Decision-making | Board Leadership
RUNNING THE RISK Leaders are under pressure to avoid ethical obstacles
It’s crucial to draw on your own experience and the experience of others. Increase diversity at board level Research has found that diversity is associated with better decision-making, and, by association, distinctive strategic choices, creative innovation and competitive advantage. This implies more women, minority groups, different industry expertise and the inclusion of digitally experienced board members where necessary.
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Building an ethical positioning
How high do you think the moral bar should be set for your organisation? Between aspirations and practice, where are the biggest zones of difference? What are the stumbling blocks and what’s slipping under the ethical radar of your organisation? What signal-spotting reflexes are in place? These are essential to ensure a company’s ethical antennae are fit for purpose. Any firm is a potential breeding ground for unethical behaviour. Ill-conceived goals and incentives, although originally intended to promote a positive behaviour, may encourage a negative one. www.ethicalboardroom.com
Where are your blind spots? In cases of ‘indirect blindness’, third parties are not held sufficiently accountable. ‘Motivated blindness’ means overlooking unethical behaviour because it’s in our interest to remain ignorant. When we give a pass to ethical behaviour because the outcomes seem to serve the firm, we are ‘overvaluing outcomes’. All too easily we find ourselves on the slippery slope: unethical behaviour develops gradually and ends in a reputational crisis.
3 Honing leadership styles
How can leaders get the best of both worlds? Reconciling leadership paradoxes demands reflection. 3 How can leaders temper an entrepreneurial style by checks and balances to ensure that seizing opportunity (or positive risk) does not lead to poor decision-making (negative risk)? Can a personal mission of ensuring ecological sustainability be reconciled with a ‘sovereign’ style of leadership? possibly, rather than being simple either/or trade-offs. Wisdom can also lie in getting the best of both worlds, transcending opposing views to reach a broader, holistic but still commercially-viable, perspective.
The way forward
In conclusion, a wise leader addresses the socio-economic and environmental dilemmas of modern business in a holistic way. For senior executives and boards, it’s about building sustainable, legitimate organisations, while creating, capturing and sustaining economic value over the long term. As our study shows, the journey from smart to wise decision-making involves ongoing self-reflection and learning. While our findings suggest that most leaders know that this is the path they want to take, many struggle to stick to it due to the daily strains of business and short-term imperatives. Many are missing self-reflection and tough, honest feedback, and need to be wary of letting self-confidence override their willingness to take other opinions on board or to change direction if necessary. It’s a cliché but it’s true: it can be lonely at the top. Isolation from ourselves and our true principles, as well as from others, can undermine wise decision-making. While good practice is crucial – involving the right stakeholders and trying not to fall into thinking traps, for example – it’s also essential to work on our personal processes. This involves investigating our true motivations and strengths and identifying avenues for self-development. Mindfulness is a good place to start. Engaging in one or more reflective practices could make the world of difference, enabling internal answers to emerge and tuning into our core values, principles and mission. Establishing this requires searching questions. For example: to what extent is what I do important to me? Is there really nothing more important for me? What is the essence of my (personality) profile? How can I best use my resources – for myself and for others? What goals do I need to set for myself to ensure that my life has sense and meaning? What do I really want for myself? These measures will equip leaders to better address the increasing external pressures applied by a widening spectrum of stakeholders and to re-build the trust that is still sorely lacking. In the modern business environment, it’s organisations with wise leaders and boards that will succeed in the long run. 1 Kiel, F., (2015b), Measuring the Return On Character, Harvard Business Review, April: 20-21 2Harvard Business Review Staff, (2017) The Best-Performing CEOs In The World 2017, Harvard Business Review, NovemberDecember 3Meyer, R., Meijers, R., (2008), Sovereign Or Servant, Cross Fertilizing 20 Approaches To Develop A Robust Leadership Style ©Krauthammer & Strategy Academy. The publication of the report coincided with the launch in October 2017 by Meyer & Meijers of Leadership Agility: Developing Your Repertoire Of Leadership Styles, London and New York, Routledge, Taylor & Francis Group. The authors invite leaders to exercise agility, experimenting with broadening their range beyond their ‘default’ styles. See the Full Report for more key references: Alves et al., (2014), Ardelt (2003), Chen et al., Rovira & Trias De Bes, (2004), Soll, et al., (2015), Magnien et al., (2002).
Spring 2018 | Ethical Boardroom 37