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JohnZinkin,ChrisBennett TheChallengeofLeadinganEthicalandSuccessfulOrganization John Zinkin, Chris Bennett The Challenge of Leading an Ethical and Successful Organization ISBN978-3-11-078081-9 e-ISBN(PDF)978-3-11-078087-1 e-ISBN(EPUB)978-3-11-078095-6 LibraryofCongressControlNumber:2022946186 BibliographicinformationpublishedbytheDeutscheNationalbibliothek TheDeutscheNationalbibliothekliststhispublicationintheDeutscheNationalbibliografie; detailedbibliographicdataareavailableontheinternetathttp://dnb.dnb.de. ©2023WalterdeGruyterGmbH,Berlin/Boston Typesetting:IntegraSoftwareServicesPvt.Ltd. Printingandbinding:CPIbooksGmbH,Leck www.degruyter.com Acknowledgments We were helped by many people in developing our thoughts, refining our argu- ments,andmakingthecase. Wewouldliketothankthefollowingforthetimetheyinvestedinreadingour drafts to ensure that the case we make is correct, clear, and, relevant; based on their respective experiences as academics, company director of long standing; se- niormanagementconsultingpartner;entrepreneur;centralbankerandcapitalmar- kets regulator; and lawyer: Professor Sander van der Leeuw, Professor John Rudd, John Colvin, Dato Dr R. Thillainathan, Edward Clayton, Tony Heneberry, Tan Sri Andrew Sheng, and Sujata Shekar Naik. If we have misunderstood or misrepre- sentedtheirviews,thefaultisentirelyours.WewouldliketothankStefanGiesen, our excellent editor, for challenging our assumptions robustly and constructively, including simplifying thestructure of the book. Wewould like to thank Jaya Dalal for her excellent coordination of production, as usual; and Mervin Ebenezer for finalproduction. JohnZinkin ChrisBennett KualaLumpur https://doi.org/10.1515/9783110780871-202 Advance Praise for The Challenge of Leading an Ethical and Successful Organization “TheChallengeofLeadinganEthicalandSuccessfulOrganizationdemonstratesthat there are serious external obstacles to being both ethical and successful. Obeying the law provides minimum guidelines, and the law does not treat corporations as moralagents.Theresultingfocusbyjudges,investors,andanalystsonshareholder value maximization often leads to breaking the law and behaving unethically, as longastheso-called‘costofdoingbusiness’islessexpensivethantheextraprofits achievedthroughmalpractice. Theenddoesnotalwaysjustifythemeans.Theoutcomedoesnotalwaysjustify the process. The process must be morally upright and ethically sound. It must stand the scrutiny of good decency. Ethical decisions are more complicated when theworldasitis,differsfromtheworldasitoughttobe;andreconcilingduty-based and consequential ethics may prove impossible because of different cultural assumptions and individuals’ ‘multiple ethical personas.’ Choices are often between complicated‘shadesofgray’ratherthanbetweensimple‘blackandwhite’answers. John Zinkin and Chris Bennett show in detail how leaders can overcome the barrierstoethicalandeffectivedecision-makingbybuildinganethicalandsuccess- ful organization – where ethics defines its mission, vision, and values, combining the ‘Five P’ performance checklist (covering ‘Purpose,’ ‘Principles,’ ‘Power,’ ‘Peo- ple,’ and ‘Processes’) with a simple six-step ethical process that allows leaders to confronttheirethicaldilemmassuccessfully. I highly recommend this book to anyone in a leadership position who has to makedifficultethicalchoicesintheworldasitisasopposedtotheidealworldasit oughttobethatdoesnotexist.” –DevanesonEvanson,CEO,MinorityShareholdersWatchGroup(MSWG) “What ought I do? This is increasingly becoming a challenge – society today de- mands that we take into account a vast number of factors when deciding whether ornotacourseofactionisethicallyacceptableornot.Thiscanleadtomanyunfor- tunateoutcomes– virtuesignalling,where we actina way,webelieve otherswill findacceptable,kneejerkreactions,wherewedowhatfeelsrightatthetime,often basedonasimplesetof‘rules’wehaveconstructed.Orelsetocompleteandutter confusion as we seek to navigate our way intelligently and ethically through the challengeswefaceatworkandinwidersociety. TheChallengeofLeadinganEthicalandSuccessfulOrganizationisanenormous