Ethical Leadership: The Role of Boards in Fostering Ethical Practices

Anybody who watches the news or even casually follows politics knows that there’s a bit of an ethical crisis occurring in the world right now. Ethical lines are blurring and shifting. Navigating the current landscape and maintaining ethical principles as a leader are challenging to say the least. The need to hold people—and organizations—accountable has never been more apparent. In business, that’s where your board of directors comes in.

Your board of directors plays a key role in setting a high standard for ethical practices and have a high level of responsibility to uphold ethical principles and encourage responsible leadership. In many ways, ethics is the thread that runs through everything your board does; it’s tied to decision-making, governance, operations, strategic planning, and oversight. The board isn’t just there to practice ethics themselves but also to make sure that executives abide by ethical leadership—but what is ethical leadership?


Definition of Ethics

We can all agree on the dictionary definition of ethics as “a set of moral principles or the principles of conduct governing an individual or a group,” but that doesn’t mean we’ve settled on the application of ethics. How we each incorporate ethics into our daily lives varies from person to person. Think about it. Have you considered your own definition of ethics? What morals do you live by? It’s up to each person, and each organization, to define their own ethical standards and, more importantly, stick to those standards. At the board level, it’s crucial that your board members agree on and regularly review the ethical standards they want to operate by; there is no room for confusion, disagreement, or ambiguity.

While our individual applications of ethics may vary, we must honor the universal idea that ethics are based on well-founded standards of right and wrong that prescribe what humans ought to do. As a society, there are core ethical principles we all must adhere to, like recognition of the difference between right and wrong and being mindful of how we treat one another. Your approach as a leader should be grounded in the ethical principles of honesty, respect, service, justice, and community. Staying true to your morals is crucial to your success as a leader, the success of your board, and the success of your organization.


Principles of Ethical Leadership

As you define ethical standards for yourself, your board of directors, and your greater organization, there are a few key ideas to follow. When it comes to ethical practices, rest assured that you learned everything you need to know about ethics in kindergarten.

  • Rely on your basic convictions of right and wrong.
  • Let your inner moral beliefs guide you.
  • Don’t overcomplicate it or overthink ethics.
  • Practice the Platinum Rule to treat others as they want to be treated.
  • Ground your ethical decisions in respect, service, honesty, justice, and community.

You’ll encounter ethical dilemmas time and time again as a leader. It requires strength and confidence to push back against a colleague or fellow board member—especially when it’s a matter of right versus wrong. Trust your instincts, and let your moral compass lead the way.


Role of Your Board of Directors

As a business executive, you don’t have to take on ethical dilemmas alone when you have a trusted board of directors to help foster ethical principles. Your board and your C-suite should operate within a system of checks and balances to hold one another accountable and prevent either group from becoming too powerful. The board also has fiduciary and governance responsibilities to make sure the company operates in the best interests of its employees and its customers.

The culture among your board of directors is just as important as the board’s role. The board can maintain all kinds of responsibilities, but if the culture is toxic or threatening, you’re bound for trouble. You need respectful conflict and healthy debate within a culture of psychological safety on your board. Not all arguments are ethical problems, but your board’s culture needs to encourage the expression of dissent and unpopular opinions.


Checks and Balances in Your Organization

We’re living in a unique time in history as ethical lines blur and shift in politics, education, and business. It’s never been easier to justify unethical behavior when you see someone else who has done the same thing—or worse. We argue about when ethics matter, if ethics matter, and how far you can bend the rules.

To help keep your business on the right path, turn to impartial, outside input by consulting with an advisory board or board of directors. They’re available to help you land on the ethical side of history.


Questions to Consider

  1. Do you have a system of checks and balances in your organization, or do you need a board of directors or advisory board to establish that system?
  2. Has your board of directors agreed on what constitutes ethical behavior?
  3. Does your organization have an agreed-upon foundation of ethical standards?
  4. Do you have a process in place to actively debate these issues?

Contact me if you’d like to discuss how to foster ethical practices among your board of directors. I’d love to help you learn more about leadership development, the role of boards, and high-performing teams.