c suite executive leadership and ethics

Beliefs, Practices, Challenges
Persons in positions of leadership inevitably encounter major ethical dilemmas and in fact make ethical decisions on a daily basis. Interviews with senior executives can reveal the complexities of ethical decision making at the executive level, as personal morals frequently disconnect from the ethical culture governing the organization or the industry’s regulatory climate (Bailey & Shantz, 2018). Bandwagon fallacies—the sense that because something is normative it is ethical—predominate in the workplace. An interview with C. Linden (name altered to protect the individual’s privacy) shows how personal ethical beliefs clash with the prevailing norms and values in the field. Employee diversity adds to the complications involved in executive ethical decision-making, according to Linden. The predominant ethical challenges usually relate to balancing two equally compelling ethical objectives, or weighing the pros and cons of a decision when there are no clear black-and-white resolutions. No genuine dilemma has a straightforward answer; it is not as if C-suite leaders are faced with simple choices like whether to steal, accept a bribe, or commit some crime. The most common ethical challenges are those that require discipline and self-restraint, but also courage and humility.
The subject of this interview holds ethical beliefs that align with universal principles, while veering more towards the philosophy of character ethics. As Crossan, Mazutis & Seijts (2013) point out, character ethics or virtue ethics can prove to be a more sensible model or framework for guiding the decisions made by leaders. Unlike deontological or utilitarian ethical frameworks, virtue and character ethics demand self-reflection, the willingness to change, and the ability to act based on intrinsic motivation to do the right thing. At the same time, Linden agrees that a formal ethical code remains essential in any organization. Research substantiates the subject’s belief in a formal ethical code that outlines behavioral guidelines and the ramifications of transgressions. For example, Schwartz (2013) found that formal elements such as “code of ethics, ethics training, an ethics hotline, and an ethics officer” prove far more effective than nebulous means of approaching dilemmas and decisions (p. 39). Leadership always remains critical for the entire corporate culture, inculcating the values and norms of the organization through C-suite behavioral characteristics. Linden believes, as Hatcher (2018) does, that “an organization is only as ethical as its leaders,” (p. 98). One of Linden’s biggest challenges has been to speak out against immoral acts, even when they are committed by colleagues he would have referred to as friends. The courage to speak out involves delicate and tactful approaches to communication and emotional intelligence, Linden notes, pointing out that the first step should always be direct confrontation with the individual and then if necessary alerting senior leadership.
Linden believes that human resources should remain more actively involved in promoting the ethical culture of the company through more robust hiring and training practices. At the risk of overreliance on personality assessments, a human resources department can use tools and techniques to seek out the character traits most suitable to the organization’s outlook. Similarly, through employee development and training, the human resources department participates in the process of engagement and motivation that minimizes conflict. Three years ago, Linden’s company invested in software systems for employee training and also in public speakers designed to improve the moral character and outlook of employees. Intrinsic motivation comes from engaging employees and creating the type of organizational culture that discourages ethical infractions. Whereas Linden used to benefit financially from the benefit of stock-based compensation, a shift away from such ethically problematic policies has helped his organization to overcome some of its most serious problems. Stock-based compensation has traditionally been used as a source of extrinsic motivation for executives, but research shows how this practice leads to “smooth earnings,” and the artificial elevation of the company’s stock price, as well as broader societal problems like “lower shareholder returns, bubbles and crashes and huge corporate scandals,” (Martin, 2011, p. 43). In light of the ethical and even legal problems associated with providing C-suite personnel with stock in the firm, his company made the difficult choice to pull back and totally shift its approach towards compensation, reward, and retention of top talent.
The interview with Linden therefore believes in the importance of personal responsibility and accountability. Leadership should be comprised of people with solid values, firm ethical judgment, and strength of character that remains unwavering in the face of difficult choices. Loyalty is to values and the mission of the firm, not to cronies in the company, as Linden put it. While not all ethical dilemmas can be resolved easily, through a process of open dialogue and interchange with opposing points of view, leaders can come up with creative solutions that promote the goals and values of the organization. Finally, ethical behavior never needs to conflict directly with profitability. As Hatcher (2018) points out too, values have value in the C-suite. MacDougall, Bagdasarov & Buckley (2018) refer to the concept of the “triple bottom line,” which many senior executives like Linden have come to adopt in their daily work (p. 212). The triple bottom line refers to the concurrence of financial, social, and environmental performance metrics that most stakeholders take into consideration. An ethical business is one that may suffer some short-term setbacks in order to reap the rewards of long-term success and market dominance through brand recognition, reward, and respect. Yet Linden also believes that it is important to fulfill ethical duties not out of a sense of quantifiable obligations but out of a genuine desire to use the power inherent in the company and its resources to effect positive change in the world.
