Leadership and Ethics- Myth or Reality?

[This post is a guest contribution by ASK Associate, Barbara Hocking. You can read Barbara's biography on our Guests page, which also provides a link to her Personal Learning Profile.]

Is the time for ethical leadership really here? Has the global economic climate created conditions for a radical rethink in the way we do business? Will we see a different set of values being pursued by those in positions of influence in the major corporations around the world? Business schools across the globe are certainly questioning how they should be developing leaders of the future in the light of criticism from many quarters following the worldwide economic crisis.

Business education – and MBA programmes in particular – came under heavy criticism as the economic problems in the West took hold. The American academic, Henry Mintzberg, was one of the most ferocious critics, accusing business schools of producing over analytical thinkers who are detached from the real world and concerned only with financial short termism. In one article, he commented about the corporations in the US at the centre of the financial crisis:

Our planet is becoming as sick as many of these corporations, yet we are being implored to get back to consumption. Fix the problem now; continue to forget about the future. Except this time, we may be consuming ourselves.”

As early as 2004, a number of business schools and organisations (including IBM and Aviva) founded the Globally Responsible Leadership Initiative, calling on business leaders across the world to embed global responsibility into their vision, goals and practice. More recently, MBA students at Harvard Business School developed an MBA Oath (you can read more about the Oath here, or read our earlier blog piece about it), which has now been taken by over 2000 MBA graduates worldwide. Included in the oath is the promise to ‘refrain from corruption, unfair competition, or business practices harmful to society.’

In a further move to influence those involved in management education, 8 institutions have formed the Global Forum for Responsible Management Education (including the United Nations Global Compact, the European Foundation for Management Development and the Aspen Institute) and developed PRME – 6 Principles for Responsible Management Education (the full text of which you can read at their website). Leading business schools around the world have signed up to these principles, which include:

… we will develop the capabilities of students to be future generators of sustainable value for business and society at large and to work for an inclusive and sustainable global economy.”

At a recent EFMD conference on responsible leadership in Barcelona, speakers from Universities around the world (including Nigeria, India, China and Nicaragua) all gave examples of how they are trying to embed ethics, sustainability and corporate social responsibility into their management programmes.

In a separate initiative, a number of academics in the UK are promoting the concept of ‘worldly leadership’, building on the ideas of Henry Mintzberg and of Jonathan Gosling at the University of Exeter. This is about looking beyond models of leadership developed in the West and seeking to learn from leadership practices and wisdom from a range of cultures and countries that are not traditionally quoted in identifying ‘best practice’. At a Worldly Leadership conference last year, a Masai leader from Kenya talked about their leadership practices. As he described their approach to instilling responsibility in their children early on by giving them responsibility for the tribes’ chief asset – its cattle – those listening could not help but think ‘empowerment’ – although, of course, the Masai practices predate this management terminology by some years!

But the question remains as to whether these issues are priorities for those seeking management education or recruiting those with management qualifications. Surveys by the Graduate Management Admission Council still show the most frequently cited reason for completing an MBA is for salary enhancement, and data from employers on what they value most in MBAs alumni does not make mention of ethics or CSR! (The 2010 MBA.com Registrants survey (which you can download as a PDF) for example, shows ‘developing knowledge, skills and abilities’ (KSAs) as the key motivation for registrants from all areas of the world except the US & Canada, where ‘career advancement’ came top. But looking at the KSAs that registrants were hoping to develop, ‘Knowledge of human behaviour and society’ came bottom of the list: it seems that MBA registrants may be keener on running the world than on understanding it.)

Even some leading academics are questioning the role of business schools in promoting ‘ethical’ leadership. For example, Theo Vermaelen (Professor of Finance at INSEAD) has been critical of the Harvard MBA Oath, saying in relation to the global financial crisis:

the solution is not more ethics or pledges, but more finance education and better forecasting and risk management models.”

So which way for those involved in the development of managers and leaders of the future? Is there a responsibility to take a lead in this area and support achievement of social goals as well as the traditional organisational ones of ROI or shareholder value? In the competitive market place for business qualifications (where these are primarily full cost programmes not attracting government subsidies), should business schools be determining what they provide? Or should they be market led and provide the sort of qualifications that business and aspiring managers seem to be wanting?

And who decides what’s ‘ethical’ or ‘responsible’? In taking a global perspective, cultural differences can make it challenging to get establish a set of universal standards. Is promoting and protecting the employment of family members ethical? Whilst in the West, we might deplore the notion – and practice - of not promoting on merit (and of course have employment legislation to support ‘fair’ recruitment), values relating to family responsibility might be seen as very ‘ethical’ in other cultures. In certain parts of the world, business is conducted very much on the basis of relationships and less on written contracts. When is ‘gift giving’ an acceptable part of building relationships, and when is it unacceptable? Having plundered many of the natural resources of the planet, do we Westerners have a right to expect those in developing countries not to exploit their own natural resources to preserve our lifestyles?

So these are challenging times for business and all those involved in developing managers and leaders. Has the economic crisis really precipitated a radical rethink in how we see leadership? Are we entering a new era – or is this just a temporary phase of soul searching after which we will resume business as usual?