22 Dec 2016 15:19 IST

‘Ethical leadership can inspire employee engagement’

Leadership consultant Andrew Leigh says Indian companies falter on transparency, but score on other counts

In 1989, Andrew Leigh co-founded Maynard Leigh Associates, a consultancy that does leadership development programmes. After writing a dozen books on leadership issues, Leigh got interested in the subject of integrity. He conducted a workshop on it and found that quite a few people were drawn to it. He has since then been focussing his leadership knowledge on helping companies develop ethical behaviour, which he insists makes sound business sense. Excerpts from an interview:

It’s been demonstrated that issues like sustainability and gender diversity translate into business gains. Does ethical leadership also ‘pay’?

A study done by HBR shows that employee engagement is directly affected by leaders who are ethically oriented. So are profits. If you look at companies that are making money over a long period of time, they are all ethical companies. Does ethics pay? Unambiguously yes. If you don’t have engaged employees, you don’t have performance, and performance is directly related to profits.

How do you build an ethical company?

It starts with having a chief executive who is willing to set the tone. You have to have a leader who is in favour of an ethical approach. It is very hard to do it bottom-up — though, of course, now the thinking is that the middle is what operationalises it. But you need a leader to drive it. And then there should be a steady development programme to promote this approach. You don’t have to necessarily call it ethical. It can be about integrity or quality. Some companies expect their teams to talk about ethical dilemmas every month. Other companies do it once a year. But to inculcate an ethical approach, you have got to do it all the time. And if you don’t have a plan, you won’t get there. I love the Chinese phrase: if you don’t know where you are going, any road will do. So you have to have a commitment to it and know where you are heading.

What does a leader have to do to drive ethical behaviour?

The five pillars of ethical leadersip are commitment, relevance, positive value, influence, and means — not ends. Ethical leaders also need to invest a lot of time in strategy, in working out how to get there. They don’t hand it over to consultants. It might make a lot of money for McKinsey & Co, but it won’t make a jot of difference to the company. Change has to come from within. You can get guidance on strategy, but you cannot hand it over to a consultant.

What role does HR have in this?

HR has traditionally been the holder of ethics in the company. But it’s complete rubbish. They are just one of many departments that ought to be involved. They have a particular emphasis on people, and ethics involves a deep relationship with people. But all HR can do is to provide a good route to the chief executive. Much of HR sadly has been stuck in very old roles of the past. Their process-driven approach has stopped them from asking the fundamental things they should be doing.

In a country like India, where it’s not easy to do business, is ethical leadership more difficult?

There are plenty of good companies in India that are ethical. When you look at certain measures like transparency, India does not come out very well. But against some of the other measures, such as trust among employees, they score well. They have not got there by chance, they got there by integrity.

What are the various measures?

There is a whole list: transparency, employee trust, culture, values, reputation, governance and so on. Ethical leadership is about standards of behaviour: what’s good, what’s bad, what’s acceptable, what’s not. Which is why I say Prime Minister Narendra Modi’s decision on demonetisation was an unethical decision because the government is struggling to justify it. There was no apparent use of an ethical filter for the decision.

What are the ethical filters that a leader should use for big decisions?

Simple question like “Would you do it again? How would you feel about the horror stories as a result of your decision?” This is how you test it out: by asking a set of questions.