Analysis
Linden seems tacitly aware of the main ethical theories like virtue ethics and utilitarianism. A mature leader with almost fifteen years of experience in the C-suite, Linden does exhibit some comfort with moral ambiguity while remaining fairly consistent in the application of ethical theories. Admitting to once being a stalwart utilitarian, Linden now claims to have shifted his focus from a consequentialist perspective to one that is grounded more in good sense and character. For example, Linden mentioned the term “servant leadership,” which has become a buzzword in business ethics (Hoekstra, Bell & Peterson, 2018, p. 79). Sauser (2018) also refers to the trend towards developing “cultures of character” in the C-suite, setting the tone for the entire organization (p. 19). Even in large or bureaucratic organizations, it is possible to promote norms of accountability.
One of the best ways to achieve a culture of character is by doing away with typical reward/punishment options and instead acknowledging that some infractions are based on ignorance or on bad habit. Harsh or punitive cultures would seem to police unethical behavior well, but in fact an analysis of best practices in business shows that compassion, dialogue, and collective responsibility helps to change behavior and improve decision-making more meaningfully and effectively (Sauser, 2018). Linden also pointed out that employees who are afraid to admit a mistake because of a fear of severe repercussions are far more likely to hide their error, which can potentially compound the problem. Not divulging an error can even lead to situations involving litigation. On the other hand, employees who are encouraged to step forward and who are treated with respect and compassion after a mistake will be more likely to take responsibility and learn from that error.
Personal accountability coincides with virtue or character ethical theories, which Linden certainly does uphold and embody. However, it would be impossible to only work from a virtue ethic framework given the complex, nuanced nature of most ethical decisions made at the level of senior leadership in a mid to large-sized organization. Deontological and utilitarian theories eventually come into play, and from what Linden said about the challenges of ethics and the processes of ethical decision making, situational ethics seems to be the most common approach. Situational ethics refer to the different means of making ethical choices based on the contingencies of each situation. In other words, each individual choice requires a flexible approach rather than a strict adherence to some arbitrary rule. Having said that, the need for a strong ethical code in the organization does help to streamline the decision making process, avoid inconsistencies in ethical judgment, and create even or equal standards for all employees (Schwartz, 2013).
Character ethics is an ideal to which the senior executives strive, as they serve as role models and rudders for the company. However, leaders do need to remember that human beings have flaws, and also that culture, gender, age, and other factors will color one’s interpretation of a situation or ethical guideline. A code of ethics can be used to clarify the ways in which leaders are expected to act in any given situation, with codes of conduct dictating appropriate and standardized responses to those behaviors. When it comes to developing and changing the codes of ethics in the company, leaders need to respond to shifts in the normative culture outside the organization. For example, leaders like Linden have had to consider changing the code of ethics to respond to issues like micro-aggression and subtle forms of discrimination that had previously gone unnoticed, unreported, or outright ignored.
Linden exhibits a tremendous amount of strength in his ethical decision making, albeit with the problems inherent in subscribing to situational ethics. Likewise, a character ethics framework can be difficult to align with cultural diversity. Linden does affirm the need for universal norms and standards, though, refusing to believe in moral relativism based only on the traditional values of a culture. The perfect example of how deontological ethics predominate in Linden’s thinking is the leader’s attitude towards gender and also to affirmative action. Linden has advocated for the promotion of women and minorities in positions of power through the support for programs like affirmative action in all of the firms he has worked for over the past twenty years. During that time, Linden experienced tremendous opposition and even hostile responses from colleagues. Instead of cowing down, Linden instead joined forces with allies and opted for paths that might have been personally injurious but which eventually led him to the C-suite anyway. Supporting unpopular but ethically sound initiatives requires strength of character, which is why a primary vision of virtue and character ethics can prevail even when a person also acknowledges the need for categorical right and wrong behavior.
The ethical philosophy Linden most often disagrees with is utilitarianism. Ironically, Linden claims utilitarianism remains common among his colleagues, in part informed by the utilitarian ethos in American society. Utilitarianism allows for a democratic forum, and yet can too easily lead to a tyranny of the majority. In some minor situations, Linden admits that the ends can justify the means but only when the means do not lead to substantive harm. Breaking small and insignificant rules can seem ethically problematic, which is why senior leaders take risks when they act in ways that seem harmless even when they violate an ethical principle. To resolve this problem, Linden reverts to the principles of character ethics. For example, the need to meet deadlines sometimes places inordinate pressure on him and his colleagues to make decisions before they have all the necessary information. When this happens, Linden asks his team to make a choice that seems right in light of the information they do know rather than becoming embroiled in the quagmire and confusion of uncertainty. Indecision can in fact be more destructive to the company and more harmful to stakeholders than trying too hard to do the right thing.
