“Greed is good” said Gordon Gekko in the 1987 award winning movie Wall Street. That infamous phrase has insidiously permeated the fabric of society to become the mantra that is accepted, even applauded, in industry for the next two decades. Until its nemesis – the global financial crash of 2008.

Rise of the Concept
Those intuitive enough to see it coming tried to stave off the cataclysmic event with counter measures, including instituting the concept of “ethical leadership”, with elements like corporate governance and corporate social responsibility. “Corporate governance was unheard of in the 1960s and 70s. But fraudulent practices that came to light in recent decades have made it necessary for company directors to come together and formalise certain practices. So transparency, corporate governance – these are all products of the late 1980s, 1990s, because so many companies were growing then,” explained Dr Mohamed Sultan (BBA Hons 1968), founder and Chairman of Melorita, an international recruitment agency based in Malaysia. “Society has developed the desire to outdo each other, to be profit-driven; and everything is about dollars and cents. There’s nothing wrong with it, but where does it end?” he pointed out.

So, enter the guiding principles of ethical leadership. Paul Yap (MBA 1984, BBA 1972), Managing Consultant of Ideaction Consultancy, says, “Ethical leadership is responsible leadership, concerned about what’s best for the marketplace, the society, the company itself and the business that it is serving. While a company tends to be profit-driven and shareholders may demand certain performance levels, the company has to take care of its staff otherwise they won’t deliver, and it has to take care of the market or the customers won’t buy. The company is there, in the first place, to serve them.”

Mr Yap believes we must go back to the raison d’etre of a company. He says it usually comes about when “an entrepreneur looks at a situation and wants to change it, then people buy into his idea, and that’s how he consequently makes money”. But ethical leadership is often compromised nowadays because “people start enterprise with the sole purpose of making money”. He reminds, “There is always pressure to deliver profits or shareholder expectations. But if you deliver profits at the expense of staff and other values, you may see short-term rewards, but it won’t be good for the long-term.”

Reality of the Notion
In fact, Prof Cynthia Wang from the Faculty points out that “a recent article in Forbes reiterates that companies with a better reputation for product quality, corporate citizenship, workplace satisfaction and corporate governance tend to hold a greater market share. Therefore, not concentrating on the bottomline may possibly improve the bottomline”.

That notion is noteworthy for managers who may be tempted to decry the rigors of ethical leadership in favor of doing whatever it takes to stay afloat in these troubled times.

Professor Wang argues that “especially in this economic climate, many leaders realize that it is economically risky to be perceived as indifferent to ethical issues – their constituencies will respond fiercely if they believe that human rights is endangered solely for personal economic gain and padded profit margin; and, in turn, these companies will economically suffer. The tainted milk scandal in China is a prime example of strong emotional backlash – the whole milk industry in China was crushed following the realization of a few tainted suppliers”. She suggests that it is in the interest of companies to adhere to “a long-term purpose of developing a culture that naturally views corporate responsibility as an end, rather than a means to an end”.

Dr William Koh, who has been teaching and researching leadership in NUS for several years, agrees. “Ethical leadership and its values are universal and enduring. And in the current crisis, when there is all the more a need to stand out from the crowd, companies which practice ethical values will have the edge in recruiting the best people, training them and motivating them to stay on when things improve,” he says.

Instinctive versus Instructed
With the recognition of the need for ethical leadership and corporate governance, laws and sanctions have been put in place to guard against bad practices. But Dr Mohamed contends that “if you have that inner guidance and value system, whether someone says something is ethical or not, you will always do things ethically. If a leader doesn’t have that, he will go from one fad to another – just as ‘corporate governance’ seems to be a fad with a nice name now, when it used to be simply assumed that a leader will always be fair, honest and dependable without having to call it ‘corporate governance’ ”.

Dr Koh backs this concept that satisfying a “legal” requirement does not always equate with doing the “right” thing. “Take the example of retrenchment benefits,” he says. “Often there is no legal requirement to give these benefits, but if you feel you owe it to your workers who have stood by you, and it would help them tide over unemployment, then you should do the right thing and give it out. So legal requirements don’t always match personal ethics.”

Dr Koh sums it all up nicely, saying that “standards of ethics should be higher than legal requirements; they should be beyond the law”.

From Left to Right: Captain Sahai, Mr. Yuen Sweee Yong, Dr. Mohamed Sultan, Dr. William Koh, Prof. Cynthia Wang, Mr. Paul Yap