Responsible leadership. Dr Alan Burton-Jones Griffith Business School, Griffith University

Transcription

1 Responsible leadership Dr Alan Burton-Jones Griffith Business School, Griffith University

2 Griffith MBA Values If you undertake the Griffith MBA you will graduate with an understanding of responsible leadership, sustainable business practices and what it means to work globally within the Asian Century - as such you will be equipped to be an effective businessperson in the 21 st century. Responsible leadership Giving our students the knowledge and skills and values to encourage them to become responsible leaders in the future, with a concern for planet and people as well as profit. Sustainable business practices Researching, developing and promoting social, financial and environmental approaches that lead to sustainable businesses and communities. Global orientation Providing education and research that recognises we operate in a fast-changing global environment, and that prepares global citizens, with a special focus on the Asia Pacific region.

3 Abstract While concepts such as business ethics and corporate social responsibility are frequently discussed, the notion of responsible leadership is less widely appreciated. The aim of this brief essay is to describe responsible leadership, how it relates to other leadership concepts, global factors that have influenced its development and its role in organisations.

4 Introduction This essay briefly describes the concept of responsible leadership and its implications for individuals and organisations. In doing so it draws upon a variety of literatures involving leadership, business ethics and corporate social responsibility (CSR), stakeholder theory, sustainability, and theories of the firm. Sources include scholars, organizational practitioners and world leading bodies, such as the Globally Responsible Leadership Initiative ( and United Nations Global Compact ( The essay is divided into four parts: part 1 describes the notion of responsible leadership; part 2 positions responsible leadership in relation to other leadership constructs; part 3 highlights macroeconomic and environmental factors that have helped shape the concept of responsible leadership; and part 4 discusses responsible leadership in practice. The essay concludes with a look at future trends. What is responsible leadership? A variety of perspectives on responsible leadership can be found in the literature. According to the United Nations Globally Responsible Leadership Initiative, responsible leadership is the art of motivating, communicating, empowering, and convincing people to engage with a new vision of sustainable development and the necessary change that this implies (The United Nations Global Compact and European Foundation for Management Development, 2008). Maak and Pless (2006 p. 103), define responsible leadership as a relational and ethical phenomenon, which occurs in social processes of interaction with those who affect or are affected by leadership and have a stake in the purpose and vision of the leadership relationship. Other perspectives highlight the need for responsible leaders to behave both ethically and effectively (Ciulla 2006) and to extend the notion of responsible leadership from single individuals (the great leader concept) to all levels of the organization (Mirvis et al 2010). From these perspectives we can broadly define responsible leadership as a multilevel phenomenon involving individuals, groups and organisations that emphasises leadership effectiveness, ethical behaviour, respect for stakeholders and economically, socially and environmentally sustainable practices. Evolution of thinking on leadership Leadership has been defined as the ability of an individual to influence, motivate and enable others to contribute to the effectiveness and success of organisations of which they are members (House et al. 1997). While we can readily define leadership, what makes for a good leader is not so easy to 1

5 define. Trait-based models emphasize the importance of attributes such as motivation, drive, charisma, confidence, integrity, cognitive ability and business knowledge. Such traits, however, are not necessarily indicators of effective leadership in organisations (Fisher et al 2006) and some, such as self- confidence, can be detrimental when employed to excess (Kahneman 2011). Many effective leaders seem to be strong in some traits and weak in others in short there seems to be no universally applicable trait-based leadership model. Other leadership theories have focused on leader behaviours, showing that some leaders are good at dealing with people ( winning hearts and minds ), whereas others are better at planning and organising. A further influential perspective emphasises the contingent nature of leadership captains and commanders for efficiency versus coaches for learning and development (Stace and Dunphy 2002). While trait-based, behavioural and contingent perspectives are all clearly relevant, other perspectives, including transformational and servant leadership, move closer to the notion of responsible leadership Transformational leadership, according to Burns (1978) occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality. Servant leadership (Greenleaf 2002) highlights the importance of the leader s ethic of attentiveness and care and competence to serve and empower others. Other emerging leadership theories that are consistent with the notion of responsible leadership include authentic leadership (Avolio & Gardner 2005) and spiritual leadership (Fry 2003), both of which stress the importance of leadership integrity, concern for others and ethical decision making. Another relevant perspective is stakeholder theory (Freeman 1984) which highlights the importance of firms and their leaders attending not merely to their shareholders but to the needs of workers, customers, suppliers and other stakeholders. The changing business environment The emergence of responsible leadership as an important concept for organisations is also clearly linked to changes in the global macroeconomic environment and to changing attitudes to protection of the natural environment. For the past half century, Australia and other advanced nations have been progressively shifting from an industrial economy, in which money capital has dominated, to a post-industrial economy, in which organisations major resources are becoming their human capital (human knowledge, skills and abilities), social capital (relationships) and structural capital (systems, processes and other intangible assets) (Bell 1973, OECD 1996, Burton-Jones & Spender 2011). As firms depend more on their human talent and relationships with customers, suppliers and business partners, a broader range of stakeholder interests naturally emerge. Contemporary knowledge-based theories of the firm (Grant 1996) have helped refine our notions of what it takes to lead organisations in a knowledge-based 2

