The E&C Pulse - February 19, 2019

February 19, 2019 LRN Corporation
 
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TOPICS OF CONVERSATION
 
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Demand for Moral Leadership in Business Growing Stronger

Workers are protesting how the organizations they work for are conducting business. Activists, investors and consumers are using their dollars to reward companies who do business in a way in which they approve, and are punishing those they disagree with by withholding capital, seeking changes in boards and management, by not buying products or services, or committing to boycotts and other disruptions.

All are signs people no longer are content with letting companies operate like they used to, with workers and communities calling out companies for bad behavior, lack of diversity, inequality in pay. All this points to a clamoring from people for more moral leadership throughout all levels of society, including from business leaders.

LRN today releases its new report, The State of Moral Leadership in Business 2019, which found 87% of the 1,100 respondents in the U.S. believe the need has never been greater for moral leadership than it is now.

Managers and executives who use moral authority, not their formal authority, to lead are seen by 94% of respondents as being effective at achieving business goals, versus 14% of managers who don’t. That matters because 72% said their organizations would better confront its biggest challenges if leadership used moral authority, up from 59% who said so in 2018. Ninety percent think moral leaders are better at encouraging innovation.

“Moral leadership is not about moralizing. It's not simply taking a stand on social or political issues, although that can be part of it. Moral leadership is rooted in and guided by a moral framework and set of principles that inform how leaders approach everything they do: how they interact with others, how they make decisions, how they manage and conduct themselves,” said Dov Seidman, LRN’s founder, chairman and chief executive.

“Above all, moral leadership is about how leaders touch hearts, not just minds--how they enlist others in a shared and significant endeavor, and create the conditions where everyone can contribute their fullest talent and realize their deepest humanity,” said Seidman.

While the demand for moral leadership is growing, very few respondents see evidence of it in their workplaces. Only 7% said their managers routinely display behaviors associated with moral authority, with 59% saying their bosses rarely or never exhibit such qualities. That’s a problem because managers who don’t exercise moral leadership are 10 times more likely to treat people unfairly and five times more likely to value short-term results over the long-term mission.

CEO activism isn’t enough to move the needle for most people. While 45% of respondents said their chief executive has taken a stand on a social or political issue on behalf of the company, just 25% said their CEO is consistent in their use of the behaviors that define moral leadership.

And there may be a price to pay when companies ignore moral and ethical implications of their business practices and operations, as 82% said such companies face greater risks than those who do pay attention to behaviors. The number jumps to 92% for those respondents who work for companies in heavily regulated industries.

“Moral leaders are more effective at achieving business goals than their peers,” the report stated. “They are better at encouraging creativity and imagination, they make people feel like they matter, they are trusted by their colleagues, and they inspire individuals to contribute their best. These leaders foster ethical workplaces and are more resilient in the face of obstacles.”

There is little chance of creating a culture based on morals, ethics, doing things right and doing the next right thing unless moral leadership is exhibited by the people in charge. The survey found 89% of managers who work for CEOs who don’t display moral leadership also don’t act with moral authority.

People who don’t work for managers who show moral leadership are 42 times more likely to believe that individuals will be ignored if they take a stand for doing the right thing, and 34 times more likely to believe that they will be punished for doing so.

“Moral leadership is well-adapted to the particular challenges that companies face today--whether it's the never-ending demand for growth, innovation, and better performance; the disruption of business models and the changing nature of work; or the reverberations of the ongoing moral challenges in society,” the report stated.

“Importantly, moral leadership is not only for top management. Everyone has the power to behave like a moral leader, regardless of their role or rank, and when they do, the entire organization can move forward and outperform peers in a reshaped world.”

(Watch for more on the report in future newsletters and on our LRN blog.)

 

Ben DiPietro
@BenDiPietro1
ben.dipietro@lrn.com

 

 
MIND NUMBERS
 
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Managers who don't exercise moral leadership are 10 times more likely to treat people differently and unfairly, eight times more likely to give orders and commands, eight times more likely to keep relevant information to themselves, and five times more likely to back strategies that promote short-term profits and objectives, according to LRN's The State of Moral Leadership in Business report. 

 
WHAT'S NEWS
 

A piece in Forbes says the way to get companies to confront pressing social issues is to appeal to their sense or morality, and not on how doing so will be good for business.

Ron Carucci, writing in Harvard Business Review, looks at recent corporate scandals to see how lying becomes the norm at some organizations.

British lawmakers singled out Facebook but say the big tech companies should be subject to regulatory oversight to make sure they are upholding democracy and citizens' rights, Reuters reports. Facebook could face billions in fines in the U.S. for privacy violations, Security Week reports.

A story in Quartz wonders if companies should employ a risk management approach to creating a better corporate culture.

A survey of more than 7,000 companies said while two-thirds worry about retaining workers, 69% said they didn't plan to offer raises of more than 3%, or keeping up with inflation, CFO reports.

The people who developed a new AI fake text generator say it may be too dangerous to release, Guardian reports.

China and Iran have begun new rounds of cyberattacks on U.S. businesses, The New York Times reports. China denies it was involved in a cyberattack on Australia's political parties, The Guardian reports.

Safety questions are arising in the legal marijuana industry after several explosions and fires at facilities injured workers, Politico reports.

 

 
FROM THE
WORLD OF LRN
 
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As mentioned in today's newsletter, LRN has released its newest report, The State of Moral Leadership in Business Report. This year, we share results from interviews with more than 1,100 employees, managers, and executives across 17 different industries.

GET THE INSIGHTS →

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In our first #HOWMatters conversation of the year, LRN CEO Dov Seidman was joined by Zainab Salbi, humanitarian, media host, author, and founder and former CEO of Washington-based Women for Women International.

WATCH THE REPLAY →

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