Editor’s note: This post was submitted by Dr. J. Phillip “Jack” London, Executive Chairman/Chairman of the Board of CACI International Inc; opinions are the author’s own.
How does one of the world’s most popular automakers ruin its reputation virtually overnight? By cheating…and trying to hide it.
In September 2015, reports broke that Volkswagen vehicles with diesel engines sold in the United States had been embedded with software that detected when the vehicle was being tested and changed the vehicle’s performance to pass emissions tests. This “defeat device” would allow the vehicle to emit up to 40 times the legally allowed amount of nitrogen oxide. Over half a million cars in the United States and 11 million cars worldwide were affected. Volkswagen had to recall all the vehicles and modify the emissions systems at a cost of over $7.3 billion and a potential fine of up to $18 billion in the U.S. alone.
Fingers immediately were pointed at then-CEO Martin Winterkorn, whose leadership style (as well as overall management’s) was described as “cutthroat” and “insular.” Volkswagen itself blamed the scandal on individual misconduct, flawed internal policies, and a mindset in some parts of the company that tolerated cheating. By late December, Volkswagen announced sweeping changes to its senior management structure and its compensation plans. However, the damage to both the company’s bottom line and its reputation were already done.
There’s a reason why an organization’s leadership gets the blame when things go wrong. Leaders set an organization’s culture, direction, and reputation. The example the leaders set can make the difference between “competitive” and “cutthroat.” In fact, studies have found that trust in the person leading an organization is inextricably linked with trust in the organization itself. That’s why leadership is such a pivotal role and responsibility.
Successful (and unsuccessful) leaders certainly have different perspectives and approaches. No two organizations are the same. Yet there is one leadership factor that remains the same across the board. The late General Norman Schwarzkopf put it best: “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.”
Character is a unique set of moral and ethical qualities that define what you believe in, what you stand for, and what you expect of yourself and others. It’s also integrity, values, and doing the right thing. This is equally true for individuals and organizations.
Character-based leadership creates the foundation for ethical organizations. The most essential function of leadership is the demonstration and communication of character. An organization’s leaders certainly set an example through their own behavior. These leaders have positive attitudes, unquestionable integrity, and a commitment to the mission. However, the leadership team also has to make good character an organizational priority. Leaders must be very direct and clear about the company’s culture and its standards of performance. How is this done?
- The first step is establishing formal standards of ethics and codes of conduct.
- The next step is clearly communicating expectations and identifying behavior that is acceptable and not acceptable.
- Provide training and indoctrination programs on organizational culture. And hold such programs with sufficient frequency to ensure a character-based culture is an organization’s ever present modus operandi.
- Organizations also need a free and open system for adjudication of grievances or breaches of ethics and rules (“whistleblower” hotlines, etc.).
- Members of an organization also need to rely on reasonable administration of problems and judicial procedures for correcting ethical failures. People can’t rally around what they don’t know and who they don’t trust.
A foundation of good organizational character, however, is only a starting point. Volkswagen and many other companies whose leaders set them down the wrong path (i.e. Enron, WorldCom) all had ethical standards and processes in place. Successful organizations – those that want to be successful for the long run – go one step further with character-driven leadership. How is this different from character-based leadership? Momentum. Leadership based on character institutionalizes the expectation of and processes for ethical behavior. Leadership driven by character sustains good organizational character by operationalizing and empowering ethical behavior. Here are some ways to make this difference happen:
Sustain an ethical workforce -> Hire ethical candidates
Many may think a candidate’s expertise is the first and most important piece to evaluate. However, good leaders know that even the most impressive technical knowledge and skill sets cannot make up for a poor attitude or being unreliable and noncommittal. The ideal candidates will have more than a particular domain expertise. Take the importance of attitude. How candidates describe themselves and their past accomplishments, both in writing and in personal interviews, can be extremely revealing. What particularly comes through is a candidate’s attitude, which is a strong indicator of suitability in the hiring process. Simply put, attitude illuminates a candidate’s character traits, reveals character strengths and weaknesses, and can set one applicant apart from dozens of others. Even a slightly poor demeanor can be a red flag.
Character-driven leaders listen for words that align with the organization’s vision and culture. They pay attention to what has motivated and sustained them. While actions do speak louder than words, words are the first representation of an individual’s own values. Leaders want candidates who offer a complete package and the potential to make a worthwhile contribution to the organization. If a candidate can offer only part of the equation, he or she won’t be a good fit for the organization and could even set the organization back.
From these candidates, character-driven leaders will build a team and a culture that subscribe to the organization’s values. A solid organizational culture attracts (as well as deters) certain people – people who have the right attitude and who associate with ethics and integrity. In turn, people with the right attributes are recruited, the company grows, and the company’s culture is even further enhanced. People tend to want to share their time and work with people who have similar values and goals, so they work for character-driven leaders.
