CEOs Need to Do More to Be Moral Leaders: The E&C Pulse

February 24, 2021
Ben DiPietro

Chief executives have been lauded for taking stances on prickly public issues, weighing in on everything from racial injustice, to gender inequality, to climate change, to politics, vaccines, immigration, and on and on.

There is more to do for CEOs to become true moral leaders, based on the results of the new State of Moral Leadership in Business 2020 report from The HOW Institute for Society.

The report found 8% of CEOs consistently exhibited the behaviors of a moral leader, while half the CEOs didn’t exhibit any behaviors consistently. The survey of 2,305 people from all levels and sectors of the U.S. business community found 43% of respondents said they had seen their CEO take a public stance on an important issue.

“Activism alone, however, does not make a CEO a moral leader,” stated the report. “While taking a stand on a political or social issue may require moral leadership, it may also reflect ulterior, self-reflected motives. The conviction behind one’s activism is the key ingredient in moral leadership, not the act itself.”

When it comes to the particular behaviors of a moral leader, 20% said their CEO pursues a “noble purpose” that involves making the world a better place; 20% said their CEO demonstrates empathy and builds connections; 24% said their CEO has a high commitment to doing the right thing; and 21% said their CEO develops others to gain the wisdom needed to make the right calls.

At the manager level, 7% of respondents said their managers consistently show moral leadership behaviors. The repercussions of not developing moral leadership at the management level are significant, as respondents who have managers that rank in the bottom tier for demonstrating moral leader behaviors are 12 times more likely to leave the organization within the next year compared to respondents whose managers rank in the top tier.

“Employees clearly want meaningful working relationships with those to whom they report, and one of the consequences of failing to meet that demand is higher turnover,” stated the report.

The pandemic has given opportunities for CEOs to demonstrate their leadership, as their organizations look to them for facts, guidance, and for clues as to how to behave. 

This extends to managers, as the report found those managers who cultivated a sense of hope for the future, who explained decisions in the context of the organization’s purpose, and who listened to perspectives that challenged their assumptions were seen as being most effective during a time of crisis.

A CEO or any type of leader has authority by virtue of their position, but what makes one an effective leader is whether they can wield the moral authority to back up their formal authority, said Dov Seidman, chairman and founder of HOW Institute, and chairman and founder of LRN.

“While formal authority can be seized, won, or bestowed, moral authority must be earned by who you are and how you lead,” said Seidman.

                                                                                                        BEN DIPIETRO
                                                                                                       @BENDIPIETRO1
                                                                                       BEN.DIPIETRO@LRN.COM


THE ELEVEN

Google fired another top AI ethicist, and revised its diversity policies. The CEO of Seattle's pro baseball team resigned after making derogatory comments about foreign-born players; the team is trying to clean up the mess.

The mayor of a Texas town resigned after telling his constituents to stop asking for help and to "sink or swim" while doing without water and electricity. One of the state's senators was blasted for going to Mexico during the crisis.

Congratulations to all the LRN partners who made Ethisphere Institute's 2021 List of World's Most Ethical Companies.

More people are suffering mental health strains; what can companies do? Workers are burnt out and depressed. Japan appointed a minister of loneliness.

People from underrepresented segments of society often have to change fundamental aspects of who they are when they come to work. It may be time to stop describing people as "diverse."

Amy McDougal on the ABCs of DEI. A House committee held a hearing on reparations. McDonald's is tying executive bonus pay to diversity progress.

Do companies need a chief paranoia officer to combat disinformation? Is there a way to persuade the unpersuadable? People with extremist views have a harder time completing difficult mental tasks.

A report details how white supremacists are making inroads into the U.S. military. The U.S. Inspector General says the Department of Justice has a systemic issue with its whistleblower protections

Tips for companies doing ethics and compliance on a budget. Do you have a policy to govern your policies? COVID's impact on cultures of compliance.

Companies are selling fake reviews to businesses that sell on Amazon.com. New York is suing Amazon, alleging unsafe pandemic conditions at its warehouses.

There are no more all-male boards among companies in the FTSE 350.

About the Author

Ben DiPietro

Joined LRN in October 2018 after 30 years as a journalist, including seven years at The Wall Street Journal, including Risk & Compliance Journal and was a creator of the WSJ Crisis of the Week column. In 2015 was named one of the 100 most influential people in business ethics by Ethisphere Institute. Spent 14 years as a reporter in Hawaii, 11 with The Associated Press.

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