ethical by example

January 13, 2020

illustration by swapnil redkar

The line between right and wrong is never static, subtly shifting in today’s VUCA landscape. In these ethically challenging times, leaders have to serve as the moral compass for their organization. A robust code of ethics is vital for the long-term health of a business, backed by strong enforcement at every level of the hierarchy.

There is a famous story attributed to Mahatma Gandhi. A woman brought her young son to Gandhi and requested him to advise the boy to stop eating sugar. She was worried that too much sugar was harmful for his health. But instead of speaking to the boy, Gandhi turned to the woman and asked her to come back after two weeks. When the woman returned with her son, Gandhi took the boy aside and told him gently not to eat sugar, and also explained why. Perplexed, she asked Gandhi why he had not spoken to the boy earlier. The Mahatma replied, “When you came to me the first time, I was in the habit of eating sugar myself. I had to give up sugar first, before I could advise your son to do so.”

This anecdote is a shining example of integrity, honesty, and humility—three fundamental values that Gandhi lived by all his life. He was deeply committed to doing the right thing for the right reason, no matter what the circumstances. As a popular leader, he knew that he had to be true to himself before he could be true to the millions he was leading to freedom.

Integrity, as espoused by Gandhi, refers to uncompromising honesty and strict adherence to moral and ethical principles, in the face of adversity and especially when ‘no one is watching’. It means all your words and actions are in sync with your inner values and beliefs, regardless of whether those attributes prove detrimental to you and those around you. You do what you think and know to be right.

While integrity requires no special talent or skill, it is the single most important leadership attribute in any company or organization; more so, in these times of increasing fraud, corruption, and malpractice. Unflinching integrity at the top of corporate leadership—C-suite leaders such as CEOs and CFOs—can go a long way in earning the trust and loyalty of employees, stakeholders, and customers; increasing compliance; and improving business and financial performance.

While integrity requires no special talent or skill, it is the single most important leadership attribute in any company or organization.

Mohammed Sajid Khan
(Head of International Development,
Association of Chartered Certified
Accountants (ACCA))

Besides, it is also a universal fact that leaders who demonstrate high personal and professional integrity build effective relations with their employees, keep attrition to a minimum, attract new talent, and create a superior workforce. They are looked upon as trustworthy, reliable, and accountable for their actions.

Heads of various professions, including accountancy, have a critical role to play in ensuring that their companies adhere to the highest ethical and governance standards. For example, leadership teams need to be honest about whether they are comfortable with what they know and what they are doing. They need to resist going along with a project or task if they have any doubts about it, because in the event there are problems later on, they may find themselves in trouble. In such cases, it is better to listen to your conscience and reject a task, rather than risk tarnishing your honor and reputation, and ruining your career.

Strong leadership can set the tone for integrity and ethical behavior at the top. Senior management must promote ethical behavior in the organization by creating, implementing, and enforcing a code of ethics and professional conduct for everyone, from C-suite down to the junior-most executives. Once the ethics code is in place, the leadership team should raise awareness about the repercussions of breaking the code through a series of training programs. Organizations and leaders can leverage new technologies that provide better data insights to improve the efficiency and effectiveness of these programs from an integrity perspective.

Following this, the leadership must implement a ‘speak-up’ policy to ensure anonymity of those employees who report unethical practices, inappropriate behavior, and illegal activities in the organization. Here, it is equally important for leaders to ensure that the whistleblowers are not under pressure from their immediate superiors to withdraw complaints.

Significantly, CFOs, by nature of their position in the organization, accord higher importance to integrity and ethics than other senior leaders. This is primarily because they are responsible for the organization’s financial management, encompassing financial planning, risk management, record-keeping, data analysis, and financial reporting. CFOs are also more inclined to perform these essential tasks with the highest level of transparency
and accountability.

Many professions consider integrity to be a true and inevitable part of leadership, particularly in the digital age. A global survey of ‘attitudes to ethics’ carried out by Association of Chartered Certified Accountants (ACCA) among over 10,000 professional accountants (including trainees) and over 500 senior managers revealed that a majority of the accountants were of the view that strong ethical principles and behavior would become even more important in the digital age than it is now—a sentiment echoed by a similar proportion of C-suite executives.
In other words, technology will have an impact on shaping ethics in an organization, but it will not change the need for leaders to be ethical.

I believe that the long-term benefits of integrity within the organization and among the leadership far outweigh the short-term consequences of a dishonest act or unethical conduct. As Andrew Gordon, E&Y’s Global Leader for Fraud Investigation and Dispute Service, rightly observed in his foreword to the 15th Global Fraud Survey 2018, “Doing the wrong thing is a lost opportunity to do the
right thing.”

Indeed, the demonstration of integrity in the workplace not only prevents unethical behavior and the ensuing scrutiny and penalty, it also leads to the success of a business and enhances the perception of the organization in the eyes of both employees and customers. As the E&Y Survey pointed out, “In a world of changing business models, the explosion of data, and increased regulation and enforcement, the integrity of an organization becomes the most important driver for ethical business.”

Leaders who carry out their duties with an exceptionally high level of integrity and business ethics bring great value to their organizations, in terms of enhancing human and financial capital, and encourage the adoption of global standards in corporate reputation and excellence. 

Leaders who carry out their duties with an exceptionally high level of integrity and business ethics bring great value to their organizations.