Business forum: When our leaders stray, we all pay

  • Article by: NAN DEMARS
  • Updated: December 3, 2012 - 7:03 PM

The costs of unethical leadership can cripple any organization, be it civilian or military.

hide

David Petraeus, former Central Intelligence Agency Director, with Paula Broadwell, the author of his biography, flying to Helman Province, Afghanistan in June 2011.

Over a recent holiday dinner, the conversation moved into the Petraeus/Broadwell liaison. The twenty-somethings at the table said: "What's the big deal? It's just sex, and it's just their business."

Unfortunately, this is a common response to unethical behavior. Maybe we've become cynical, or pessimistic, because we've seen similar melodramas before.

But I'm optimistic that our leaders can and should be models for ethical behavior. Why? Because if they choose the low road, they cost the rest of us dearly. I'm talking about lives, time and dollars here. When trust in our leaders is broken, we all pay the price.

The Petraeus debacle shocks us because our military personnel are held to a much higher standard than any corporate, nonprofit organization or elected public official because the military's mission is to protect the American people. There is no wiggle room whatsoever -- the military is the most unforgiving of professions. If Petraeus' security grid was compromised, people could die. Likewise, with the Secret Service agents mixed up with call girls in Cartagena, Colombia, last spring. There is no higher price to pay.

Unethical corporate behavior in the workplace also is costly and it is our pocketbooks (or stock portfolios) that suffer the consequences. We often overlook the fact that the costs of unethical behavior can be measured and directly correlated to the crippling of service, lowering of morale, and the stifling of recruitment and innovation. Everyone loses.

Just a few examples:

Inappropriate personal relationships in organizations today have stark consequences. Stockholders suffered when Best Buy stock plummeted in part because the company's leaders did not immediately follow protocol after learning of their CEO's affair with an employee.

Minnesota taxpayers are smarting over the legal costs after former Senate Majority Leader Amy Koch had an affair with aide Michael Brodkorb. These people may ride off into the sunset, but the public is left paying the bill.

Harassment litigation starts the monetary clock ticking as soon as a complaint is filed. No matter how these lawsuits ultimately play out, companies (and their employees and stockholders) suffer the consequences.

Ponzi schemes are obvious train wrecks for all involved. Their fallout reaches the public's bank accounts, investments and pensions, and sometimes costs lives.

Add to these the costs of the investigations themselves. Imagine what it costs to track the thousands of e-mails generated by Petraeus & Company to determine if there were any security breaches, to say nothing of the cost of diverting attention from critical issues facing the military in wartime.

However, I believe the most costly consequence of unethical behavior of our leaders is the loss of trust. Lack of trust within an organization eats at the fabric of the ethical workplace.

We hold our leaders to a higher standard of ethics, and we have every right to do so. They attain their positions because they are able to personify the best in all of us. To paraphrase Lincoln, they represent the "better angels of our nature."

You can imagine that, when faced with a tough situation, individual soldiers have thought, "What would Petreaus do here?" We want to both look up to and emulate our leaders.

And employees are watching. When they see unethical actions at the top, they lose their trust, and the temptation to follow suit increases. ''Why should I care if the boss doesn't care?'' the thinking goes.

I call this the "I-quit-but-I-just-forgot-to-tell-you" syndrome. Employees show up, but don't give a full measure. Productivity tanks, accountability and communication suffer. The best employees jump ship. Shame and blame infect the culture, security gets loose and profits are lowered.

I have had an opportunity to look behind the curtain of many organizations of all kinds and sizes. I cannot overstate the damage, in both tangible and intangible costs, of unethical leadership. When subordinates trust their leaders to do the right things, the organization can excel. When that trust is lacking, chronic problems just keep rippling through the organization in an endless loop.

But there is good news. Ethical leaders foster ethical workplaces. And ethical workplaces foster mutual respect, trust and honest communication among co-workers, customers and vendors.

I am happy to say that ethical practices are a proven way to achieve a competitive advantage -- as companies see the link between ethical cultures and healthy profits.

When leaders fall, it is a big deal. And a costly one to boot. Perhaps it's best to remember Warren Buffett's caution: "It takes 20 years to build a reputation and five minutes to ruin it."

  • ABOUT THE AUTHOR

    Workplace ethicist Nan DeMars is president of Executary Services, an Edina-based search, seminar and consulting firm. Her latest book is "You've GOT To Be Kidding! How to Keep Your Job Without Losing Your Integrity.'' Her e-mail is dearnan@ office-ethics.com.

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close