At a time when the conduct of business leaders is regularly questioned, the concept of ethical leadership matters now more than ever.
People are taking to the streets around the world, demanding action on human rights, civil liberties, and climate change.
With the public becoming increasingly concerned about environmental, regulatory, and societal issues, these considerations are being factored into their purchasing habits. And as a result, people are demanding action from policymakers and leaders.
The power of purpose
In our turbulent and uncertain world, these sentiments are leading businesses to re-examine how they account for their existence.
In August, one of the pre-eminent business lobbies in the US, the Business Roundtable, issued an open letter entitled Statement on the Purpose of a Corporation.
Signatories to the letter included 181 chief executives of major corporations, from Apple to Walmart, representing 30 per cent of US market capitalisation.
In this letter, leaders stated that “each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities, and our country”. As such, it speaks to shifts that have been gathering pace – some would argue, all too slowly – in the corporate world.
Reporting on the Business Roundtable statement, the Harvard Business Review commented that it “represents a very public rebuke of Milton Friedman’s worldview” that “the business of business is business and the sole focus of the CEO is to maximise the profits of that business”.
So at this time of immense change, what does it mean to be an ethical leader?
The right way
Leadership means taking people with you. Ethical leadership is about taking people with you as you strive to do the right thing and make a positive impact on the world around you.
Clearly articulating an idea, getting others to be genuinely excited about it, bringing them on a journey, and supporting them along the way are the hallmarks of a true leader.
But, increasingly, this can’t be just any idea, and personal effectiveness and charisma alone are not enough to energise and inspire.
Through analysing feedback from more than 1.3m US employees, Harvard Business Review also found that companies with a high level of corporate purpose outperform the market by five to seven per cent each year.
Purpose matters. And that purpose has to be powerfully articulated, transmitted, and engaged with throughout an organisation.
You see leadership qualities played out in all their glory and failure in football management.
As a football fan, I’ve always been impressed with the manager of the England men’s team, Gareth Southgate. His leadership style exemplifies professionalism, courage and dignity. He prepares his players to be resilient and empowers them to “be in control of the process” at major tournaments.
It’s about empowering people to give their best, and encouraging them to do so in the right way – which means prioritising ethical behaviour.
For ACCA and the professional accountants who make up our global membership – 219,000 members and 527,000 students in 179 countries – ethical conduct is absolutely central to building trust and confidence.
Throughout this final quarter of 2019, we are highlighting the power of ethics, trust and sustainability – showing how digital advances, tightening regulation, and changing consumer behaviour have introduced new ethical complexities to the ever-changing business world.
Consequently, the need for the ethical leadership has never been greater.
This was something we highlighted on Global Ethics Day yesterday, with a number of events around the world – including the third annual Film Festival in Singapore, an ethics pledge in Malaysia and a Brussels breakfast event about ethics and trust in the financial markets.
The backbone of business
Finance professionals are the backbone of business, and ethics plays a crucial role in everything they do, so the accounting industry has a particular responsibility to uphold and lead on ethical issues.
They have to be aware of ethical dilemmas, and that’s why our students have ethics at the heart of their training, with our Ethics and Professionalism Skills Module. This is an integral part of the ACCA Qualification.
Also, the introduction of our Strategic Business Leader level exams allows our students to demonstrate strategic thinking and leadership that draws on their ethical judgment, technical and professional skills, and present their responses in the way that would be expected in the workplace.
We’re at the leading edge of this change, working with our partners to equip our students and members with the right skills and knowledge to succeed.
And our members have the edge – their lifelong commitment to ethical practice begins the moment they sign up to study our qualification. This advantage is then carried into their careers as ACCA members – who each see this ethical understanding as a collective responsibility as well as a personal one.
While the power of ethics begins with me and you, it is amplified to extraordinary effect when it applies to “us”.
And this is the most valuable commodity professional bodies can give to the world – professionals who care about doing the right thing.