Ethical leadership by itself is not enough
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.
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Standards, people, and consequence management are critical ingredients in transforming
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