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“Being an ethical business and being a successful one are not opposites. They are two sides of the same coin” Richard Branson. (Branson, R. 2016)

What Branson is saying is that in order to be successful, you don’t have to be underhanded and cheat as you strive to profiteer. The banking royal commission is most recent event where its been identified that the banks have put their own gain in front of customers. A sticking point for me was the audacity to continue to charge services to members that had passed away. Absolutely unethical!

Rasheed Ogunlaru sums it up best for me. “Funny how money speaks even more loudly than morals in this beautiful, superficial material world.” (Ogunlaru, n.d.)

The “big four” have the lions share in the banking sector and market a promise to serve you well. Commonwealth bank starts to infiltrate at school age with the dollar mite accounts and news articles show that Australians are losing billions of dollars to the banks because they are to lazy to  investigate how to switch on the premise that they believe it’s too hard. (Della Bosca, L. 2015)

Government regulation, laws & guidelines have been implemented over the years to reign in the banks for their charges and fees that have led to super profits that benefit banks and shareholders. Do the banks have account holders or shareholders on the forefront of their minds? Its evident during this commission what the answer is and has highlighted how unethical the banking sector is in Australia.

Leaders in these organisations need to strive for ethical enhancement of their practices even if they prove unpopular in the face of profits. The everyday person should not have to rely on royal commissions to make sure companies are striving to assist the communities they service.

References -

Branson, R. (2016). A good business ethic. Retrieved from https://www.virgin.com/richard-branson/good-business-ethic

Ogunlaru, R. (n.d.) Retrieved from https://www.goodreads.com/quotes/8735614-funny-how-money-speaks-even-more-loudly-than-morals-in

Della Bosca, L.(2015). Aussies losing Billions to “lazy tax”. Retrieved from https://www.yourlifechoices.com.au/news/14918/20151015/aussies-losing-billions-to-lazy-tax

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“Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.” – Harry S. Truman

We are living in a time where there has been so much instability in our Government, leading to a lack of confidence from the community in those who are running our country. In a time where news moves incredibly fast, it is more important than ever for people in leadership roles to truly understand the impact of their choices, and the responsibility they hold to make the changes required for this country to progress.  Not only for large corporate entities to be held accountable for their practices, but for policies that ensure all Australian’s have the opportunity to feel as though they have the prospect to not only thrive and succeed, but to live their life to the same standard as their fellow Australian, regardless of their geographical location, their age, gender or ethnicity.

The following Ted Talk resonated with me as it got me thinking more about the possibility that we can all make conscious choices to make a difference, not just in our personal life, that this is also possible in business.  Ethical choices can be made without it having an impact on the bottom line.  We need more of this kind of thinking and a lot more of the conversations!

https://www.ted.com/talks/audrey_choi_how_to_make_a_profit_while_making_a_difference?language=en

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Enron and Arthur Andersen
This case is about Enron, the Energy Company that its auditing work was handled by one of the biggest top five accounting firms in the world known as Arthur Andersen. The Enron case is considered as one of the biggest fraud scandals in the United States and in the world which lead to a loss to the share market of more than 6 billion and thousands of people ended up losing their jobs.

The company with its auditors intentionally perpetrated a scheme to mislead their shareholders and investors about Enron’s true financial position and performance at the time. The idea was to make complex transactions and reporting false earnings to continuously increase share price and attract more investors. This made Enron standout in the market compared to its competitions.

The responsible employees including the executive were found guilty of obstructing justice and one of the top executive known as Kenneth Lay stated that the court decision sends a very dangerous message for CEO, they are basically making an innocent act criminal”, he said.

Lay believes with the scandal that happened within the organisation, his position as an executive had no involvement with such act of crime. When you’re in a position to make decisions that only serve for your interest and not the responsible stakeholders it gives an impression of selfishness and unethical practices that has been ongoing within the two responsible organisations and its stakeholders.

The most relevant quote from a philosophy for such case is a recent one from Michelle Obama

“We learned about honesty and integrity - that the truth matters... that you don't take shortcuts or play by your own set of rules... and success doesn't count unless you earn it fair and square.”

