This article was first published in the July/August International edition of Accounting and Business magazine.
Dramatic economic, social and political changes are sweeping the global economy. It is vital therefore that ethical leadership should energise and mobilise people, putting them on the right path to solving existing problems, and making the necessary improvements.
There were many financial scandals in the millennium decade, caused by big regulation gaps and stakeholders focused on profit rather than long-term value. The goal of an ethical culture is to minimise the need for enforced rules and to maximise principles that contribute to ethical reasoning even in tough times. However, an ethical culture in companies must come from top management – those who are responsible for corporate governance.
Ethical leadership is the answer to the problems in our global economy. Without ethical leadership problems will only multiply and values, vision, virtues and voices are unable to be expressed and heard. In contrast, ethical leadership creates the climate in which people turn challenging opportunities into remarkable successes. When leaders act ethically, they usually model the way, inspire a shared vision, challenge the process, enable others to act, and encourage the heart of employees. This comes from the idea that credibility is the foundation of ethical leadership.
Ethical leaders have to know where they are heading, and have a vision for the future. The ability to look forward is what distinguishes leaders from other ethical individuals. Consequently, what’s most needed are leaders who know how to guard their credibility, since this builds a good corporate culture and employees feel proud of their organisation. Further, credible and ethical leaders should adopt the ‘four Vs’ model of ethical leadership, that I personally find a useful matrix tool, which are the following:
Ethical leadership begins with the understanding and commitment of individual core values. This means discovering the core values of employees’ identities, then integrating unique values among the employees.
The ability to form actions, particularly in service to others, within a picture of what ought to be.
Claiming your voice is the process of articulating your vision to others in an authentic and convincing way that motivates others for action.
The attempt to strive for what is right and good for all employees and not only the individual. In this way, people develop the character of virtue – striving for the common good. Ethical leaders should frequently ask themselves how values, visions, and voices are in line with the common good.
Though compliance with regulations is thankfully now commonplace, the scandals of the past decade have left their mark. We must have ethical leadership in organisations, but this depends on those leaders adopting the credibility dogma and applying the four Vs that will enable their organisation to excel and distinguish itself from others. Hopefully though, the economic uncertainty will generate and grow future leaders who will be ready to rule our world, our companies and our societies on an ethical basis.
Emmanuel G Kapizionis FCCA is financial accounting executive at Nereus Shipping, and a member of ACCA’s steering committee in Greece