The Business Book

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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

CREATING AN ETHICAL CULTURE

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–)