Part 2 of a series by Christian Voegtlin PhD, Audencia Business School, on understanding responsible leadership in global business.
In part one of this series, we ended with five key aspects relevant for responsible leadership, namely being able to make informed ethical judgments, displaying moral courage, engaging in long-term thinking, communicating effectively with stakeholders, and participating in collective problem solving. In this second part, we will elaborate in more detail on these aspects.
A key element of responsible leadership is the ability to make informed ethical judgments about existing norms and rules. Especially when overseeing global business operations, where leaders face a diversity of rules and regulations, have to engage with various cultural norms, and operate in contexts where there might be insufficient legal guidance, responsible leaders should be able to critically question norms of business conduct they deem wrong. Therefore, adding a responsibility dimension to the concept of leadership that extends beyond mere liability, means that leaders will be expected to assume a position on local societal or organisational conditions. They also have to be prepared to make a stand wherever laws and regulations are flawed or non-existent. This entails speaking up where unethical practices are concerned.
Displaying moral courage in this way was another of the commitments the managers questioned sought in a responsible business leader. Responsibility within a company should mean helping to remedy injustice internally and externally. The aim is therefore not only to do the best for the firm, but also to aspire to be a general force for good that generates positive change.
Such a business leader profile implies a shift in perspective, requiring a forward-looking instead of a backward-looking responsibility orientation. Rather than basing responsibility on the retroactive logic of holding accountable those who have already performed an unethical act, forward-looking business leaders make proactive efforts to prevent such accidents and scandals. They therefore anticipate the consequences of their decisions, orient their thinking to the long term and consider the potentially negative impact doing business can have on people, society and the planet.
Responsible business leaders also need to communicate effectively with stakeholders. While total transparency is perhaps not possible, responsible leaders should try to foster healthy relations with those who have a vested interest in their business. Greater responsibility brings with it the recognition of stakeholder groups such as employees, unions, local communities, NGOs, professional bodies and the like. Establishing channels of communication with all these stakeholders is a first step that must then be followed by a clear and co-ordinated plan that allows these channels to inform each group of the firm’s progress. At the same time, it enables the firm to incorporate the responses of stakeholders into its decision-making processes.
So, how does this new model of responsible leadership actually operate and make a difference? The answer appears to be through collective action. This is because we have to recognise that there is usually not a single person or entity responsible for creating unethical, irresponsible or unsustainable conditions prevalent in global business. Such a notion of responsible leadership can help to stress that collective problem-solving is required if successful and positive change is to be achieved.
Leaders emerge as those who use their influence to initiate and moderate dialogues. Responsible leadership thereby offers the possibility to uncover mutually beneficial solutions for all stakeholders engaged in the problem-solving process.
It can thus be argued that the one thing that underpins the success of this new model of responsible business leadership is what researchers call the ‘social connection model’ of responsibility. This theory argues that the responsibility for the harm caused by structural injustices must be assumed by all those whose actions contribute to the structural processes that produced these injustices. For instance, poverty or global warming are global problems that are not caused by single entities, nor can they be solved by individual actors. However, many business firms contribute to these problems via their actions.
Integrating this notion of shared responsibility into the concept of leadership has important implications. While the current concepts of ethical and responsible leadership place the burden of moral conduct only on the leader, sharing responsibility makes leadership a collective effort. Regarding responsible leadership as shared also means that different parties assume leadership roles in the search for common solutions. Every party affected by a decision can be regarded as part of the solution.
In part three we will talk about the challenges of responsible leadership and the implications for individuals and organizations that follow from such an understanding of responsible leadership.