The times when the head of a company was the ultimate, uncontested authority are gone forever. The world in which she or he operates has become too complex, too dynamic. Instead, every day, those at the helm of organizations can expect to encounter volatile markets, demanding employees, fickle customers, impatient investors and bloggers and journalists who traffic in unrelenting skepticism. In this environment, it can be difficult for a leader to hold a steady course, guided by what he or she knows is right for the long run, as opposed to what’s expedient in the short term. And it’s especially hard to make the quick decisions organizations need without a robust mechanism for choosing between what’s right and what’s wrong.
As the leader of a group of people, I wrestle with this. I know I have only have a very short time to sell a new idea or a business concept to my team and get its buy-in. To succeed, I must be guided by a system of values that is crystal clear, especially to me. And, most importantly, I must set an example through my actions rather than merely proclaiming a list of the organization’s values in the company newsletter. I need to live the values in my own practice as I lead others.
Dollars and sense
There are some basic questions that all leaders should ask themselves and find answers for as soon as possible. The way I see it, answering such questions frees me from the dilemmas that interfere with my decision making. One of these questions concerns the extent to which charismatic leaders – those who influences others through the vitality of their personalities and the excellence of their communication skills – can allow themselves to manipulate people. While leading the charge, and inspiring people to follow, how can one remain critical of one’s own thought processes and actions and keep one’s ego in check?
Along with very personal questions like that, every leader faces business dilemmas, many of them ethical, every day. Should they cut costs (with the best interest of their companies and employees in mind) and use the cheapest available workforce without concern for the livelihoods of their subcontractors? Should they develop future technologies knowing there may be unintended and negative consequences for many people by doing so? Should they fill orders for items which they know will contribute to surveilling people? In adopting new tools that boost efficiency (automation and robotization), should they forget about those employees that will lose their jobs to robots, not to mention workers at other companies?
The market of ethical dilemmas for leaders is always growing. Whereas it is relatively easy to set KPIs (key performance indicators) that will demonstrate that an organization is operating efficiently, effectively and profitably, and meeting all its targets, it is far more challenging to determine whether the path taken to achieve these goals is morally justified. I am confident that all good leaders would agree they are engaged in a constant balancing act between what is necessary to protect their organization’s interests and what needs to be done to uphold their personal value systems. There are no KPIs to tell right from wrong. Accordingly, I believe it is a good idea to maintain a personal ethical compass, a private code of the principles and values one wishes to live by. Such a code will serve as a guideline that can be applied whenever one is confronted with moral ambiguity, allowing one to maintain both personal and organizational integrity (as the two are entwined) and steer clear of the traps laid by rapid change that can lure one into decision-making by mere expediency. Although such code of ethics will not eliminate the difficulty of decision-making, it will certainly make it easier. It will enable us reach coherent decisions based on a clear value system, allowing the organization to be consistent and base its growth on a sound, ethical foundation. The leader of such an organization can create an environment that supports its employees, appreciates them as people (thereby getting their best ideas and work), while building a brand that consumers and clients perceive as authentic, one whose aspirations go beyond merely maximizing profits. And this makes good business sense. According to a Nielsen survey of 30,000 consumers in 60 countries, a “commitment to social and environmental responsibility is surpassing some of the more traditional influences for many consumers. Brands that fail to take this into account will likely fall behind.”
Cheap ideas, apparent benefits
And speaking of good business, for years Wells Fargo was lauded for its expertise in selling innovative financial products to its customers without falling prey to some of the excesses that led to the global financial meltdown of 2007 – 2008. In relation to American banks its size, Wells Fargo survived and thrived while other similar institutions were going bankrupt or being bailed out by the federal government and U.S. taxpayers. However, this past February, the U.S. Federal Reserve hit Wells Fargo for a pattern of misbehavior including deceiving customers by opening fake accounts in their names (without their knowledge) and forcing others to purchase auto insurance policies they didn’t need. While this undoubtedly helped certain Wells Fargo managers meet their short-term revenue goals, it broke faith with their customers.
