Ethical Leadership and Corporate Culture

Ethical Leadership and Corporate Culture

If the goal of corporate culture is to cultivate values, expectations, beliefs, and patterns of behavior that best and most effectively support ethical decision making, it becomes the primary responsibility of corporate leadership to steward this effort. Leaders are charged with this duty in part because stakeholders throughout the organization are guided to a large extent by the “tone at the top.” This is not at all to relieve leaders throughout an organization from their responsibilities as role models, but instead to suggest the pinnacle position that the executive leader plays in setting the direction of the culture. In fact, neither can be successful independent of the other; there must be a consistent tone throughout the firm.

Trustworthiness is among the key virtues of ethical leadership. (A more detailed examination of trust is presented in Chapter 10.) An ethical leader must be reliable and dependable, worthy of the trust that the entire organization places in them. We have seen cases in which employees at Wells Fargo and Facebook believed that they could not rely on management to do the right thing. The very existence of whistle-blowers, like the former employees at Facebook, can only occur when employees lack trust that senior leaders will not do the ethical right thing.

Unfortunately, according to one study published in 2013, senior leaders are more likely than lower-level employees to break rules, and 60% of misconduct reported is attributed to managers.17 This is an alarming trend that should be considered by businesses as they develop their ethics and compliance training programs. Ralph Larsen, past chair and CEO of Johnson & Johnson, explains: “Being bound together around the values . . . around our credo . . . being bound together around values is like the trim tab for leadership at Johnson & Johnson.”18 Seventy-five years after the credo was introduced, company leadership still has regular “credo sessions,” where current CEO Alex Gorsky will guide top executives through a review of the credo and facilitate a discussion on what is working and what is not.19

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If a leader is perceived to be shirking her or his duties, misusing corporate assets, misrepresenting the firm’s capabilities, or engaging in other inappropriate behavior, stakeholders receive the message that this type of behavior is not only acceptable but perhaps expected and certainly the way to get ahead in that organization! Consider the responsibilities of leaders, both for their own actions and also for the decisions and actions of the leaders that precede them. Mary Barra, CEO of General Motors, had to answer for the prior wrongs of her predecesso