NEW COURSES AT LIGS | Role of Ethics in Business: An Interview with Ena Fejzagic
As we stated in our 2020 goals, our priority is to bring our students fresh and up-to-date content and prepare new specializations suited for students who demand the highest education standard. That is why we prepared new courses in our Ethical Leadership specialization led by our lecturer Ena Fejzagic Livancic. We bring you an interview in which she shares her view on the importance of business ethics and ethical leadership.
Where and when did the idea that business and its leaders should be “ethical” or “moral” come from?
Ena Fejzagic Livancic: It might come as a surprise to some people, but the idea of ethical leadership is as old as a business is. The earliest form of doing business, the barter economy, was based on the principle of equal exchange, which is guided by a moral compass. Ethics, as well as business, has, of course, changed and evolved throughout the centuries. Business ethics reflect the norms of each historical period.
If we consider ethical leadership and business ethics as we know them today, the origins of that modern concept can be traced back to the protests against big business in the United States in the 1970s. Gradually, the subject became an academic field, and today, thanks to government legislation, it is now a standard to uphold.
How important is value in contemporary business? Isn’t it just a facade?
Ena Fejzagic Livancic: Company values, or core values, are the guiding principles that determine the priorities of a business. I would say that any organization that is serious enough about succeeding, in the long run, must allow its values to navigate them. By implementing value-based decision-making, an organization can maximize the total value of creation consistently, increase corporate transparency, and, very importantly, attract the best talent.
The business environment has changed drastically with the generational shift in the workplace. In 2020, it is expected that millennials will make up more than 35% of the global workforce. Corporate values are extremely important to millennials, both in organizations they work for and the brands they buy from. Organizations that do not understand this are only hurting themselves.
Finally, those organizations that do not take core values seriously, and use them as bait to get a few more likeability points, get exposed today more than ever. Corporate scandals have never been easier to discover with the availability of modern media and communication technology. Organizations that use values just as a facade risk having major damage done to their corporate reputation, which can easily be something they never fully recover from.
If you want to be a more ethical leader, what should you focus on?
Ena Fejzagic Livancic: I would say the first step that an ethical leader must take is to define and align their own values. We all have a unique moral code that we live by, and it is important for leader to examine their own guiding principles.
Secondly, I believe that an ethical leader must know how to listen. We can be blinded by our own judgment and act in an immoral way unknowingly. Therefore, it is quite important to hire people with good morals who are not afraid to speak up. This helps the leader have more perspective and question their decisions when necessary.
And lastly, being ethical does not mean being perfect. Every leader faces moral dilemmas and it is not always easy to label something as ethical or unethical. People are not meant to be perfect, and neither are leaders. If a person wants to be a more ethical leader, the best they can do is continuously learn and improve. The focus should be on future growth, not on past mistakes.
What is the role of emotional intelligence in ethical leadership?
Ena Fejzagic Livancic: The role of EQ, or emotional intelligence, in ethical leadership is undeniable. As a matter of fact, I would say that these two intersect in many ways. Higher EQ helps individuals, among other things, to communicate better, promote a team effort and engage in complex problem-solving. It also helps foster and grow stronger relationships with people; employees, customers, partners, etc. All of these are the basis for ethical leadership.
There is a significant difference between the management style that is successful today versus the one from “the old days”. In the modern business environment, authoritarian managers are much less likely to be successful in the long term. Instead, today’s employees respond best to a manager who exhibits high EQ and acts on the base of values and moral principles.
Does ethical leadership have the chance to change the world?
Ena Fejzagic Livancic: I think the best lesson to be learned comes from the example of how doing business unethically can take down even a giant of the industry. In 2015, the famous Volkswagen emission scandal served as a textbook example of what not to do in business today. Had it been some other time in history, I don’t think the company would have suffered such a harsh backlash and such tremendous consequences to its revenues, operations, corporate image, and reputation. The world has certainly changed already thanks to the growing expectations of ethical business operations, and no organization is bigger than the standards set. We do not forgive businesses for unethical behavior anymore.
I believe that ethical leadership is already a norm in the business world and it will certainly have a major role in the changes that the world is going through. There was a time when it was good enough for leaders to deliver on financial performance and be praised. Today, the bar is set much, much higher. Business leaders are expected and even pressed to contribute to changing the world for the better, by being socially responsible, environmentally responsible, transparent, and philanthropic. There is no going back, it will only get more ethical from here on.