This one refers to the importance of integrity in the society and how such practice should be embedded with our everyday work and what we do.  Enron and Arthur Andersen had to shred thousands of documentation to eliminate any evidence of the ongoing unethical practices they were involved with and therefore the truth.  People that occupy high positions and have much power should also be aware with the responsibility they have to perform and the expectation of the public.

Reference

Arthur Andersen return 12 years after Enron scandal.(2019, March 15). The Telegraph. Retrieved from https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11069713/Arthur-Andersen-returns-12-years-after-Enron-scandal.html

Integrity quotes from Brainy Quotes.(2017, September 29). Retrieved from https://www.brainyquote.com/quotes/michelle_obama_449071?src=t_integrity

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Quote from Jack Ma, Founder and Executive Chairman from Alibaba:

“Help young people.  Help small guys.  Because small guys will be big.  Young people will have the seeds you bury in their minds, and when they grow up, they will change the world.”

(“Famous quotes from 12 of the world’s top business leaders and CEOs,” 2017)

The above comment from Jack Ma is an insight to his back ground.  Today he is a successful business leader who co-founded the Alibaba Group, a large multinational technology corporation.  Growing up, Ma lived in isolated communist China and lived a underprivileged upbringing with meager opportunities.  (“The Rags-to-Riches Life Story of Alibaba Founder Jack Ma, Inc.com,” 2017)

The quote demonstrates that as a business leader, his corporations embrace an environment where they adopt an ethical stance on social responsibility in their business model.

The below Youtube link features Brooke Deterline, Corporate Director, Heroic Imagination Project.  Brook discusses the environment of how your ethics can shift and your reasoning changes so an ethical situation could be overlooked or ‘given more time’.

https://www.youtube.com/watch?v=wzicXbnmllc

At some stage a person makes a choice not to challenge and speak up about an ethical dilemma for fear of criticism.  Perhaps they should follow the advice of Aristotle;

"There is only one way to avoid criticism: do nothing, say nothing and be nothing."  Aristotle

(“Nicomachean Ethics Quotes,” 2019.)

References:

Famous quotes from 12 of the world’s top business leaders and CEOs. (2017, September 26). The Telegraph. Retrieved from https://www.telegraph.co.uk/business/2017/09/26/famous-quotes-12-worlds-top-business-leaders-ceos/profile-jack-ma/

Nicomachean Ethics Quotes. (n.d.). Retrieved March 15, 2019, from https://abrainyquote.com/tag/nicomachean-ethics/

The Rags-to-Riches Life Story of Alibaba Founder Jack Ma | Inc.com. (2017, February 3). Retrieved March 15, 2019, from https://www.inc.com/business-insider/alibaba-jack-ma-life-story.html

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The example of unethical leadership I highlight relates to the conduct of ex- ABC Chairman, Justin Milne. In 2018, Milne allegedly directed (the then) Managing Director Michelle Guthrie to fire high profile economics broadcaster, Emma Alberici. The email that Milne sent to Guthrie, allegedly stated that the government “hate her” (Alberici), and directed Guthrie to “Get rid of her” as “there is no guarantee they will lose the next election.”

This, and other allegations, appear to demonstrate a number of unethical practices from the Chair that have led to the establishment of a senate enquiry into the scandal.  As an example (and if true), this email clearly shows that Milne’s friendship with Malcolm Turnbull and allegiance to the Liberal Government, led him to abuse his power as Chairman to manipulate the MD of an organisation that is supposed to be non-partisan and independent of government.

There are many quotes that appeal to my moral philosophy of leadership but for this purpose, I have chosen the following from Chinese philosopher Lao Tzu:

A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves. —Lao Tzu

I chose this quote because it speaks to a non-hierarchical, distributed approach to leadership that I believe is the most effective in today’s fast paced, complex environments: It is also diametrically opposed to the abuse of power and position allegedly conducted by Milne, instead encouraging an inclusive approach that values and enables the strengths and contributions of others.

Raelin (2005) coined the term Leadership – As – Practice (L-A-P) as a new way of looking at leadership that challenges traditional notions of leading from the front - an emerging paradigm that views leadership as collective, concurrent, collaborative and compassionate. I think the above quote captures the spirit of L-A-P beautifully.

References

Raelin, J.A. (2005). We the Leaders: In Order to Form a Leaderful Organisation. Journal of Leadership and Organizational Studies, 12(2), 18-31.

