This article continues to focus on Organizational Leadership because leaders must elevate their organizations to a higher level of consciousness that requires a transformation in practiced behaviors, values, and motivation. This change also includes consciousness of community and societal needs, which is rarely achieved at the individual level (Barrett, 1998). I believe that many of the problems within organizations today are the failure of leaders to operate at a level higher than simply being exalted managers of a defined domain.
Recalling the Virtuous Cycle from a previous article, when speaking of ethical or virtuous behavior we do so in an organizational context that sets boundaries for the ethical principles or standards we consider important as leaders. For this reason, each organization must define its own code of ethics. Over 90% of large U.S. corporations and 85% of Canadian corporations have a code of ethics (Schwartz, 2002); however, having a code does not mean that organizations or the people within them are acting ethically. Enron was a perfect case in point; they had a code that everyone ignored, which led to the company’s demise and the loss of millions to those who had invested in the company.
Thus, acting ethically requires more than simply having a code. There must be compelling elements behind the code that cause people to act in certain ways. Michael Schwartz suggests a set of six universal moral standards should be applied within a code of corporate ethics; ironically, this set is identical to the six values promulgated by the Character Counts! Program® that exists in about 5% of American schools and predated his exposition. Thus, the following six values represent a universal perspective you should strongly consider as you examine and revisit your corporate standards.
- Trustworthiness, which includes notions of honesty, integrity, reliability, and loyalty.
- Respect, which includes notions of respect for human rights, diversity, and inclusion.
- Responsibility, which includes notions of accountability.
- Fairness, which includes notions of process, impartiality, diversity, and equity.
- Caring, which includes notions of empathy and avoiding harm to others.
- Citizenship, which includes notions of obeying laws, protecting the environment, and acting in ways that promote the welfare of others.
These standards are “higher order” values that operate at both the individual and organizational levels, but when we speak of business ethics, we are essentially addressing a social contract between an organization and the people within it as well as with the society the company serves. Thus, people outside of a company have expectations of how an organization and the people within it operate. Business leaders who understand this social contract should seek to build character within their businesses, beginning with core values that serve as a foundation for creating consistent, ethical performance.
The concept of character is central to any discussion about values, virtues, personal ethics, and organizational codes of ethics. Character is formed, and reformed, every time each of us has a defining moment when a choice must be made between conflicting values (Badaracco, 1998). These choices require individuals and leaders to decide about the values that are most deeply rooted in our lives and the communities and organizations we care about, respectively. The formation of one’s character is closely tied to emotional intelligence because one must consider the two sides of character development: performance character, which relates to doing the best job that one can do, and moral character, which relates to being the best person one can be toward others. Being clear on our values, both individually and organizationally, determines behaviors within the social contexts within which we operate. Operating from a set of well-defined values reinforces positive behaviors that others will desire to emulate, which reinforces one’s influence as a leader.
All organizations are value-driven, whether or not the values are well defined or implied. However, visionary leaders use values “to guide decision-making and to build a cohesive corporate culture” (Barrett, 1998, p. 104), which is their responsibility to define, build, sustain, and protect. These cultures should embody the values that stem from both individual and organizational character and serve as boundaries for ethical behavior in all situations.
Suggested Reading (Book is available on Amazon):
- Badaracco, J. L. (1998, March-April). The discipline of building character. Harvard Business Review, 76(2), 114-124.
- Barrett, R. (1998).Liberating the corporate soul: Building a visionary organization. Boston, MA: Butterworth-Heinemann. This book is another classic that still holds significant seeds of wisdom.
- Schwartz, M. S. (2002). A code of ethics for corporate code of ethics. Journal of Business Ethics, 41(1), 27-43.
Questions for the Week: In defining one’s character, ask three questions. First, Who am I? Defining personal identity is an act of self-awareness, the first level of Emotional Intelligence (EI). Identity falls within the realm of performance character because it relates to how one acts based upon this identity. Second, Who are We? The character of the organization is a reflection, in part, of the individuals within it, but it is much more. Organizational identity involves organizational and social awareness, which is the third level of EI and reflects the first level of moral character. Third, What is the Company? The answer here is complex because it requires a clear definition of how the company or organization relates to the broader community and society and transcends the fourth level of EI, which is about relationship management. The character of a company depends on many factors for which strategic leaders (Levels 4 and 5) bear ultimate responsibility. We’ll investigate this question in greater detail in the next article.
| About the Author: Dr. Ray Benedetto is co-founder of GuideStar, Inc.® a practice in organizational leadership for performance excellence (www.guidestarinc.com). He is a retired Air Force colonel with a distinguished active-duty military career. He is board certified in Healthcare Management and a Life Fellow of the American College of Healthcare Executives (ACHE). Dr. Ray taught leadership for 12 years for the University of Phoenix Chicago campus. He holds degrees from Penn State (BS), the University of Southern California (MSSM), and the University of Phoenix (DM). He is co-author of “It’s My Company TOO! How Entangled Companies Move Beyond Engagement for Remarkable Results” (Greenleaf Book Press Group, 2012) and numerous ezine articles available online. You can reach him at ray@guidestarinc.com.
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