3 Things Ethical Leaders Ask and Say

January 27, 2025

As a leader, you’re probably under a lot of pressure: Hit your targets. Move faster. Motivate your team. Put out fires. Innovate. And all this while maintaining your organization’s reputation and being ethical.

What are key things you can do to uphold what we call the “ethics imperative” (doing the right thing, even when it’s costly or hard)? Here are three things ethical leaders ask and say often:

Is this a good organization?
Would this serve us all well over time?
We’re not doing that.

We address each in turn below, with examples.

1. Is this a good organization?

This was the question that the new president of DTE Energy asked himself and his senior management team when he started working there. It’s an illuminating question.

And it’s a timely question, because there’s much evidence that we have a lot of work to do on this front. According to the EY Global Integrity Report 2024, 21% of respondents admit that their organization “has had a significant integrity incident, such as a major fraud, data privacy and security breach, or regulatory compliance violation in the last two years.”

The report authors noted that there’s a “say-do gap” in about 49% of companies: executives speak often about integrity but don’t implement ethics programs and policies. In about 5% of companies, the organization doesn’t prioritize the promotion of integrity at all. Only 22% of companies have an “integrity-first” approach, while 23% have a “policy-driven” approach: they have a range of programs and policies to meet compliance obligations, but they don’t embrace an integrity-first approach.

That’s a shame because there are many benefits of ethical leadership, even beyond the most obvious and important one of it being the right way to lead. According to a meta-analysis of 101 samples over 15 years, with 29,620 respondents, ethical leadership showed positive relationships to followers’ job performance, work attitudes, and evaluations of their leaders. (1)

There are major benefits that come from having an ethical organization. According to Alex Brigham, founder and executive chairman of the Ethisphere Institute:

“In addition to increased financial performance, ethical companies benefit from
better brand reputation, consumer loyalty, and higher employee retention rates.”

There’s a powerful business case for ethical practices in organizations. When you operate ethically, you have the potential for:

higher sales
customer loyalty
pricing premiums
lower costs
operational efficiency
better risk mitigation
reputation enhancement
talent attraction and retention
competitive advantage

Leadership Derailers Assessment

Take this assessment to identify what’s inhibiting your leadership effectiveness. It will help you develop self-awareness and identify ways to improve your leadership.

Example: Whole Foods Market

Whole Foods Market is a multinational supermarket chain (2) that exemplifies what co-founder and former CEO John Mackey calls “conscious capitalism.” How? By prioritizing responsible sourcing (including local producers of organic food), environmental sustainability, the wellbeing of workers and customers, and community giving.

The company’s purpose is to “nourish people and the planet.” Their shared values:

We sell the highest quality natural and organic foods
We satisfy and delight our customers
We promote team member growth and happiness
We practice win-win partnerships with our suppliers
We create profits and prosperity
We care about our community and the environment

Though the company has made missteps over the years (3), its approach has resulted in a positive reputation, impressive customer loyalty, and long-term growth.

Other examples of this kind of approach over the years include:

Ben & Jerry’s
The Body Shop
Costco
Eileen Fisher
New Belgium Brewing
Patagonia
Seventh Generation
TOMS Shoes
Warby Parker

2. Would this serve us all well over time?

Another question you should ask often as an ethical leader is whether an action you’re considering will serve you and your major stakeholders well over time. Which stakeholders? Workers, customers, investors, suppliers, your community, and the environment.

A sign on the wall at the company headquarters of Barry-Wehmiller, a capital equipment and engineering solutions firm, reads as follows:

“We measure success by the way we touch the lives of people.”

The other key factor here is taking the long view. Too many leaders these days buckle under pressure to play the short game and focus on immediate pressures and quarterly metrics.

Personal Values Exercise

Complete this exercise to identify your personal values. It will help you develop self-awareness, including clarity about what’s most important to you in life and work, and serve as a safe harbor for you to return to when things are tough.

