The Issue of Images and Perceptions in Corporate Environment

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In today’s corporate environment the issue of images and perceptions are becoming more and more important. The top most executives have to perform their organization leadership tacks with a high degree of integrity.

Over the past few years we have seen the public and investor confidence fall due to poor leadership styles that don’t take the issue of ethics seriously. Some of the corporate debacles include Enron, Adelphia, WorldCom and Tyco just to mention a few. According Hackmam & Johnson (2000 , 450) “it is the work of organizational members including executives to make sure that organizational goal and objectives are achieved in such a way that serves their own interests and the interests of the society at large.”

Many cases of unethical leadership arise as a source of conflict arise when there lacks an equilibrium between shareholder interest which is profitability, self interests, employee interests which often include perks and stock, options and the interest of the society. Ethics in business is a wide topic that may cover greed, neglect of duties, breach of confidentiality ,favoritism, by standing and failure to intervene when fouls are committed ,unfairness, unkindness, and harassment just to mention a few.

Earlier in the 1990’s the topic of ethics and corporate social responsibility was not a very hot topic, but in todays post Enron environment it has become mandatory that top executives who are leaders of their various corporate companies to engage themselves more in ethical styles of leadership.

The dangers that are related to cases that amount to lack of integrity are not taken lightly because they result to breach of trust of the public and dented investor confidence. Brown (2005 96) insists that leadership in ethics is all rounded and must cover the civic, environmental, organizational, interpersonal and cultural. According to Brown integrity is not integrity unless is consistent, purposeful, rational and all inclusive.

In today’s business environment businesses strive to exhibit top class ethical behavior; this is mainly because of pressure from the government, shareholders and stakeholders. With the emergence of indices such as the FTSE4GOOD companies are merging the goals of their social responsibility charters together with all other organizational goals.

Top executives are setting strategies that advocate for corporate citizenship amongst their employees communicating goals of these programs, motivating employees to stick to them. As situations in the environment changes leaders should also change with them according to the situation and the context.

The pressure to perform financially has lead to cooking of books and using of unorthodox accounting techniques that have lead to recent corporate debacles. By taking a look at the Rigas family owners of Adelphia which comprised of a father and two sons who were top executives in one of the largest cable companies in the world can paint a clear picture of what is considered ethical or not.

The Ethisphere Institute published on 25/04/2010 its fourth annual list of what are considered the top most ethical organizations in the world today, this survey took a look at corporate citizenship, corporate governance, innovation towards public well being, integrity track record and reputation, and internal systems of ethics/ethics compliance programmes. On the other hand Xerox has exhibited exemplary leadership in ethics under their Anne M. Mulcahy who was their C.E.O 2001-2009.

The Rigas family is well known to be amongst the biggest violators of ethics in corporate America, these executives are a symbol of poor ethical leadership and gross incompetence. It seems that the Rigas were unable to distinguish between what family was owned and what was publicly owned. Sashkin & Sashkin (2003, 124) Ethics provide a foundation which enables an organization/corporate entity broaden their priorities far beyond the classical aims of profit maximization and shareholder enrichment.

Therefore ethical matters have a big influence on other public sector organization and stakeholders for whom the issue of quality, cost management, honesty and accountability is vital. There may be no absolute rules, standards and controls that govern ethical leadership but Rigas went clearly overboard.

John Rigas founder for Adelphia was jailed for 15 years together with his sons were taken to court and found guilty of wire and securities fraud, tax evasion and concealing financial statements. It is estimated that $ 3.1 billion was unaccounted for and that $2.3 billion in liabilities was concealed.

The family further went ahead during their reign at Adelphia to purchase personal land, golf courses, and artwork and executive jets beside huge personal expenditure using funds from Adelphia. It seems they were unable to distinguish what belonged to the shareholders and what belonged to them as a family.

According to Rest and Colleague’s model Yunus & Webber (2007 56) in order to be ethical leaders must first of all be able to take look and analyze their actions by simulating the consequences of their behavior to come to a conclusion whether there is likely to be a negative or positive outcome to the relevant parties.

