Sunday Times

Ethical leadership by itself is not enough

- DEON ROSSOUW Professor Rossouw is CEO of The Ethics Institute

More than at any other time since the dawn of the new South Africa, people are agreeing that there is a clear and urgent need for ethical leadership in the country. The cost of getting us to this level of awareness has been painfully high — it took corruption on a grand scale in the public and private sectors being exposed — but at least now the wheels appear to be turning in a positive direction.

And yet, especially for those organisati­ons that have been tainted by state capture, having new leaders riding the wave of the positive momentum is simply not enough.

For example, KPMG — whose reputation has suffered grievous damage after evidence came to light of its relationsh­ip with Gupta-linked entities and its role in the infamous South African Revenue Service report — has replaced the leaders under whose watch these unethical practices occurred, and has appointed, for the first time, independen­t directors to the governing body.

The first independen­t chairman, Wiseman Nkuhlu, has made it clear that ethics will be put first in the attempt to restore the integrity of not only the firm, but also of the accounting profession. The new CEO, Nhlamulo Dlomu, also appears highly committed to leading KPMG on a new path. So the first essential leadership steps have been taken.

And indeed, Eskom and the SABC are in a similarly giddy moment, with freshly appointed leaders keen to make a difference, and nothing short of a mountain to climb ahead of them. Perhaps it isn’t a stretch to say that the entire country — holding its breath for new ANC president Cyril Ramaphosa to solve our multiple crises — is in the same situation.

Let’s be clear: ethical leadership matters. In fact, it is the most vital requiremen­t for transformi­ng organisati­ons affected by scandal and corruption into functional and reputable entities. However, there are other critical ingredient­s that cannot be ignored: standards, people, and consequenc­e management. To clarify:

The intention of building an ethical organisati­on can only be turned into reality if there is clarity about the ethical standards that will guide it. There should be no doubt — among staff, suppliers and business associates — what kind of conduct is considered acceptable, and which is not. Minimise the doubt, and you minimise the temptation to take personal benefit of that doubt. This can only be achieved through ongoing communicat­ion of, and emphasis on, clear standards;

The wrong people need to get off the bus, the right people need to get on (or remain on) the bus, and they must be in the right seats. Persons who were part of the previous shenanigan­s should be brought to book — which might mean demotion or departure, depending on their wrongdoing — while those who resisted should be retained and rewarded. In those parts of the organisati­on where competence, confidence or courage took a hit under the previous culture of corruption, vital placements of talented and committed people must be made. It is not only the ethical tone at the top that matters, but also the ethical mood in the middle, and the ethical groundswel­l on the ground; and

In most instances, organisati­ons interpret consequenc­e management in a retaliator­y manner: for example, they show “zero tolerance” to transgress­ions and transgress­ors. While it seems obvious that transgress­ions should be dealt with unambiguou­sly to prevent a recurrence, it is less obvious that such an approach can cultivate a culture of fear-based compliance, where the motivation to uphold standards is purely a desire not to be punished. Positive recognitio­n of persons who adhere to the organisati­on’s ethical standards can be far more effective in building a values-based ethical culture.

It starts with leadership, certainly, but the hard work — embedding ethical standards, getting the team right and reinforcin­g through consequenc­es — will determine the extent to which those leaders’ hopes of restoring organisati­onal integrity can be achieved.

Standards, people, and consequenc­e management are critical ingredient­s in transformi­ng

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