Maintaining an ethical culture is about much more than changing rules and processes after an organisation's misdeeds. It's more than a compliance exercise to ensure the organisation remains within the law. It is about leadership.
Ethical leadership can be defined as the process of influencing people to act through principles, values, and beliefs (characterised by honesty, fairness, and equity) and by respecting the dignity, diversity, and rights of individuals and groups of people.
LeaderShape Global, a UK leadership and training organisation of which I am chairman, has worked with hundreds of senior leaders over the past 20 years, including more than 100 CEOs who have been through our development programme. Based on that experience and other research, we suggest that the journey of leadership development begins with raising awareness of self and others and learning to manage emotions. Understanding which leadership style to use in which circumstance can help to develop the right culture for the leader's organisation.
Leaders who are not only ethical but also emotionally intelligent and caring are "transpersonal" leaders. Such leaders behave in a way that encourages people to be their very best, motivating them to put in that extra, discretionary effort. They are also radical in how they approach challenges as well as authentic, while always continuing their personal development as a leader. And perhaps most importantly, they lead beyond their ego — prioritising the decision that's right for the organisation, rather than for themselves.
This combination of leadership competencies can create and maintain cultures that are both performance-enhancing and sustainable in this fast-changing world where younger generations have different demands and expectations.
This involves the development of three types of intelligence: rational, emotional, and spiritual (this is values based — not to be confused with religion).
Distrust in leadership is becoming more common than ever, according to the annual Edelman Trust Barometer. As a result, many business leaders consider establishing a reputation for probity as a source of competitive advantage. This still sounds like self-interest (albeit at a higher level), but it may just be the start of top leaders looking to develop themselves in new ways.
The right leadership behaviours
One obstacle to developing ethical leaders lies in the traditional route to CEO. As well as considering experience and qualifications, selection in most organisations is usually based on more traditional leadership characteristics, such as self-confidence, assertiveness, influence, and achievement. These attributes can regress to high ego, aggression, manipulation, ruthlessness, and an obsession with control unless accompanied by positive values and behaviours to temper them.
The lesson must be that if potential leaders do not have the right values and behaviours (or are not genuinely committed to improving behaviours), they should never be allowed on the ladder to higher office. That protocol could provide the opportunity for many excellent candidates currently sidelined because they are not willing to get to the top at any cost to become our top leaders of the future.
So how can someone become a transpersonal leader?
It might feel like a tall order to develop all of the characteristics in the "REAL Transpersonal Leadership Development Journey to Excellence" diagram, but the model is based on LeaderShape's research and experience with leaders over the past 20 years.
Like driving a car
Most of the issues that leaders have are about people. While participants in LeaderShape's CEO development programme were good at helping each other find solutions to these issues, the approach addressed only symptoms rather than the cause. Developing new behaviours to build and improve relationships is a more fruitful approach.
The great thing about learning new behaviours is that it is no different from many other learning processes; for example, learning to drive a car. It feels very complicated to start, but with regular practice and focus it becomes automatic. The plasticity of the brain allows us to rewire and connect new circuits. Improving the CEOs' emotional intelligence had a positive impact on their leadership and the performance of their organisations.
While this was a major step forward for the leaders in our programme, taking them to the "intermediate" level in the diagram, it did not address ethics and values. For those who are unethical, emotional intelligence can be used in a manipulative way.
The advanced stage of the development journey is fundamentally about bringing our values to full consciousness, improving our decision-making and judgement, leading beyond the ego, developing a purpose, and constructing a touchstone that guides us in our decision-making.
A solid foundation for leadership
Management accountants have the foundation to become transpersonal leaders, with strong analytical brains (rational intelligence) and core values (spiritual intelligence) of integrity, honesty, and trustworthiness. In addition, their profession is bound by codes of ethics, such as the CGMA Code of Ethics (cgma.org).
In my experience, management accountants are hardworking and diligent and therefore have the right attitude to develop in the area of emotional intelligence, including understanding other people and managing relationships effectively. This is increasingly important as technological automation is shifting the skills requirement of the finance professional towards these human skills.
Empathy is the greatest development need for many leaders. The challenge to become more empathetic can seem overwhelming, but if we break it down into the following components, it seems much more manageable:
- Listen attentively to what people say.
- Demonstrate an awareness of how others are feeling.
- Accurately identify the underlying causes of the other person's perspective.
- Express an understanding of the other person's perspective.
My experience working with many leaders shows that becoming more empathetic is the key portal to becoming more comfortable with some of the softer values such as humility, vulnerability, forgiveness, and patience, which all have an important role in transpersonal leadership.
And all these lead, in turn, to effectively managing our own ego, which is critical to leading ethically. As a leader, our core responsibility is making the right decisions for the organisation rather than for ourselves. To do that we must resist the pressure of the main drivers of our own ego: power, prestige, recognition, and reward. A good first step to becoming a transpersonal leader is to ask ourselves, "To which of these drivers am I most susceptible?", and learn to manage that desire so that it never compromises our organisational responsibility.
A summary of the Transpersonal Leadership Model was first published in the The Invisible Elephant and the Pyramid Treasure report sponsored by CIMA, available at cgma.org (member login required to download).
How to Develop Ethical Leaders, download at crcpress.com
"Seven Steps to 'Transpersonal' Leadership," FM magazine, 27 June 2012
John Knights is chairman of LeaderShape Global and lead author of Leading Beyond the Ego: How to Become a Transpersonal Leader. To comment on this article or to suggest an idea for another article, contact Neil Amato, an FM magazine senior editor, at Neil.Amato@aicpa-cima.com.