be sure what is shared is true. And remember that the very presence of suspicion creates a demand for organizations and leaders with integrity; leaders should consider how they can best satisfy that demand.

In their June 2009 article in the Harvard Business Review, James O’Toole and Warren Bennis argue for organizational “cultures of candor”. Leaders need to make a conscious decision to support transparency and create cultures in which candor is the norm. This may not be easy; they suggest that it is human nature to conceal and hoard information because information is a source of power. [Perhaps that’s true, but it’s also true that real candor feels hard because we’re not accustomed to it.]

Don’t just talk about ethics, model them. If you believe in community service as an organizational value, then organize an event that supports a community in which you work or live. Invite people. I have heard key business contributors share with me about their former bosses, “I never thought of him/her as a particularly ethical person”. Who would want to hear that? Leave no doubt. Ethical behavior alleviates suspicion.

Be visible about your values as an organization. Real values guide behavior. Be willing to talk about them— even better, create opportunities to talk about them. Although talking about values is not nearly as important as modeling them, there is great value in demonstrating a willingness and ability to engage your people on this level.

Drive changes in your organization that promote transparency. Promote the awareness of websites and other media that evaluate your business practices and inform your stakeholders. Also, ensure protection for— in fact, reward— employees who bring ethical concerns to your attention. Hire employees who have demonstrated the ability to raise tough issues. Rushworth Kidder of the Institute for Global Ethics has written about what he calls the current “ethics recession” and argues that the only real solution is the creation of “broad-based, authentic cultures of integrity within our organizations and institutions.” Consider what can be done to promote such a culture in your organization. One place to begin is an ethics audit— a process for assessing the level of ethics within your operations and culture.

Responding to the challenges presented by the current climate of suspicion and transparency requires purposeful behavior and, often, conscious change. To remain successful, leaders must model the ethical behavior that will overcome suspicion. What’s more, they must also demonstrate the willingness to face the new reality of transparency, and embrace it as a means to communicate the integrity and positive direction of their organizations.

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