Synthesis
As a student of business ethics, I was impressed by Linden’s responses to the questions and his overall approach to ethical decisions. The subject frankly admitted that no one in the C-suite can ever be perfect, and that the key is to accept human faults without becoming complacent. Leaders need to be honest and admit their mistakes, taking responsibility for their team and not playing the blame game. Taking responsibility takes courage, and courage is one of the hallmarks of strong character and virtue in a leader. Yet leaders also need to correct their behavior and not be too permissive, admitting their mistakes while working hard to amend them and alter practices or policies as needed. Linden also noted that leaders have a direct responsibility to alert their colleagues of ethical problems and work hard to use a direct and diplomatic communication style to influence others. The combination of a strong, clear code of ethics plus the cultivation of good moral character in employees makes for a sensible approach to ethical dilemmas in the workplace. A code of ethics and even the law are insufficient to guide employee behavior. As Linden does, I also believe in the need to be intrinsically motivated. We cannot expect people to be angels, but we can demonstrate through good leadership that ethical behavior benefits the self, others, and promotes the triple bottom line.
Leaders in the C-suite become role models for the company. Linden did not go into specifics regarding corporate social and environmental responsibility as they are practiced in his organization, but shows how sometimes extrinsic reward eventually leads to intrinsic motivation down the road. One example is the company’s environmental policies and practices. The company has changed its environmental policies several times in response to client requests and also to market forces. At first, the C-suite took some steps to reduce waste out of the need to retain customers and remain competitive. One competitor had billed itself as the green alternative in the industry and threatened to undermine Linden’s firm. To respond, the company released a line of products that appealed to the “green” ethos. After a year, Linden and his colleagues realized that they actually had a better attitude and emotional outlook towards their work knowing that they were acting in accordance with overarching ethical principles. This was a good example of how extrinsic factors are sometimes necessary to stimulate the more important intrinsic changes that lead to normative ethical behavior.
Speaking with leaders like Linden also showcase the diversity of opinions and approaches to business ethics. Not all leaders will believe that character ethics can be integrated into a large company. Many leaders believe that market forces and the legal climate are the only real thing guiding ethical decisions. Others may believe that religious values are needed to create a stable ethical climate in a company. Linden straddles the extremes of consequentialism and deontology, showing that hard lined stances are just as problematic in the world of business as moral relativism. Through this interview, I also learned the importance of humor—an unexpected takeaway. Linden kept reminding me that people make mistakes and that when a leader with the potential to make errors with major ramifications does make a mistake, it is important to recognize it immediately, correct it, but also have the courage to laugh. Working with a team, and continually collaborating with others can also prevent the types of errors that do lead to seriously adverse outcomes. Therefore, teamwork, humility, and courage remain the core features of ethical decision making.
References
Bailey, C. & Shantz, A. (2018). Creating an ethically strong organization. MIT Sloan Management Review. http://ilp.mit.edu/media/news_articles/smr/2018/60101.pdf
Crossan, M., Mazutis, D. & Seijts, G. (2013). In search of virtue. Journal of Business Ethics 113(4): 567-581.
Hatcher, T. (2008). The value of values in the C-suite. In Sims, R.R. & Quatro, S.A. (Eds.) Executive Ethics. Charlotte: IAP, pp. 97-122.
Hoekstra, E., Bell, A. & Peterson, S.R. (2008). Humility in Leadership: Abandoning the Pursuit of Unattainable Perfection. In S.A. Quatro & R. R. Sims (Eds.), Executive Ethics: Ethical Dilemmas and Challenges for the C-Suite. Greenwich, CT: Information Age Publishing, pp. 79-96.
MacDougall, A.E., Bagdarasov, Z. & Buckley, M.R. (2008). Applying a primary risk management model to the C-suite. In Sims, R.R. & Quatro, S.A. (Eds.) Executive Ethics. Second Edition. Charlotte: IAP, pp. 211-234.
Martin, R. (2011). The CEO's ethical dilemma in the era of earnings management. Strategy & Leadership 39(6): 43-47.
Schwartz, M.S. (2013). Developing and sustaining an ethical corporate culture: The core elements. Business Horizons 56(1): 39-50.