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Five practical lessons from ethical leaders Add to ...

This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab.

From many years as an ethics consultant, I have seen my share of ethically challenged leaders in both business and government. Most do not achieve long term success, but some do.

I have also worked for highly ethical individuals who have risen to the top of their organizations. These leaders who match ethics and success exhibit many qualities for others to emulate.

Here are five practical lessons based on observations of ethical business leaders.

Say less, but say the truth When you are a CEO, every word you say is measured by your employees, doubted by journalists, parsed by analysts, and weighed against laws and regulations by a hungry plaintiff’s bar. You are not entitled to many opinions, as any expressed opinion will be mined for potential insight into what your company will do next. This is why CEOs are often quiet on issues of the day. When they speak, they are speaking for their companies and not themselves, no matter how hard they try to separate the two. Ethical leaders avoid half-truths and lies by saying less. They limit what they say to what they know – or think they know – to be true.

Know the stakeholders While almost all CEOs pay lip service to the maxim that shareholder value is paramount, ethical leaders realize that a corporation is successful only if it gives priority to many stakeholders. Not only does a corporation depend on its employees and customers, it also depends on its suppliers, the media, regulators at multiple levels, environmental critics, the financial community, political allies, and many other stakeholders. While some CEOs focus only on shareholder value, ethical leaders try to balance the interests of stakeholders so that they align in support of the corporation. Some call this social responsibility, but it is just common sense to ethical leaders.

Surround yourself with truth tellers Many CEOs express surprise at how little they can directly know about the organizations they lead. All CEOs are dependent on their direct reports and other managers to tell them how things are really going. Ethical CEOs are always looking for direct reports who tell them the truth, even when it is very uncomfortable to do so. These CEOs know that they will only be able to ascertain the organizations true status if they reward managers for candidly delivering bad news. Delivering bad news does not come naturally to highly competitive individuals seeking to advance their careers. It is only by making a conscious effort to reward individuals who deliver bad news as it happens that a CEO can gain a realistic idea of what is going on in the organization.

Learn for yourself No matter how much effort you put into rewarding candor on the part of those who report to you, nothing substitutes for looking into things for yourself. I remember talking to the CEO of a financial services company that had just barely survived a scandal. I suggested that he visit all of the company’s field locations to tell his team what he expected of them, and also to listen to how they felt about what had happened. The CEO said, “You mean you want me travel around the country and sit on plastic chairs drinking coffee out of styrofoam cups?” Exactly what I meant. By doing this, he not only put the company back on track, but he also learned how it had gotten off on the wrong track.

Pass on some opportunities A lot of excitement springs up anytime a new opportunity presents itself in a company. Despite this anticipation, ethical leaders look at opportunities not only in terms of what can be gained, but also in terms of the ethical implications of pursuing the opportunity. The CEO of a construction supply company won the right to sell heavy equipment in Mexico. However, he asked his team how they could succeed in Mexico without paying bribes. No one had an answer, so he passed on the opportunity. The company that seized the opportunity was plagued by corruption charges not only in Mexico, but also at home. For ethical CEOs, if an opportunity cannot be pursued ethically, it cannot be pursued at all.

Both ethics and success require a commitment to the truth. Ethical leaders build their organizations around that commitment.

Mark Pastin is the CEO of the Council of Ethical Organizations, a nonprofit dedicated to promoting ethics in business and government. A Harvard-educated ethicist who’s received grants from the National Science Foundation and the National Endowment for the Humanities, he’s published more than 100 articles and written a new book, Make an Ethical Difference: Tools for Better Action.

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