The Demand for Leaders of High Integrity
Over the last several months, there's been a rash of magazine articles questioning both the ethics and abilities of some of today's corporate leaders. The Economist magazine refers to "fallen idols," Slate magazine writes about "the new business villains," and BusinessWeek editorializes about an "ethics epidemic." What began with the Enron and Arthur Andersen debacle threatens to tar many leaders with the same brush.
Barely a week passes without coverage of alleged corporate misdeeds – insider trading, the cooking of financial books or news that firms were not nearly as sound as many, including most employees, believed. In this charged atmosphere, where the scapegoating of managers may sometimes occur, many believe that cases such as Enron's are just the tip of the iceberg. About three quarters of Fortune 1000 executives surveyed think there are "other Enrons out there," according to search firm Christian & Timbers. Respondents were asked whether they believed that there are other CEOs and/or boards of directors who are deceiving their stockholders. Fully 76% of 492 respondents said they think that there are other cases in which both CEOs and boards are engaged in such deceptions, 18% believe there are CEOs who are committing such acts, and 3% said that boards are deceiving stockholders.
Similarly, employee confidence in leadership is diminishing. According to an April 2002 Wall Street Journal/NBC phone survey, 57% of 1,005 respondents believe standards and values of corporate leaders and executives have diminished over the past two decades. A similar study conducted four years ago found that only 42% thought ideals had slipped over a 20-year period. These types of doubts about the values of today's business leaders could have a serious impact not only on financial markets and stockholder confidence but on employee morale, retention, productivity and loyalty.
So just how are leaders demonstrating that they're worthy of trust and avoiding practices that would jeopardize the organization's financial well-being? Clear, factual business communication is key. According to a recent survey by the Society of Financial Service Professionals and Walker Information, over 80% of polled employees and 90% of employers rated deceptive statements to employees or customers as the most serious ethics violations.
Some opinion-makers maintain that top leaders also must change the corporate culture through better leadership development. A recent BusinessWeek article asserts, "CEOs must actively encourage dissent among senior managers by creating decision-making processes, reporting relationships, and incentives that encourage opposing viewpoints. At too many companies, the performance review system encourages a 'yes-man culture' that subverts the organization's checks and balances. By advocating dissent, top executives can create a climate where wrongdoing will not go unchallenged."
Social responsibility is another area in which leaders may improve their companies' image among employees and the general public. Johnson & Johnson, for example, ranked first among firms recognized for social responsibility, according to the most recent survey by Harris Interactive and research firm Reputation Institute. Following the Sept. 11th terrorist attacks, the company covered costs for a special issue of Newsweek, in which all ad space was made available to nonprofit organizations. Investor and employee queries about the organization's actions to assist survivors prompted Johnson & Johnson to issue a media advisory listing its donations of cash and products.
Yet some experts caution that even the best intentions may be misinterpreted. After the attacks, some companies that opened their pocketbooks and publicized their donations were criticized for opportunism. Yet others who gave a great deal, but quietly, were viewed as uncaring. For this reason, it may be difficult for a firm to balance the size or type of donation it wishes to make as well as how best to announce the action to workers, investors and the general public. Presenting the firm as a truthful, straightforward organization and one that is caring in a social sense may do much to strengthen employee and investor confidence.
More information about the study by Christian & Timbers is available online at
http://www.i4cp.com/NDdz1P.
A listing of all 60 companies recognized for their social responsibility is available from Harris Interactive at
http://www.i4cp.com/mYaVoz.
An article about whether leaders are "falling off their pedestals" is at
http://www.i4cp.com/X7mpUE
Barely a week passes without coverage of alleged corporate misdeeds – insider trading, the cooking of financial books or news that firms were not nearly as sound as many, including most employees, believed. In this charged atmosphere, where the scapegoating of managers may sometimes occur, many believe that cases such as Enron's are just the tip of the iceberg. About three quarters of Fortune 1000 executives surveyed think there are "other Enrons out there," according to search firm Christian & Timbers. Respondents were asked whether they believed that there are other CEOs and/or boards of directors who are deceiving their stockholders. Fully 76% of 492 respondents said they think that there are other cases in which both CEOs and boards are engaged in such deceptions, 18% believe there are CEOs who are committing such acts, and 3% said that boards are deceiving stockholders.
Similarly, employee confidence in leadership is diminishing. According to an April 2002 Wall Street Journal/NBC phone survey, 57% of 1,005 respondents believe standards and values of corporate leaders and executives have diminished over the past two decades. A similar study conducted four years ago found that only 42% thought ideals had slipped over a 20-year period. These types of doubts about the values of today's business leaders could have a serious impact not only on financial markets and stockholder confidence but on employee morale, retention, productivity and loyalty.
So just how are leaders demonstrating that they're worthy of trust and avoiding practices that would jeopardize the organization's financial well-being? Clear, factual business communication is key. According to a recent survey by the Society of Financial Service Professionals and Walker Information, over 80% of polled employees and 90% of employers rated deceptive statements to employees or customers as the most serious ethics violations.
Some opinion-makers maintain that top leaders also must change the corporate culture through better leadership development. A recent BusinessWeek article asserts, "CEOs must actively encourage dissent among senior managers by creating decision-making processes, reporting relationships, and incentives that encourage opposing viewpoints. At too many companies, the performance review system encourages a 'yes-man culture' that subverts the organization's checks and balances. By advocating dissent, top executives can create a climate where wrongdoing will not go unchallenged."
Social responsibility is another area in which leaders may improve their companies' image among employees and the general public. Johnson & Johnson, for example, ranked first among firms recognized for social responsibility, according to the most recent survey by Harris Interactive and research firm Reputation Institute. Following the Sept. 11th terrorist attacks, the company covered costs for a special issue of Newsweek, in which all ad space was made available to nonprofit organizations. Investor and employee queries about the organization's actions to assist survivors prompted Johnson & Johnson to issue a media advisory listing its donations of cash and products.
Yet some experts caution that even the best intentions may be misinterpreted. After the attacks, some companies that opened their pocketbooks and publicized their donations were criticized for opportunism. Yet others who gave a great deal, but quietly, were viewed as uncaring. For this reason, it may be difficult for a firm to balance the size or type of donation it wishes to make as well as how best to announce the action to workers, investors and the general public. Presenting the firm as a truthful, straightforward organization and one that is caring in a social sense may do much to strengthen employee and investor confidence.
More information about the study by Christian & Timbers is available online at
http://www.i4cp.com/NDdz1P.
A listing of all 60 companies recognized for their social responsibility is available from Harris Interactive at
http://www.i4cp.com/mYaVoz.
An article about whether leaders are "falling off their pedestals" is at
http://www.i4cp.com/X7mpUE