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Ethical Leadership
Quote from Larry Page, CEO of Alphabet Inc.  “It’s important that the company be a family that people feel that they’re part of the company and that the company is like a family to them”. Larry Page stands out from other CEOs' of large organizations because of how he leads, communicates and motivates his employees. He believes that it is imperative that people have a sense of belonging in the workplace and that the company should be like a family to them. He has always been very supportive of his employees’ and also believes that treating people well is more important than making money as people are more productive when they are happy. The Company continues to build on its relationship with its employees’ by making them feel happy and empowered as well as figuring out ways to provide great opportunities for them (Lashinsky, 2012). I believe this is vital in today’s business world, every organization depends on employees’ for its success hence why leaders should create a good working environment for people so they are more motivated and committed towards the success of the company.

A quote from a philosopher that appeals to my sense of moral leadership is from an ancient Chinese philosopher Lao Zhu “To lead people walk behind them” (Tzu, n.d). I have chosen this quote because I believe it is important that leaders should train and develop their team members into great leaders. They should have the ability to inspire and empower their followers to step up, lead and take responsibility as this is a critical opportunity for them to learn and develop their leadership skills.

References:

Lashinsky, A. (2012). Larry Page: Google should be like a family. Retrieved from: http://fortune.com/2012/01/19/larry-page-google-should-be-like-a-family/

Tzu, L. (n.d). Retrieved from:  https://www.brainyquote.com/quotes/lao_tzu_165406

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So many ethical failings were uncovered during the Banking Royal Commission, but one that stands out for me is the leader who, on being directly informed of the insurance rort his bank was perpetrating, chose to ignore it. Head of CBA Ian Narev told Matt Comyn, then Head of Retail at CBA, to “temper your sense of justice” after Comyn repeatedly brought the issue to Narev’s attention (Frost, 2018). According to reports, Comyn understood this to mean he was to stop advocating for the bank’s customers, and focus on making money.

Here was an opportunity for a leader to make an ethical decision, but he instead deliberately chose to focus on profit at the expense of customers. As we saw so often in the Royal Commission, the banking leadership put shareholders – and their own bonuses – ahead of all other stakeholders, including customers.

A quote that appeals to my personal sense of moral leadership, is from Jane Addams, who is known as the ‘mother of social work’, and was a feminist activist and philosopher. In her book originally published in 1907, she wrote “for action is indeed the sole medium of expression for ethics.” (Addams, 1964, p273). It is one’s behaviour that determines if you are ethical or not, and in Narev’s case, his action to turn a blind eye to a banking practice that was causing customer hardship and exposing the bank to unnecessary risk, was a failure of ethical leadership.

References:

Addams, J. (1964). Democracy and social ethics. Cambridge, Mass.: Belknap Press of Harvard University Press.

Frost, J. (2018, November 20). Banking royal commission: CBA's Narev told Comyn to 'calm down' over junk insurance. The Australian Financial Review. Retrieved from: https://www.afr.com/business/banking-and-finance/banking-royal-commission-cbas-ian-narevs-instruction-to-matt-comyn-20181120-h183ec

Oh look, it's me!

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Being a long-term owner of a vehicle made Volkswagen AG of Germany, it was with some interest I followed the 2015 emissions testing scandal that afflicted that organisation. It was discovered that the organisation had deliberately manipulated certain vehicle software in order to deceive testing protocols in the United States. The media scrutiny was intense and the subsequent court action in the United States resulted in a $25 billion bill for restitution to consumers and authorities (Parloff, 2018).

However, despite the admission of the company to blatant wrongdoing, the CEO, Martin Winterkorn, was quoted as he stepped down from the position, following the disclosure, that he ‘had no knowledge of any cover-up’ at VW (Cremer & Bergin, 2015). Whether the CEO did or did not have any personal knowledge is, in the context of ethical leadership, a moot point. If the organisation is managed in such a way that an employee would take it upon themselves to act this way speaks about the culture of the operation. As Kiley, 2016, found when the question of why arose. Because employees “feared they would lose sales if they adhered to the rules”.

The lack of responsibility from those in the organisation that were chosen and paid to act appropriately, is an example of how an individual’s ethical and moral actions can be influenced. In this case, the deception of consumers who made purchases, in good faith, that what they had been sold, was what they were receiving.