The Fed’s punishment included denying Wells Fargo the right to expand its retail business (or open new branches), or in any way add to its 2017 balance sheet. In other words, the bank’s growth was stopped dead in its tracks. (The market responded accordingly by punishing the bank’s stock.) The Fed also insisted that four directors on the bank’s 16-person board step down, charging the board as a whole – indeed, Wells Fargo’s entirely hierarchy – with lax oversight. It was a remarkable, unprecedented, and very public dressing down.
We live in a time when customer opinion, brand confidence and loyalty are invaluable – things to be built up by expending huge amounts of resources and effort – and not to be squandered by chasing short-term gains at the cost of assuming long-term reputational risk. But today’s leaders are often caught between financial objectives, spreadsheets and shareholder expectations on one hand and, on the other, empowered customers who can post their experiences on the internet, reaching millions in moments. Customers may forgive a slip-up; they will not forgive a pattern of shady dealing that shatters institutional credibility, as it has at Wells Fargo.
The criticality of credibility
This example highlights another problem. Increasingly, today’s leaders operate in public view. Indeed, having the media put them on a pedestal may well be an integral part of a company’s strategy. Companies want and need attention – from their investors and customers – and use multiple channels to get it, including both conventional and electronic media. Today, effective communication is worth its weight in gold. However, operating so publicly can be a double-edged sword. Customer attention spans are short. In pursuit of advertising and ratings (they go together), the media is driven to simplify messages while looking for whatever will attract the most eyeballs. And as every journalist knows, bad news sells.
To protect the good name of an organization in this chaotic, fast-moving and hyper-competitive media environment, leaders should adhere to a clearly articulated value system that is more than a jerry-built media strategy. It is essential to be consistent and credible at all levels. PR efforts will be useless unless business partners and employees ensure that the company message is backed up by actions that reflect it: that leaders practice what they preach as they go about the day-to-day business of their organizations. Credibility in the backbone of business, and business leaders need to align their actions with the image the business projects.
When writing about artificial intelligence, I have repeatedly noted its great potential for good. I have often expressed my belief that technological progress, despite some immediate and unavoidable individual and social disruptions, ultimately will benefit us all. However, the artificial intelligence era will not make resolving ethical issues any simpler. Customers, citizens, people are understandably (if sometimes irrationally) anxious about new technologies. A smart home filled with electronics, battlefield drones, widely implemented facial recognition systems for crowd control, robots replacing employees, and machine-generated news all make for a world of great ethical complexity. One challenge for today’s technology leaders is make the case for progress, even when it is initially disruptive or worrisome. However, modern technological systems are not immune to prejudice and superstition.
For instance, imagine algorithms used to predict behaviors by facial image analysis. The algorithms that use such data could influence lending, legal and social decisions; in other words, algorithms could decide an individual’s future success, or lack of it. As the leader of an organization that offers technological solutions, I must bear in mind that although my programmers are unbiased, the technologies they create may fail to reflect that, or be hijacked by others and used for unethical purposes. It is the role and ethical duty of leaders to be aware of such mechanisms and ensure that their colleagues and employees are aware of them, too. This will require not rigid instruments of persuasion, but rather open debate on what is in the best interest not just of the company but also the customer and, ultimately, society at large.
The essential human factor
This may sound paradoxical, but as technologies get smarter the role of people in leadership gets more important. Their self-awareness, courage and ability to ask questions will become more critical to preserving the humanity of the technology we use. We live on the edge of great change, and leaders must remain open, even to criticism. Enabling the free flow of ideas, being open to discussion and debate, demonstrates respect for others and provides a guardrail that preserves the values essential to our humanness in the face of increasing automation and roboticization. Personally, I do all I can as a leader to ensure that honesty, respect for others, social engagement and openness to dialogue guides my actions.
I believe that a leadership position must be earned. One works for it by adhering to one’s principles and values. Winning a title – president, director, board member – means little, and it does not make one a leader. Living and working as an ethical, thoughtful human makes a leader, and is essential to organizational success.