This quality is known as moral sensitivity and is the first element in Rests & Colleague’s model, the second element is moral judgment which allows a leader the ability to choose between right and wrong, After leaders make a choice the next element is moral motivation which in turn tries to explain what inspires the action and finally the implementation of the action through ethical means takes place (Hackman & Johnson, 2000, p.337).

Diagram 1. Rest’s Model of Ethical Interpersonal Communication

According to the model which is linear, a leader should go through each step at a time and when an issue arises then he/she should perform more analysis and consult his/her peers. According to the model it is therefore correct to conclude that John Rigas had a low moral sensitivity that lead to his despicable unethical actions.

His actions did not only lead to financial downfall of Adelphia and loses to shareholders but also to unemployment of many workers, regulatory organizations such as the securities exchange commission were blamed together with other public oversight companies for failing to detect this problem early. Furthermore the trust of the public and investor confidence was weakened within America. (Show, 2004 89)

On the other hand Xerox through its C.E.O Anne M. Mulcahy who was the company’s chief executive between 2001-2009.Is a company which has shown exemplary standards as far as the issue of leadership in ethics is concerned.

The Ethisphere Institute named Xerox as the most ethical company in its second annual companies list in June 2008.Anne Mulcahy is the type of leader who inspires and transforms the organization by creating strategy that tries to strike a middle ground between financial goals and social goals of an organization.

Upon her entry as C.E.O Anne Mulcahy was preceded by many instances of unethical behavior in Xerox but as a determined leader she used her unique traits to turn the organization around. Using her charismatic and referent power she went ahead to marshal organizational support to insist upon good ethics from all employees by creating an ethics and compliance program that has brought Xerox to where it is today just as suggested by Ciulla (2004 148-175).

The ethics and compliance program laid a code of conduct for business, for finance employees, board and directors and all other employees. It is therefore as a result of the good leadership style, traits that assigns tasks, and identifies individual needs and incorporates them into overall strategy that has assisted in outstanding ethics within the organization. (Carmichael, 2007 36)

Inter-departmental systems of communication that consisted of memos, emails and the web were introduced to handle complaints, suggestions and communicate the leadership’s intent towards ethics. Furthermore mandatory employee training of all employees, senior management and officers was made part of company policy thus bringing an ethical culture to Xerox.

Introduction of systems that have resulted to ‘greening the supply chain’ and reverse logistics which insist on recycling and use of sustainable resources as well as calling back and replacing equipment that are considered unsuitable to the environment are some of the good ethics in Xerox.

There exist many challenges in the field of ethics, some of which business executives hiding behind the law instead of knowing that ethics and the law are not the same thing Ciulla, (2004 30).

There are plenty of business practices that are legal but at the same time unethical for example greed ,therefore organizations should implement leadership that will come up with various means of drawing a clear line of separating the two. The difference amongst personalities and different cultural diversities within the organization creates a challenge towards achieving ethical goals. Individuals vary from each other and therefore what is unethical to one person may be considered ethical to another individual.

Therefore in summary ethics can only be a success if it is in the heart of leadership, without executives setting a clear path and leading from the front as far as ethics is concerned then, chances of failure increase.

References

Brown, MT, 2005, Corporate Integrity: rethinking organizational ethics and leadership, Cambridge University Press, New York.

Carmichael, S, 2007, Business ethics: the new bottom line, Demos, London.

Ciulla, JB, (2004), Ethics the heart of leadership, Praeger Publishers, 88 west road Westport.

Hackman, M, Z, & Johnson,C,E (2000), 3^rd edn, Leadership: A communication perspective,Waveland Press Inc,Illinois.

Sashkin M, & Sashkin GM, 2003, Leadership that matters: the critical factors for making a difference in peoples’ lives, Marshall Berrett Koehler Publishers Inc, San Francisco.

Show, WH, (2004) Business Ethics, 5th edn, Thompson/Wadswort, London.

Yunus, M, & Webber, (2007), Creating a world without poverty: social business and the future of capitalism, PublicAffairs, New York.

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The Issue of Images and Perceptions in Corporate Environment

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