Ethical leadership applies to everyone

I wear two hats – I’m the Executive Director of Audit New Zealand and the Vice President of Chartered Accountants Australia and New Zealand. Most of my insights on ethical leadership have a public sector or accountancy profession focus, but I believe they’ll have relevance wherever you’re based.

Ethical leadership is a cornerstone to trust and confidence. Which do you think is more damaging to trust and confidence:

• bad performance; or
• bad behaviour?

We asked this question of about 850 public sector leaders at Audit New Zealand’s client events held earlier this year. The overwhelming consensus was, poor behaviour is regarded as more damaging to trust and confidence than poor performance.

We have all seen or heard about the significant, long-lasting impact that wrong-doing can have for sectors, organisations, and individuals. In many cases, the IT, accountancy, audit, and legal professions have all been involved in identifying and rectifying the wrong-doing.

The accountancy profession has certainly not been unscathed.  Globally – there are instances of audit and accounting failure, and increasing examination and discussion about audit/accountancy culture and ethical practices inside firms and organisations. As a profession, we’re questioning of the role of audit within broader practice as well as accountants operating in organisations.

What is ethical leadership?

A few bad eggs can damage people’s trust and confidence in the system. By far, most people do behave ethically most of the time. Generally we do it without thinking, simply because it’s the right thing to do.

As a public auditor, my role is twofold – providing assurance to the public sector, and helping it improve. Similarly, ethical leadership can be divided along similar lines: assurance and improvement.

Ethical leadership for assurance

At its most basic, I believe ethical leadership is doing the right things all the time and in every situation. It’s “always on”: even when not visible to people around you, you still maintain the highest standards of integrity. It has to be fundamental to how we operate; it’s not something used for some decisions and not for others.

Whose responsibility is it to show this leadership? It’s everyone’s – individuals, organisations, and systems. Ethical leadership needs to be from the ground up, as much as from the top down. The work you do every day in your job reinforces ethical leadership. Collectively, that becomes your organisation’s – and your profession’s – ethical culture. Leaders have an obligation to set the right tone, along with clear expectations of what is – and isn’t – acceptable.

Our ethics are shaped by a range of expectations that are either organisation, sector, or profession specific. Most organisations or professional bodies will have things like codes of ethics, codes of conduct, values, behaviours, and policies to reinforce those.

In my roles, I’ve got no shortage of ethical requirements. These include a code of conduct for employees at the Office of the Auditor-General, the Auditor-General’s own code of ethics for assurance providers, as well as Audit New Zealand’s values and essential behaviours. I also have another hundred pages to consider through the CA ANZ Code of Ethics.

In the digital space we also have, among others, the New Zealand Information Security Manual, guidelines for trusted data use, and a Privacy Maturity Assessment Framework, that goes alongside core expectations by the Government Chief Privacy Officer.

So with the right culture and tone, and lots of guidelines and rules, ethical leadership is a piece of cake, right?

Not quite.

Take procurement as an example. Often, our auditors see examples where guidelines, even requirements, are ignored due to time and cost pressures. Full consideration of the ethical dimension can be seen as slowing things down. Shortcuts, especially at the planning and tendering stages, speed the process up – at least until the project faces costly reviews, legal action, or falls over.

It can be tough, when faced with pressures to speed things up, to do the right thing at every stage. When faced with that pressure, your clients and leaders need to support you and, when needed, give assurance that it’s okay to take a little extra time to do everything properly.

Ethical leadership for improvement

There is a push by government and central agencies – such as Treasury and the State Services Commission – to shift the thinking in the public sector toward improving outcomes. It will also impact on the private and NGO sectors. For example, Treasury is looking to include wellbeing indicators, alongside economic indicators, to measure progress across a greater, more holistic, range of areas.

The public sector has traditionally operated in silos, providing outputs that meet their objectives. While organisations are improving their performance reporting – that is, how effective their services are at contributing to the outcomes they seek to influence – we need to see progress on measuring and reporting achievement at the all-of-government level. That is, how well is the system working to improve the wellbeing of New Zealanders?

How data is utilised can play a big part in improving wellbeing. Ethical leadership, to me, not only means following the rules and protecting data, but also understanding what the data you – or your clients – hold is capable of, and using it to measure, report, and ultimately improve outcomes.

Data is the starting point for information. Turning that data into information, and using that information to make good strategic decisions, will lead to better service delivery and improvements in your organisation. Not every organisation will be at the cutting edge of data use. But knowing that there’s more you can do with your data to add value, and not taking any action to add that value, is to me a failure in ethical leadership.

Sharing information and collaborating with like-minded others can lead to improvements beyond what your organisation alone is capable of delivering. Collaboration, done well, can help the system deliver services that are designed around the needs of individuals that receive the services.

We all have a role to play

To reinforce the results of the question I posed earlier – behaviour matters. Poor or bad behaviour is particularly damaging to trust and confidence whatever role, profession, or sector you operate in. So it’s clear that ethical leadership matters and we all have a role to play.

There is much to consider when it comes to modelling ethical leadership – objectivity, due diligence and professional care, high standards of conduct and character, privacy and confidentiality, and competency, to name but a few. Ethical leadership is critical whether you’re working on assurance or an improvement. It’s always necessary.

In my next blog post, I’ll discuss how the principles of ethical leadership apply to the digital space, including sharing data and data security.

This was adapted from the keynote speech given at the ISACA Education Day given at the Wellington KPMG offices on 26 October 2018.