help to the confused – as well as to kneejerkers and virtue signallers – because it takesthereaderbacktofirstprinciplesofethics,andshows,withnumerouscontem- poraryandhistoricalexamples,theunderlyingissuesandhowtheycanbehandled. https://doi.org/10.1515/9783110780871-203 VIII AdvancePraiseforTheChallengeofLeadinganEthicalandSuccessfulOrganization Itequipsreaderswithatoolkitwhichcutsthroughtheconfusionofmoderncontinu- ouslychangingethicalpriorities. Reading this book provided many ‘aha’ moments and clear insights which I foundextremelyhelpfulasIadviseclientsandmentorstaff.” –EdwardClayton,Partner,Advisory,PwCMalaysia/Vietnam “TheChallengeofLeadinganEthicalandSuccessfulOrganizationisfilledwithexam- ples of our ultimately self-destructive nature. Given the current state of the world, perhapsitisnotdarkenough,norimbuedwithasufficientsenseofurgency. John Zinkin and Chris Bennett have again written a book which is profoundly informativeandchallenging,leavingmehopingitprovidesconclusivesolutionsto theproblemsbusinessleadersface.Itdescribesaworldwherethetramlines(rules andregulations)aredesignedtocontrolthemajority,forthebenefitofthepolitical andfinancialminorities(readelites),forwhomthetramlinesappearnottoapply. The final chapter brings light to the darkness with practical suggestions for change.Iwonder,however,whetheraglobalsystemoftaxation,variableaccording toanorganization’spositiveimpactonsocietyandontheenvironment,shouldbe addedtothisrecipeforredemption.” –TonyHeneberry,FounderandCEOofCEOSolutions “WithTheChallengeofLeadinganEthicalandSuccessfulOrganization,JohnZinkin and Chris Bennett have come out with a three-volume masterpiece. After dealing ably and comprehensively with The Principles and Practice of Effective Leadership in their first volume, in their second volume, Criminality and Business Strategies: SimilaritiesandDifferences,theymakeitoverwhelminglyclearthatthesimilarities between organized crime and legitimatebusinesses are a lot greater than their ap- parentdifferences.Insteadofleavingtheirreaderswiththisdepressingconclusion, in this, their third volume, they demonstrate masterfully, using their trans-disci- plinarytoolkit,howbusinessleaderscanconfronttheethicalissuesandchallenges they face in decision making as well as building and guiding enterprises that are bothethicalandsuccessful. Theirtrilogyoneffectiveleadershipisamustreadforallexecutives.” –DatoDrR.Thillainathan,DirectorofGentingBerhad, PublicInvestmentBankBerhad,IDEASPolicyResearchBerhad Contents Acknowledgments V Introduction XIII Chapter1 EthicsandtheLaw 1 Ethics 1 ProfessionalEthics 2 BusinessEthics 3 PersonalEthics 4 TheLaw 5 RealityisDifferent 5 RuleofLaw 7 TheWorkingsoftheLaw 10 Summary 15 Appendix1.1:IntroductiontoBusiness-relatedProfessional CodesofConduct 17 Accountancy 17 Engineering 17 Finance 18 Journalism 18 Law 19 Medical 20 Chapter2 TheEthicsContinuum 23 “Ought”Versus“Is” 23 Duty-basedVersusConsequentialEthics 26 DifferentAxioms,DifferentChoices 28 Virtue 28 Effectiveness 33 Mutuality 34 Predictability 35 Utility 36 Self-image 36 MultipleEthicalPersonas 37 RewardandPunishment 39 FordPintoCase 41 Boeing737MAXCase 42 Summary 43 X Contents Chapter3 BarrierstoEthicalBehavior 48 Evolution 48 System1andSystem2 48 Rhetoric 50 Volatility,Uncertainty,Complexity,andAmbiguity(VUCA) 51 Maslow’sFiveNeeds 51 Survival 51 Safety 51 Belonging 52 Esteem 53 Self-actualization 53 InappropriateRoleModels 53 IncreasingImpunity,DecliningAccountability 54 MediaandRealityTV 56 VestedInterests 58 InappropriateRegulation? 60 Deception 62 “BadApples” 63 Rules-basedandPrinciples-basedRegulation 66 CulturalComplications 67 WeakEnforcement 68 InappropriateKPIs 69 Summary 71 Chapter4 HandlingEthicalDilemmas 76 EstablishinganEthicalBaseline 76 EstablishingPersonal“MoralCapital” 77 EthicsareSituational 78 Determining“KaleidoscopicEthicalPersonas” 82 DealingwiththeState 82 DealingwithEmployees 83 DealingwithPeers 84 KaleidoscopicEthicalPersonas 84 ConfrontingEthicalDilemmas 85 DeterminingAreasofConflict 86 MakingDecisions 88 ApplyingtheSix-StepEthicalFramework 89 Purpose 89 Principles 90 Power 92