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Leadership Insights

Restoring Trust: Leaders and Ethical Frameworks

6 min read

An emerging moral vacuum and absence of broadly accepted ethical frameworks were key concerns for leaders attending our recent roundtables. Is there is a need for business leaders to strengthen, and in some instances, re-establish the ethical fabric within organizations through a moral code?

A dilution of moral pillars

While previous generations may have embraced an established and commonly-held moral code, societal change has blurred the lines between what was previously seen as right and wrong, opening the door to wider questions around morals and ethics. Whereas the family, and to a lesser extent political and societal positions, once offered a common moral compass on how to operate in the world, this has steadily declined. The Edelman Trust Barometer reveals a significant shift in trust toward ‘my employer’ from 2019 onwards. Business is now more trusted than NGOs, government, and the media – becoming as important as the role previously played more prominently by family and public institutions.

These developments signal a pressing need for leaders to establish and maintain a collective set of values and behaviors, underpinned by a strong moral code. Where values were previously marketing-driven ‘nice-to-haves’, they are now essential in defining and governing an organization and its employees’ integrity. This code is the foundational ingredient for long-term business success – trust.

Why ‘trust’ is needed more than ever

The Sam Bankman-Fried case became a focus of discussion at our leadership events. As founder of the now bankrupt cryptocurrency exchange FTX, he was convicted of committing one of the largest financial frauds on record, stealing $8 billion from exchange users. FTX senior members and those in associated businesses allegedly knew of his activities. If this was the case, where were the whistle blowers? What now are the consumer and employee perceptions of the sector? What impact does this have on future investment and talent accessibility?

Failure to undertake and evidence self-regulation within any sector, and against a framework which is transparent and robust, is an invitation for overregulation and government ‘big-brothering’. In the absence of corporate values, these can have adverse and even rebellious consequences.

Leaders therefore need to strike a balance between competence in their services or products and acting responsibly in line with an ethical framework, to regain consumer confidence and trust.

Trust is built upon an ‘unspoken code’

A framework needs to be established in an organization to foster trust – owning the framework and acting ethically then builds that trust. This framework comprises several pillars, including accountability, integrity, transparency, genuine responsiveness toward employees and customers’ questions and concerns, and collaborative not consensual or collusive decision making. Trust is further established by a leader’s ability to connect across the organization, breaking down generational differences, to create a unified ethical position.

Traits such as accountability, transparency, and responsiveness are part of the human leadership paradigm. Leaders who live these attributes both role-model and cultivate ethical behaviors that grow trust and are people and business affirming. Trust is proven through brave leadership and the ability to acknowledge and address disruptive dynamics that can affect the wider organization. In addition to building trust, brave leadership that stands-up and faces challenges head-on, creates a self-regulating culture, significantly de-risking the occurrence of future scandals.

Aligning individual and corporate values

Leaders can no longer assume an alignment between individual and corporate values. First, they must establish the organization’s purpose and its values. Then articulate these, along with the framework of endorsed behaviors to their leadership team, broader employee base and investors. This needs to be linked to meaningful work and value creation that goes beyond shareholder return.

Bruno Roche’s Economics of Mutuality encourages this concept and aligns with generational thinking.

This challenges organizations to think beyond ‘pure profit’, and create solutions to society’s problems in balance with creating financial value across the value chain.

This philosophy – increasingly adopted by organizations – is achieved by integrating stakeholders’ and the planet’s needs when determining appropriate earnings targets. It also demonstrates that alternative approaches to traditional thinking are emerging.

If leaders are going to live by these ethics, explicit alignment of their personal goals, motivations and behaviors is vital. This requires a comprehensive review of individual and corporate values to decide upon the common and individual goals that executives can and will emotionally invest in. Importantly, this alignment provides leaders with the confidence to uphold and stand by the organization’s values. In doing so, they help foster an ethical framework which embeds throughout the organization. With this framework in place, trust ensues.

Establishing a moral framework to act with bravery

We work with leadership teams to re-establish their ethical framework, and help them reset and role model this throughout their organization. In addition, this establishes a moral foundation upon which leaders can navigate challenges and bravely call out unethical behaviors – not just within their organization but across their sector. 



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