“Ethical leadership. The coin of the realm.”
That was the opening pronouncement from one of the participants in a recent meeting I attended of business and nonprofit executives discussing ethical leadership.
While everyone around the table nodded and responded positively to this highly-regarded colleague, there were no direct responses. This initial comment, however, set the tone for some internal debate, and not long into the discussion another participant stated passionately: “I can’t remember the last time I heard about a business leader taking a strong stand on anything having to do with values and ethics. Everyone is concerned about shareholder return or simply survival.”
These opposing opinions reflect the challenges facing leaders today. While all types of organizations must cope with the decline in trust due to daunting forces of the financial crisis, unemployment and bad behavior of people in power, there is a renewed focus by leaders to build or rebuild trust. The most effective trust-building strategies, which we will explore below, are those that include a sincere commitment from top leadership and a values-based approach to management that is reinforced throughout the organization.
How Did We Get Here and Where Do We Need to Go?
Public disapproval is getting worse over the actions and behaviors of business, and the public is clamoring for greater corporate integrity, transparency and responsibility. The 2011 Edelman Trust Barometer, an annual global survey of public attitudes about business, government and non-governmental organizations (NGOs), shows a decline in trust in U.S. business with only 46 percent who believe they “trust business to do the right thing.” Trust in U.S. government is even worse, with a score of 40 percent (or 60 percent distrusters), on par with the Russian government. Finally, NGOs in the U.S. are regarded as trustworthy by 55 percent, far superior to business and government but an eight-point decline from 2010.
Encouraging evidence that corporate leaders are listening to the dissatisfied public can be found in the results of the 2010 global CEO survey conducted by IBM. The survey, which included 1,500 one-on-one interviews, reveals that CEOs believe that creativity and integrity are the two most valuable leadership qualities for the next five years. The pairing of these two attributes at the top of the list demonstrates that CEOs are seeking new ways of thinking and doing. The study points out how creative leaders are “open-minded and inventive in expanding their management and communication styles particularly to engage with a new generation of employees, partners and customers.”
Building a Culture of Trust
The large majority of leaders our consulting firm has worked with have been people of integrity and self-discipline. In our experience, the men and women leading institutions, ranging from Fortune 500 companies to government agencies, are smart, dedicated and hard-working. The leaders who truly stand above the rest, however, share a passion and commitment to what we define as values-based cultures. Though the language used varies from company to company, we have identified four fundamentals that distinguish the best leaders and company cultures.
Serve Internally First
Trust starts at home. The best leaders we work with share a common commitment to creating a positive, trusting and inclusive workplace. The CEO and her/his executive team pay attention to and are intentional about aligning the organization’s vision and goals with the needs of employees — turning words and ideas into actions. This alignment includes an integrated approach that consists of: a personal commitment and focus from the CEO; clearly articulated business goals and aspirations about employee behavior; and a meaningful employee education, awareness and recognition program.
Leaders who are seeking to transform their company into a values-based culture are most effective by initially being conservative with their rhetoric, while aggressively putting the training, communications and accountability processes and systems in place. When creating change, a common mistake is when communications get out ahead of actions and behavior, setting up false expectations by employees.
Demonstrate Courage and Manage Complexity
Leaders need to add more than an ounce of courage to their morning coffee to regain trust within and outside their organization, which is no easy task. Managerial courage is described by Lominger, a leadership research and training firm, “as the ability to openly and tactfully provide feedback to others without being intimidating; and to deal head-on with people problems and sensitive situations.” It is proven to be one of the hardest leadership skills to master, far more difficult and more important than reorganization process flow charts and spreadsheets that occupy too much time in the C-suite.
The top leaders are masters at managing conflict and complexity. While acting cool under pressure, they also aren’t afraid to admit when they don’t have all the answers. Many understand that while strengths attract others to us, it is our vulnerabilities that make people really love and follow us.
Trust As A Force Multiplier
The military was the first to develop the idea of a force multiplier, which refers to attributes that significantly increase the effectiveness of a group. The best example of this concept put to practice is the U.S. Marine’s values-based leadership program. The program is designed to provide a multiplier effect on maintaining the direction of troops in the field through shared goals and behaviors, and life-saving teamwork.
The success of the troops can be boiled down to understanding that one-plus-one equals much more than two and, at the same time, the chain is only as strong as the weakest link. Mix that with heavy doses of believing in a cause larger than oneself, and you can create some really driven people.
Examples of companies where values-based leadership is a force multiplier can be found in Fortune magazine’s annual list of best places to work. The companies selected for the list excel in building trust in leadership that expands, or multiplies, to trust between co-workers and departments. This creates a more supportive and productive work environment, and produces exceptional business results. The publicly-held companies on the list outperform their peer companies 4:1 during good economic conditions, and a recent survey shows those same companies have been outperforming their peers 10:1 during the recent recession.
Leaders as Storytellers-in-Chief
Storytelling is one of the principle roles leaders need to play to instill and reinforce a values-based culture, and an important role for CEOs in creating a values-based culture is to serve as Storyteller-in-Chief. Dr. Walter Fluker, author and the Martin Luther King Jr. professor of ethical leadership at Boston University, says that executives need to follow three steps as cultural leaders: remember, retell and relive stories about the organization’s character and values. Doing so will create a shared consciousness and commitment by employees.
According to Rushworth Kidder, best-selling author and president of the Institute for Global Ethics, the only way out of this distrust mess is for leaders to build a culture of integrity within their organizations. Through Kidder’s work with CEOs around the world, he has determined that the foundation of a culture of integrity requires leaders to have the courage to be honest, responsible, respectful, fair and compassionate. For ethical leadership to truly become “the coin of the realm,” leaders must be committed to creating a values-based culture within their organizations based on these tenets. Leaders must realize that devoting time and resources to building a culture of trust will have an impact on and beyond the bottom line.
J.R. Hipple is CEO of Atlanta-based Hipple&Co. Reputation Management; chair of the Public Relations Society of America’s Counselors Academy; and chair of the Board of Governors of the Center for Ethics and Corporate Responsibility at the Robinson College of Business at Georgia State University. He is also a member of the INSIGHT Into Diversity Editorial Board. A version of this post was originally published in the September/October issue of INSIGHT Into Diversity, and is republished here with the author’s permission.