Practicing Principle-Based Leadership

By John A. Haas
Management Strategies Group

Increasingly, executives' focus has been on producing the bottom-line results they believe stakeholders expect. This has led to a short-term focus and creative and, at times, marginally legal and ethical accounting and reporting practices. Enron, Tyco, HealthSouth, Putnam and apparent complicity by such presumed "neutral parties" as Arthur Anderson, are well-publicized examples. I'm sure there are many others. Naturally, investors have become skeptical about information their companies report and their business practices.

Responses include increasing SEC and other governmental oversight and passage of the Sarbanes-Oxley Act, etc. intended to discourage, catch and prosecute offenders. Perhaps there's another way-to restore the sense of fair competition and ethical practices that used to be hallmarks of US business practice.

The Means to the Ends Matter

Principle-based leadership is about stating and practicing a set of values and beliefs that an organization expects all its employees to follow. These serve as a "moral compass," that define the organization's culture and serve as a guide for all policies, procedures, practices, individual judgments and actions. It also has to do with:

  • · Maintaining a sense of direction in light of constant and rapid changes
  • · Empowering people to solve problems and seize opportunities
  • · Encouraging people act according to their core values, principles and sense of ethics in all they do and in all their relationships
  • · Rewarding behavior that exemplifies these high standards and quickly correcting behavior that doesn't
  • · Valuing diversity in the workforce; practicing inclusionary behavior
  • · Treating people with respect, whether inside or external to the organization

How Some Others Frame the Concept

In his landmark book Leadership is an Art, former Herman Miller Chairman Max DePree asks us to think about a leader as steward of assets (e.g. financial health, quality of goods and services and reputation). They also are stewards of legacy. They "owe their institutions a value system which leads to the principles and standards that guide the practices of people in the institution. The measure of leadership is not the quality of the head, but the tone of the body."

"If you focus on principles, you empower everyone to act without constant monitoring, evaluating, correcting or controlling." Stephen Covey in Principle-Centered Leadership.

"Businesses are not just economic machines, but social systems. Integrity goes all the way across and through an organization, but it can be no better than the integrity at the top." Former EMC2 Chairman/CEO Michael Ruettgers in a speech for the Raytheon Lectureship in Business Ethics at Bentley College, Waltham.

There are bottom-line benefits to doing the right things and doing things right!

Winter 2004 -Volume 14, Number 1

 

 

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