|
Getting your Trinity Audio player ready...
|
The increase in the number of failing business organisations due to unethical leadership practices has continued to rise. The highly publicised collapse of the Enron Corporation in 2001 due to fraudulent accounting practices, such as inflating profits and hiding debts of an estimated $30 billion, led to a $63 billion market value loss and bankruptcy. Likewise, the collapse of the Nigerian airline Arik Air in 2017 was due to poor ethical leadership and management practices. Sadly, these types of stories bordering on unethical leadership practices in corporate bodies have continued to increase, with a growing number of organisations still falling into this trap on a daily basis.
Are you still wondering why business owners should care about ethical leadership?
Building a legacy in business is not only about erecting physical structures, building prominence in popularity profile or expanding the number of business branches and outlets. It begins from the very first year of your business and is ingrained in the code of ethics that guides the operations of the business. Like a mindset, it drives your actions, decisions and style of operation, and this very goal ought to be the centrepiece of every business leader’s approach.
Ethical leadership is essential for building sustainable organisations that can thrive in the long term. It is the key to shaping corporate accountability and fostering sustainable business practices. Companies that integrate ethical leadership are more likely to build long-lasting and responsible legacies that prioritise both profit and positive societal impact.
Now more than ever, consumers are becoming increasingly aware of ethical practices and sustainable options, and they can recognise a business culture that values long-term sustainability over short-term gains.
In this piece, I shall be guiding you on how ethical leadership shapes corporate culture, promotes accountability, and helps businesses build sustainable practices that benefit both their bottom line and society.
First, one must understand that ethical leadership begins with ethically driven individuals. How well do you promote values such as transparency, integrity, and fairness within your organisations in your actions and decision-making? Are you aware of your responsibilities to customers and employees working with you? Allow me to share here an insight from Harvard Business Review:
“As a leader you have responsibilities to four stakeholder groups: customers, employees, investors, and society, through five pathways: well-being (which deals with what is ultimately good for the person), Rights (which entail the entitlements to receive certain treatments), duties (which are the moral obligations to behave in a specific way), best practices (which entail aspirational standards required by law or cultural norms), and fairness (involving steps taken towards resolving issues impartially, consistently, and equitably allocating opportunities, benefits, and burdens)—CatherineCote (2023).
Second, ethical leaders model integrity, set a strong ethical tone from the top, and promote a culture where employees at all levels feel empowered to make ethical decisions. These actions not only affirm your identity but also tell your brand’s story and communicate its values to your customers and clients. For instance, CEO Paul Polman’s leadership actions at Unilever through its Sustainable Living Plan project demonstrate a commitment to ethical practices and sustainable goals. This proves that ethical leaders adopt a long-term perspective that considers continuous relevance, originality, and the impact of their decisions on future generations and the environment.
Remember—sustainability is not just about meeting current needs, but rather it is about meeting current needs and creating pathways that are relevant in meeting future needs and protecting the environment in the long run.
This reinforces the idea that a key aspect of ethical leadership involves the ability of leaders to influence their companies’ governance structures, corporate strategies, and public perceptions, as well as ensure that the organisations they lead are accountable for their actions and impacts on stakeholders, society, and the environment. Herein lies the idea of corporate accountability in its simplest form.
Finally, it would be naïve for one to think that adopting ethical leadership is an easy walk in the park. On the contrary, every business leader is faced with challenges such as short-term financial performance deficits, fierce industry competition, unstable financial markets, ethical dilemmas in retaining customers, and the temptation to prioritise immediate gains over long-term ethical practices, which can erode both trust and sustainability. Yet, despite these challenges, corporate accountability and sustainability can still be achieved.
Companies can achieve accountability and sustainability by implementing robust training programmes, establishing clear ethical guidelines, and fostering open communication channels to promote ethical decision-making. Also, organisations can prioritise environmental, social, and governance (ESG) initiatives such as CSRs to demonstrate the immense value of aligning business strategies with positive societal impact. These efforts not only contribute to the betterment of communities but also enhance the company’s reputation, customer loyalty, long-term success, and resilience in the marketplace towards a thriving and ethical global economy.
Remember, integrating accountability and sustainability practices into our corporate ethos is not merely a choice but a responsibility. It is no longer enough to simply do business; we must do business right!
Bolanle Adetula is an MSA Research Assistant at the Department of Research, Lagos Business School.
