Ethics and executives

It wasn't apparent at the interview but six months into the new job you've been asked to make business decisions that conflict with your personal values. So do you just "suck it in" and carry on regardless or confront the boss knowing it could result in you looking for another job?

Owing to the growing expectations many shareholders place on businesses - and the way some businesses reward executives for meeting them - Murray McLachlan, senior consultant with Right Management Consultants, claims individual values are becoming increasingly compromised.

It's a brave senior executive, argues McLachlan, who's prepared to stare down shareholder demands for increased returns with decreasing investment in the business.

Having concluded that confronting these demands is career limiting, he says many senior executives are squeezed between championing ethical behaviours of the organisational culture with the realities of delivering to shareholder and market demands.

"The crazy thing is CEOs who remain staunch are typically the ones who build and grow great businesses," says McLachlan. "Nice guys [and gals] can win, but they also need to manage their visibility, and that doesn't mean relenting on honesty or ethics."

In more than 12 years of career coaching it's clear to McLachlan that executives rarely fail because they lack the skill-set for a position. But, he says, they do struggle when their values are being eroded.

"Dissension between personal values plus expected, and rewarded behaviours is a recipe for stress, depression and ultimately failure," says McLachlan.

What worries McLachlan is how few executives bother to identify their own personal values then use them to assess whether an organisation is the right fit for them. But whether they've consciously assessed them or not, he struggles to accept that executives sometimes have doubts over the ethically correct way to treat staff or customers.

"Executives who ask themselves the question know all too well what's ethically and morally right, they're only trying to justify to themselves a compromise," says McLachlan.

He says it's important that role modelling by senior executives - often emulated by other staff - doesn't capture both the negative and positive behaviours.

"For example, when younger staff see 'fee gouging' as behaviour that's not only accepted but rewarded, you quickly get values embedded into the culture that not only run contrary to mission statements, but are damaging to the firm," says McLachlan.

So is there a price to be paid for being upfront and honest?

Well, yes and no, says ethics campaigner Rodger Spiller. He says though taking the moral high ground may lead to missing out on short-term wins it's the key to business sustainability, and always the best path for career advancement.

That's why he urges executives to invest time clarifying their own principles.

"That means asking themselves 'how do I want to be perceived by my colleagues, customers, suppliers, shareholders and the general public?"' says Spiller, director of the NZ Centre for Business Ethics and Sustainable Development.

What executives overlook at their peril, warns Spiller, is that good business is repeat business and executives who repeatedly break their word find it progressively harder to convince others to do business with them. In other words, he says, it's enlightened self-interest for executives to behave ethically.

"Lack of integrity is literally a career-ending move. If executives build a reputation for honesty, fair-play, and trustworthiness - colleagues, customers, suppliers and other stakeholders will want to work with them."

So how can you check whether you "pass muster" in the honesty stakes without missing golden opportunities?

According to Ralph Norris, Air New Zealand CEO, there's no better litmus test of an executive's integrity than their ability to look in the mirror every morning and ensure the face looking back is an honest one.

Though there's always pressure on executives to perform, Norris says it should never be at all costs. Executives will often have moral dilemmas, but it all comes down to their values.

"Executives who are less than honest usually behave differently. I don't buy into the 'shades of dishonesty' argument. An executive behaviour is either right or it's not," says Norris.

With more accountabilities for executives these days, and greater transparency into a company's activities, Norris says executives also need to know the difference between what the law prescribes for and what's ethically right.

"Any executive who tries to get a commercial advantage through dishonesty is playing a very dangerous game. The market will ultimately deal to them, especially if they're legally sound but morally questionable," advises Norris.

According to Spiller, self-assessment is fundamental to living what Aristotle described as the good life. It's essential, he adds, for executives to keep reviewing their performance to monitor progress and reflect on what is working.

So if executives are unsure as to the ethically right way to treat staff and clients - what should they do, and where should they go for help?

Company and industry-related codes of ethics are useful guides to what's ethical. But if that's not enough, Polly Parker senior lecturer with the University of Auckland Business School, suggests executives seek both internal and independent guidance on how codes should be interpreted.

But Parker agrees with Norris - a first port of call is for executives to establish their own individual principles and then ensure they're in sync with those articulated by their employer.

To ensure executives don't end up working for the wrong company, she urges them to have those values firmly identified before taking on any new job.

But what should you do if the boss expects you to do things you're philosophically uncomfortable with?

First, advises Parker, know yourself well enough to recognise when you've compromised your own integrity. Parker says though most executives know when they've crossed the line it can take customer and staff feedback to provide the necessary wake-up call.

She says though executives may think they're getting away with questionable behaviour, the reality is different.

"Customers have choices, as do staff, and if you don't treat them right, they'll move," says Parker.

Executives should have the freedom to table their ethical concerns at a higher level (like the chairman or independent directors) but Parker says that's no guarantee of a desirable resolution. That's especially true, adds Spiller, if the person up the ladder can't be held directly accountable for the decisions you make.

So when push comes to shove, he says an executive might have to leave an organisation to avoid breaching their ethical standards.

"Remember, organisations with ethical issues are unlikely to maximise your career development and contribution to the business," says Spiller.

"Chances are you'll get a better return on your own contribution and energy by moving elsewhere."  Making honest business decisions

* Are the business decisions I make legal?

* What alternative courses of action do I have?

* Which outcomes are consistent with mine and the company's values?

* Would I be willing to disclose the decision to my boss, the CEO, the board or my family?

* Could I defend the decision if it was in the newspaper?

* What kind of results can I expect if the decision sets a precedent and becomes the norm?

* Am I confident my decision will seem as reasonable over the longer term?

* Who will be harmed or helped by the decisions I make?

* How do I feel after the business decisions I make?

* Have I made the decision from the perspective of all parties?

(From the The Ethical Edge: Driscoll, Hoffman, Petry)