Identify ethics standards and procedures -> Identify ethics resources
Most companies and large organizations have compliance hotlines and perhaps even an ombudsman to whom their people can report concerns and problems. This is one of the basics of character-based leadership. Unfortunately, some people are hesitant to come forward with their issues, for fear of starting an “HR process” or some kind of backlash. Sometimes people just want to talk through their concerns or ask for advice on issues within their organization. Character-driven leaders want their people to feel secure and empowered. An effective option is mentoring through both individually established and formal programs. Mentors can be inspirational. They give mentees the belief that if they did it, so can you. Other times, mentors provide a lesson in character. Their example helps employees anticipate the effects of their behavior and the outcomes of their decisions. Likewise, role models are also people who have demonstrated good character in their decisions and actions. Their behaviors are good to know and emulate. It’s important to remember that this doesn’t work if the role models and mentors don’t subscribe to character-based cultures. When they do, mentors and role models can provide valuable insights and perspectives, especially when facing major decisions that could affect the organization. Character-driven leaders are natural role models and mentors, but they can’t do it alone. They find others and let them loose!
Depending on the organization’s size and style, it may be useful to create the role/position of a formally titled ethics officer who administers related programs. An ethics officer maintains a higher level of objectivity and offers a perspective parallel to other officers in the organization, eliminating internal conflicts of interest. As a senior position, it also prioritizes the maintenance of the organization’s ethics and culture. Public companies and large organizations may also consider creating a Board of Directors ethics committee. This committee would have oversight of the design, implementation, and execution of the company’s compliance and ethics programs. It would also have the authority to conduct third-party assessments of such activities. Most important, regular committee meetings would provide the opportunity for the most critical ethical problems to be identified, discussed, and resolved before they could negatively impact the organization. Character-driven leaders acknowledge that sustaining organizational ethics and culture is a big job and the stakes are high. That’s why they surround themselves with other senior leaders and advisors who champion these values.
Reprimand wrongdoing ->Reward right-doing
Leaders recognize that no one is perfect and that mistakes are occasionally made. They create a culture of honesty and integrity that allows people to admit their error and provide a solution without fear of punishment or humiliation. Unfortunately, there are people who allow mistakes to balloon into bigger problems or, worse, intentionally lie, cheat, or steal to get what they want. The worst are those people who claim their transgressions were in the organization’s best interests. In these cases, leaders must respond appropriately to wrongdoing. This means ascertaining all the facts, disciplining to the extent allowed by the organization, and escalating serious offenses to the authorities. This is an unequivocal part of character-based leadership.
Character-driven leaders also look at the other side of the coin. They recognize and reward “right-doing.” Now, some may argue that doing the right thing should be the status quo and a reward in and of itself. This is true. However, organizations consistently face challenges and choices. Organizations change as does the world around them. Leaders should recognize when their people have positively used the organization’s values to address and resolve issues. Further, acts of right-doing can be incorporated into process improvements and best practices. Recognition programs, such as an Excellence in Character and Ethics Award, can recognize individuals and teams that act with high standards, accountability, and excellence, whether in particular circumstances or throughout their careers. Such appreciation not only rewards good character, but also identifies potential mentors and leaders within the organization.
Recognizing right-doing is particularly important when it comes to areas such as innovation. Progress involves a certain amount of risk. Leaders face the challenge of striking a balance between encouraging innovation and calculated risks and enforcing policies and regulations. Character-driven leaders know that having the right balance can create a distinct advantage.
Organizational leaders have many responsibilities, all of which come into play when their company’s character comes into question. When Volkswagen’s scandal broke, Winterkorn publicly accepted responsibility for the irregularities and asked the company’s board to terminate him. However, Winterkorn also said his resignation came “in the interests of the company even though I am not aware of any wrongdoing on my part.” Character-driven leaders understand that they are ultimately responsible for what is considered right and wrong in their organization and that they need to empower their organization to know and be the difference. They watch the trend lines and develop a vision of the future; prepare teams and organizations for moral perspectives and ethical decision-making in upcoming opportunities and challenges. This is the momentum that drives successful organizations. Anything less can drive a leader out of a job…and an organization out of business.
Dr. J. Phillip “Jack” London is Executive Chairman/Chairman of the Board of CACI International Inc (NYSE), a $4.3 billion IT and professional services company. London is the architect of CACI’s business success and culture of good character. He is a nationally recognized authority on the importance of ethical behavior in today’s government and corporate environments. He was named one of the Most Influential People in Business Ethics by the Ethisphere in 2014. Since 2002, the Human Resources Leadership Awards of Greater Washington gives its annual Dr. J.P. London Ethics in Business Award. London is the author of Character: The Ultimate Success Factor, where he provides insights from both history and personal experience that demonstrate how good character is the key to long-term success.
London has addressed important themes about character and ethics at many prestigious institutions, including the Pentagon, the U.S. Naval Academy, the Air War College, the Marine Corps University, and other prominent organizations. A graduate of the U.S. Naval Academy, the U.S. Naval Postgraduate School, and George Washington University, London also served 24 years in active and reserve duty in the U.S. Navy. London serves on the boards of Comfort for America’s Uniformed Services, the Navy Memorial Foundation, the Naval Historical Foundation, and the Friends of the National World War II Memorial.
