The Business Book

(Joyce) #1


wrong thing,” according to US
leadership expert Stephen Covey.
Faced with daily decisions about
the right way to behave, employees
have to know what “doing the right
thing” actually means. A company’s
policies covering everything from
safety to accepting gifts from
suppliers exist to ensure that people
understand how they are expected
to conduct business appropriately.

Driven from the top
Companies that prioritize an ethical
culture often select employees for
their values as much as their skills,
and ensure that new employees are
made aware of their role and
responsibilities, and also how things
are done in the organization. Such
companies are eager to ensure that
new staff both hears the company’s
values and sees them affirmed in the
actions of people around them.
Such a culture has to be driven
from the top. US economist Milton
Friedman famously said that the
social responsibility of business is
to increase its profits “subject to

the limits of law” and “rules of the
game” that ensure “open and free
competition without deception or
fraud.” However, the 2007–08
financial crisis showed clearly that
codes, laws, and regulations are not
enough to maintain ethical business
standards. Leaders with personal
integrity are vital to enact and
encourage ethical behavior
throughout an organization. By
espousing the company’s principles
at every opportunity and at every
level, leaders can continually
demonstrate their importance
within organizational culture.
In Principle-Centered Leadership,
Stephen Covey describes trust,
respect, integrity, honesty, fairness,
equity, justice, and compassion as
the “laws of the universe,” classing
them as essential values for ethical
leaders. Covey is best known for his
book The 7 Habits of Highly
Effective People, in which he
proposed that ineffective people try
to manage their time around
priorities, whereas effective people
lead their lives and manage their


Fashion businesses use materials
and labor from all around the world.
Consumers increasingly demand
transparency about goods and policies,
so they can buy with a clear conscience.

relationships according to principles.
These natural laws and governing
values are universally valid.

Ethical leadership
Typically, leaders in ethical
organizations are not domineering.
They are likely to have an open,
engaging style and to be good
listeners, able to tune in to issues
across the business. The company
they create will have a clear
structure with well-defined roles and
responsibilities, be transparent,
with promotion based on merit, and
a well-communicated strategy, so
that employees know what they
have to do and where they fit in.
Leaders with personal integrity
are a powerful influence on others.
Numerous studies have shown
that good people can make bad
decisions when acting in groups,
particularly in stressful situations.
To avoid the risk of unethical
“groupthink,” the CEO has to set
the right tone for everyone in the
organization. Effective governance
is critical, and relies on good

We’re pioneers and
we want to show that
this model works, that it
can become self-sustaining.
Ali Hewson
Irish ethical businesswoman (1961–)
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