For me, this speaks to a quote that resonated with me for my own leadership and personal practice and is applicable to the actions of the leaders of this organizational scandal.

“Real integrity is doing the right thing, knowing that nobody's going to know whether you did it or not.” – Oprah Winfrey

REFERENCES

Cremer, A. & Bergin, T. (September 2015). Fear and Respect VW’s Culture under Winterkorn.  Reuters. Retrieved from https://www.reuters.com/article/us-volkswagen-emissions-culture/fear-and-respect-vws-culture-under-winterkorn-idUSKCN0S40MT20151010

Kiley, D. (October 2015). Why VW could see a sales spike as it settles with diesel customers. Forbes. Retrieved from https://www.forbes.com/sites/davidkiley5/2016/10/25/why-vw-could-see-a-sales-spike-as-it-settles-with-diesel-customers/#57980a8226fa

Parloff, R. (February 2018). How VW Paid $25 Billion for 'Dieselgate' — and Got Off Easy. Fortune. Retrieved from http://fortune.com/2018/02/06/volkswagen-vw-emissions-scandal-penalties/

Winfrey, O. (n.d.). Retrieved from https://www.brainyquote.com/quotes/oprah_winfrey_386951

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Angela AhrendtsSenior Vice President, Apple “Everyone talks about building a relationship with your customer. I think you build one with your employees first” (Ahrendts, 2012)  I was struck by the vivid and rich conceptual portrait of a contemporary leader painted within the pages of Daft (2018). Effectiveness of a leader is measured to a large degree on the levels of trust within the workplace, the emotional and mental health of employees, and the purposefulness experienced by those who follow (Daft, 2018). 

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Angela AhrendtsSenior Vice President, Apple “Everyone talks about building a relationship with your customer. I think you build one with your employees first” (Ahrendts, 2012)  I was struck by the vivid and rich conceptual portrait of a contemporary leader painted within the pages of Daft (2018). Effectiveness of a leader is measured to a large degree on the levels of trust within the workplace, the emotional and mental health of employees, and the purposefulness experienced by those who follow (Daft, 2018). 

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The tone of leadership is immensely influential in setting the cadence of culture and defining the bounds of right and wrong within the organisation. In a 2013 interview, Tim Cook (Apple CEO) spoke to his interpretation of ethical leadership and contrasted this against the common held perception of unethical business practices such as accounting fraud and insider trading. Whilst examples, he noted they were edge cases and that on a daily basis a leader has an opportunity to act ethically and set the tone for the organisation. Tim cited simple transactional elements that culminated in an ethical leadership style:

1.       An organisations approach to environmental sustainability and its carbon footprint

2.       Its approach to supplier and labour partnerships; and

3.       The way it treats its employees.

Whilst none of these translate directly to an organisations bottom line, they do contribute largely to the modern view of organisational success defined as the Triple Bottom Line (Financial, Social and Environmental). Moreover, they are an example of leadership described by management theorist, Simon Sinek, as behaviours that create an environment where employees feel safe, that their leader has their best interests at heart, and consequently spend less time protecting themselves against internal threats and focus on productive activities. He references an organisation Barry Wehmiller, that suffered a reduction in their revenue portfolio during the global financial crisis. Rather than lay off employees as many during that period of time did, Bob Chapmen (CEO) implemented a furlough, whereby all employees were required to take four weeks’ unpaid leave in lieu of layoffs. Consequently, the business experienced increases in morale and productivity resulting in savings beyond those required to maintain operational equilibrium.

In short, whilst the discussion of ethics in an organisational context conjures images of gross malpractice, this extreme view overshadows the daily opportunity confronting a manager to lead ethically that has far greater impact on an organisation by exciting, entrusting and helping their people grow. This view of ethical leadership is one that magnifies organisational success through uniting people to give of themselves for a united cause but more importantly ensures we leave a better world than the one we found.

Tim Cook – Ethical Leadership – Leaving it better than when you found it - https://www.youtube.com/watch?v=3ygNKNaMv4c

Simon Sinek - Good leaders make people feel safe - https://www.youtube.com/watch?v=lmyZMtPVodo