From Wall Street to Up In The Air and beyond, corporate executives are hardly sympathetically portrayed by Hollywood. The business establishment might object (even if some individuals might enjoy the notoriety), but this situation is merely a reflection of the popular view that success in corporate life has little to do with morality.
One common assumption is that this is a result of the corruption associated with power. However, extensive research by an academic at Vanderbilt University’s Owen Graduate School of Management suggests that other factors could be at play. In an interview with Strategy & Business magazine, Jessica Kennedy, an assistant professor at the Tennessee school, she says that power causes people to identify so strongly with their group that they fail to see whether the group’s actions cross an ethical line. “What I found in multiple studies was that high-ranking people are more inclined than low-ranking people to accept what their group recommends to them, even when it represents a breach of ethics. That is, higher-ranking people are less likely to engage in principled dissent and actively oppose such recommendations than are lower-ranking individuals,” she adds. In answer to the question why those in positions of power are more likely than others to go along with the crowd, she explains: “The higher a person’s rank in a group, the more they identify with that group. If you show high-ranking people statements such as ‘I identify with this group’ or ‘Being part of this group [the group in which they hold high rank] is an important part of who I am’ or ‘I really value this group membership’, they agree with these statements more strongly than low-ranking people. Power creates identification with the group that accorded that power. And when people identify strongly with a group, they’re more inclined to accept that group’s norms and practices.”
These findings – as well as Professor Kennedy’s other studies of the role of gender in ethics – are fascinating in their own right. Yet they are doubly so in the light of a new book that essentially claims that leaders actually do best when they do “the right thing”. In Return On Character (Harvard Business Review Press), psychologist Fred Kiel asserts that “character” is the mystery ingredient that enables some leaders to excel and – more important – inspire their organizations to outperform their competitors.
Kiel, who claims to know whereof he speaks since he was early in his career one of the “self-focused” executives he criticizes, has spent seven years with colleagues at his leadership development consultancy KRW International studying employees and managers in a variety of public companies, privately-held firms and non-profits. But this extensive study is just the latest stage in a much longer-running project. Several years ago, he co-authored Moral Intelligence, a book that set out the idea that leaders who acted according to moral principles – notably, integrity, responsibility, forgiveness and compassion – enjoyed greater success than the norm. The new book is an attempt to rise to the challenge of a critic of the earlier one who said, according to Kiel, that “this stuff I was talking about was all very well, but it was only icing on the cake, and where’s the data?”
Kiel has certainly come out fighting. He asserts that the research carried out by KRW shows there is “an observable and consistent relationship” between character-driven, “virtuoso” leaders and better business results. Organizational leadership that ranks high on the “ROC character-assessment scale” achieves nearly five times the return on assets that leaders at the bottom of the curve achieve, he says.
The workings of this “character-assessment scale” are, of course, described in the book. Essentially, however, Kiel is returning to the principles set out in Moral Intelligence – integrity, responsibility, forgiveness and compassion – as forming the basis for character. Crucially, he insists that leaders are only regarded as virtuosos if they and their teams are regarded by employees as demonstrating these principles most of the time. Self-focused leaders demonstrate them only slightly more than half the time, with compassion scoring particularly badly.
Another important point is that Kiel sees the principles less as attributes that people are born with and more as habits that can be developed. Indeed, his own story of learning from his business and personal failures that he was going about things in the wrong way is testament to how a mindset can change. Now, in his mid-70s, Kiel is dreaming that he is inspiring “a movement that forever changes people’s expectations of leadership and performance” in organizations of all kinds. “I hope to inspire a movement where people demand character-driven leadership because it delivers higher value to all stakeholders – and because it’s the right (his italics) thing to do,” he writes.
It’s a bold vision, and in these times of great distrust of business, an optimistic one. But it’s also possible that it is just a little too simplistic. Experience in the past has shown that the best-performing companies tend to do lots of good things (each of which can be singled out by a researcher as THE key to success). So it could just be that organizations that tend to promote the people with the character habits identified by Kiel are also doing lots of other things well – indeed, to such an extent that rank-and-file employees feel engaged in the project upon which the leader is embarking.
Kennedy, on the other hand, takes a more nuanced approach. Pointing out that identifying with the group is not the only reason that executives overstep the mark, she says that one aspect she is keen to look at is the effect of an executive’s sense of responsibility for the group’s success. “I think it’s possible that high-ranking people feel a sense of loyalty and duty to help enable positive outcomes for groups that have given them these valuable positions, and so they might be more likely to go along with practices that enable success even if those practices are unethical,” she explains.
The issue, of course, is whether that success is real or sustainable. Both Kennedy’s studies of the relationship between gender and ethics and Kiel’s belief that the generations now entering and rising up organizations are more in tune with his hypothesis suggest that we could just be about to see changes in the assessment of success - and in how organizations go about achieving it.
