SCMP’s Education Post 04/12/2015 Businesses need more ethical leaders One of the most fundamental attributes if a respectable leader is his or her integrity, i.e. being honest, fair and just. Look at the recent series of corporate incidents, including the emission- manipulation by a car manufacturer, mobile phone companies charging customers overseas data service even when data roaming was not turned on, financial institutions cold-calling unknown people to sell personal loan products, fitness centres snaring customers to sign outrageous long-period pre-paid service contracts, together with the growing number of cases of companies misrepresenting the contents or functions of their goods. What images would you associate with these corporate leaders? Theoretically, there are only greedy human beings, not greedy organisations. Therefore, the leaders of an enterprise are largely responsible for the aforesaid business practices. Though not necessarily considered illegal, many such practices have certainly violated business ethics, or at least are inappropriate. They exemplify some business leaders’ sheer mercenary motive and confirm the Confucian saying “a mean person only cares about profit”. As a pillar of corporate social responsibility (CSR) or corporate sustainability, business ethics have often caught the public attention. Unfortunately, some business leaders have not yet learned from the painful experience of the Global Financial Crisis. They have not attempted to understand the meaning of “success”, “value” and "sustainability" in a new light, nor have they tried to rethink the function of an enterprise from the stakeholder theory. If we cannot keep these business leaders’ misbehaviour in check effectively, it is even harder to expect them to genuinely shoulder higher-level social responsibilities (such as environmental protection, safeguarding labour rights, fighting corruption, community contributions). Such misbehaviour will also affect the good will, sustainable development and the long-term value of the enterprises and jeopardise the stability and prosperity of our society. Owing to the failure of market forces, it is just a matter of time before the government accelerates steps towards tighter regulation and controls. Ethics are an individual’s standard of conduct (normally higher than what the law requires), whilst values are the principles or faith by which we judge what is right, good or important. Values guide the attitude and the behaviour of leaders. A different set of values may lead to different missions and leadership, and will thus affect the culture and strategy of an enterprise. In forming leadership traits, it is of paramount importance to pay particular attention to personal faith and values, and be aware of how they come about. For the leaders of the enterprises to make the right decision, first of all, they need to be clear about their own value system. It is not just about their personal interests, whims, or preferences but more about a deliberate conviction born of their free will, and one they will be firmly committed to in action. Therefore, leaders should identify themselves, clearly understand their own values and constantly reinforce them. Ethical conduct is of the utmost importance to a company’s directors or CEOs. Leaders should have the courage to act according to their value imperatives; and it is the leaders’ capability to make a moral choice that earns the trust of their subordinates. Leadership by ethics is not a one-off, but rather a long and ongoing process. Most business leaders are good people and their businesses are socially responsible. However, there are times when men can succumb to greed and weakness, and they will come up with various excuses to justify or cover up their ethical lapses. Whatever excuses they may have, when corporate leaders are perceived to have lost their integrity once, it will be very difficult for them to regain trust. In a highly free-wheeling society, maintenance of personal integrity may sometimes be challenging but leaders always have a choice of making their own decision and insisting upon it. In the wake of the financial crisis, corporate leaders should cool down and rethink the real functions and responsibilities of business, as well as define what corporate and individual success are. They should reflect on the real meaning of such concepts as competition, high growth, wealth, success, happiness, well-being, social responsibility and value, and what they hold to us. To summarise, corporate leaders and business students should first of all reconfigure their understanding of the business, from a shareholder’s approach to a stakeholder’s. In addition, we should replace our traditional concept of short-term profit maximisation with a long-term sustainable one. On the other hand, business schools need to change their basic educational philosophy and nurture responsible, contented and spiritual people instead of machines that produce little but more money.