Upfront: Ethical Intelligence From the Inside Out

Why business leaders need to integrate ethics into their daily decision-making -- and how they can enact that change.

Sarbanes-Oxley was a long-overdue attempt to bolster the public's faith in corporate governance. But while the legislation was necessary, its ability to shape executives' behavior is extremely limited. Why? Because it focuses the attention of corporate leaders on a distinct set of rules, rather than on the principles that guide everyday business decisions. Finance executives who truly want to embrace the notion of ethical intelligence must understand their own ethical standards and how those standards govern their decision-making. Which may be easier said than done.

CFOs are certainly aware that they need to reflect on the potential results of the ethical dilemmas they confront. For example, they know they need a clear view of how the relentless push for value creation can compromise product quality, customer satisfaction and employee safety. But finance managers must do more than ponder the ramifications of these dilemmas; they must also create an ethical framework that will guide them toward sound decision-making.

How can today's professional develop such a framework? According to William Damon, author of "The Moral Advantage: How To Succeed in Business by Doing the Right Thing" (Berrett-Koehler Publishers, 2004), the first step is to understand the ethical standards that you as an individual hold as absolute -- as opposed to those that are accepted as appropriate in the collective corporate mind-set. Is your top priority to serve customers? Maintain employee safety? Create jobs? Make a difference in the world?

"When you decide that there are some ethical standards that are absolute, that you will never violate those standards regardless of the consequences, it transforms the way you make your choices," Damon explains. "In your mind, you make a preemptive determination not to consider taking the unethical course" -- for example, not to weigh the merits of an improvement in cycle time if that change would increase the risk of worker injury.

The process sounds straightforward, but before you can build a solid ethical platform, you must recognize your own higher purpose in life. And that task requires a deeper level of introspection than many time-starved and stress-laden executives are able to devote to it. Nevertheless, understanding how the work you do contributes to something beyond the bottom line is a prerequisite to developing the kind of ethical compass that can transform your leadership style. As C. William Pollard, the former CEO of The ServiceMaster Co., points out in Damon's book, "People work for a cause, not just a living."

So it's time to take some time out from thinking about ethics rules and regulations. Instead, ask yourself: What purpose gets me out of bed each day? What actions and activities enable me to be my ideal self? What mission do I see beyond the profit of the company? Who am I outside of work?

Damon argues that ethical behavior is embedded in a person's larger sense of self and society. As a result, ethical intelligence is created from the inside out. It comes from the desire to be not just a good corporate leader, but also a well-rounded individual whose every interaction has meaning beyond the immediate term.