6 economy. Leaders of modern organisations must foster organizational learning, knowledge sharing, and the creation of long term sustainable capabilities all competencies associated with responsible leadership. Linking concepts from the social and natural sciences, Thompson (1967) showed how firms can be viewed as both rational and natural systems. Whereas traditional business thinking emphasised a rational, closed systems perspective, favouring top down planning, the idea of the firm as a natural, open system suggests the need for a more emergent, bottom up approach that fits well with responsible leader concepts of open dialogue and leadership at all levels. While economists and social science researchers have been drawing attention to firms increasing dependency on their human talent and stakeholder relationships, environmental scientists have been exploring the impact of business on the natural world (Carson 1962, Hawken et al 1999). Businesses nowadays are increasingly held accountable for preserving and sustaining the natural environment witness the furore following the BP oil spill off the US coast, resulting in the departure of the US Managing Director. Contemporary leaders are increasingly seen by their stakeholders and the wider public as symbols of their organisations attitude to corporate social responsibility and rewarded or condemned accordingly. Responsible leadership in practice To what extent are contemporary organisations and their leaders behaving responsibly? Mirvis et al (2010) chart changes in popular attitudes to leadership, showing that traditional views emphasised profits, shareholder returns, legal compliance and minimizing harms, whereas contemporary attitudes tend to emphasize value creation, stakeholder needs and deeper social and environmental responsibilities. The evidence certainly tends to support a shift in attitudes. A recent poll of U.S. business leaders, for example, found that three quarters of respondents believed the public expected them to exceed product reliability and safety laws and over half believed the public expected them to exceed environmental protection laws (Global Education Research Network and Boston College Center for Corporate Citizenship 2008). Companies are increasingly espousing responsible leadership values. IBM under Lou Gerstner redefined its core values as: dedication to every client s success; innovation that matters - for the company and the world; and trust and responsibility in all relationships. Anita Roddick founder of the Body Shop framed its mission statement as To dedicate our business to the pursuit of social and environmental change. Nowadays, global mining and manufacturing organisations, aware of their large ecological footprints are keen to promote responsible business practices. 3

7 Has the reality matched the rhetoric? If public opinion is to be relied on the answer is only to a limited extent. A recent survey shows that only 20% of people polled in twenty-five countries agreed that most companies are socially responsible, (Reputation Institute and Boston College Center for Corporate Citizenship, 2009 in Mirvis et al 2010). How can organisations develop responsible leadership practices? Some examples of approaches that organisations can take include promoting ethical standards, developing eco-friendly practices and embedding responsible leadership into strategy. Grojean et al (2004) suggest several ways organisations can promote an ethical climate, including establishing clear expectations of ethical conduct, setting an example from the top, providing feedback, coaching, and support for ethical behaviour and recognizing and rewarding behaviors that support organizational values. William McDonough and Michael Braungart in their book, Cradle to Cradle (2002) discuss how organisations can move beyond recycling by designing products so that they can be 5 more readily taken apart and their materials reused. McDonough and Braungart s ideas have attracted attention from governments and businesses worldwide. William Clay Ford Jr., Chairman of Ford Motor Company, for example, reportedly used their ideas in transforming the River Rouge, a massive but dilapidated car plant on degraded industrial land, into an eco-friendly factory site where Ford employee s children could safely play. Maritz et al (2011) discuss the interface between strategy and responsible leadership. For top down strategic approaches the responsible leader must take the role of architect, designing a detailed plan and ensuring alignment across all its elements. Conversely bottom up / emergent strategies require the responsible leader to act as change agent, encouraging and empowering lower level staff to come up with new ideas and make autonomous decisions. Conclusion Responsible business practices have moved into the mainstream of business thinking. The acquisition of CSR-driven businesses such as the Body Shop by L Oreal, Green & Black s by Cadbury Schweppes and Ben & Jerry s by Unilever, suggest that major corporations appreciate the customer and shareholder loyalty such businesses attract. The actions of major corporate investors, such as the Norwegian Pension fund, which reportedly owns 1% of all global stocks, to jettison investments in companies deemed not to be behaving ethically is an example to other major investors of public monies. Developing responsible business practices demands responsible leadership; leaders that can demonstrate such qualities are likely to be those most highly sought after by the successful organisations of the future. 4

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