Example: Interface

After reading The Ecology of Commerce by Paul Hawken in 1994, Interface founder Ray Anderson had a profound and transformative realization—a “spear in the chest” epiphany—about the negative environmental impacts of his commercial carpet manufacturing company. He then committed to make Interface the world’s first truly sustainable company, setting a bold goal to reduce its environmental footprint to zero by 2020 (what they called “mission zero”).

Anderson sought to go beyond waste reduction and completely rethink how the company operated. (4) They transformed their business model, operations, and manufacturing processes, including the following:

developing and using more sustainable materials
reducing energy consumption
designing products that could be fully recycled at the end of their life cycle
using renewable energy
improving waste management
minimizing the carbon footprint of all products
shifting from traditional carpet tiles to modular, easily replaceable tiles (making maintenance and recycling easier and encouraging customers to buy less by reducing the need for total carpet replacements)

Interface achieved dramatic reductions in energy and material costs while also differentiating itself as a sustainability pioneer and inspiring other companies to follow suit. Their new goal is to be carbon negative by 2040.

Example: Patagonia

Another example is Patagonia, including notable actions like the following:

being a founding member of the 1% for the Planet initiative, including donating 1% of its annual sales to environmental causes
“Black Friday” donation in 2022: donating its entire Black Friday sales—approximately $10 million—directly to environmental organizations
“Don’t Buy This Jacket” ad campaign in 2011: showcasing its recycled fleece jacket and urging consumers to repair and reuse their existing clothes and equipment
“Worn Wear” program: encouraging customers to buy used or refurbished Patagonia gear instead of new items; allowing customers to buy, sell, or trade used Patagonia items; and offering repairs on products
committing to using 100% recycled polyester in many of its products
being a pioneer in using organic cotton and other sustainable materials
focusing on fair labor practices, including paying workers fairly, supporting workers’ rights, and being one of the first companies to publish its supply chain details

Alignment Scorecard

When organizations aren’t aligned, it can reduce performance dramatically and cause frustration and dysfunction. With this Alignment Scorecard, you can assess your organization’s level of alignment and make plans for improving it.

3. We’re not doing that.

The third thing you can do as an ethical leader is draw the line in the sand and refuse to do things that are unethical or illegal—or that violate your organization’s shared values.

Here are instances in which you may find yourself where this is relevant:

Your board is pressuring you to inflate earnings or manipulate financial statements to meet quarterly targets and boost the company’s stock price.
Your colleagues are pushing you to sell user data to third parties without proper consent.
You face pressure from executives to offer bribes to foreign officials to secure a lucrative contract or avoid regulatory scrutiny.
Rival firms are overlooking poor working conditions or using child labor in factories abroad to keep costs low.
You’re under pressure to cut costs by neglecting safety protocols in your manufacturing plants.
Family members or friends are urging you to approve a business deal or investment that benefits them.

My father, Bob Vanourek (and co-author of our book, Triple Crown Leadership) was brought in as co-CEO of Recognition Equipment to turn the company around. The company was in a tailspin after the prior CEO was accused of bribing officials to land a contract.

It was time for the first earnings release under the new management. The first draft of the press release put a positive spin on the numbers. The company’s general counsel, Tom, objected in a meeting:

“We can’t say that. I don’t care if I’m a voice of one in this room.
We’re in an ethical mess. We have to be squeaky clean.”

They realized he was right, and they toned down the press release. Tom summoned the courage to serve a critical role that day—being a “voice of one” and speaking truth to power.

“One of the most valuable things any of us can do is find a way to say the things that can’t be said.”
-Susan Scott, Fierce Conversations

Susan Scott, author, “Fierce Conversations”

Recall the actions of whistleblowers and others who took bold public stands, including:

Mark Felt (Watergate)
Sherron Watkins (Enron)
Mona Hanna-Attisha (Flint water crisis)
Frances Haugen (Facebook)
Cassidy Hutchinson (White House Chief of Staff’s office)