Moral Leadership

Morally Leading the Formal Organization

The chief executive officer can guide a firm toward responsible corporate conduct vis-à-vis the formal organization by directing other managers along the chain of command structure to attend to concerns expressed by internal and external stakeholders, the former including employees and investors and the latter consumers, suppliers, the media, government agencies, and other groups in society that can affect or are affected by the firm's activities. The issues raised by these groups are often articulated in terms of moral expectations, as when employees claim the right to fair treatment, investors expect honest and transparent financial statements, consumers assert entitlements to safe products, and social activists exert pressure for sustainable business practices. If the executive manager establishes formal policies that direct other managers, especially those in the office of external affairs, to listen to, document, and attend to these concerns in a timely way, then it is possible for the firm to develop collaborative relationships with stakeholders instead of adversarial or neglectful postures. From this point of view, it can be said that moral leaders seek to ensure that firms perform their economic function in society while also addressing stakeholder issues efficiently and effectively so that the benefits of corporate impacts are maximized while harmful outcomes are prevented or minimized.

Some advocates of business social responsibility hold that executives who seek to maximize the benefits of corporate actions will also give back to community in the form of corporate philanthropy whenever possible, perhaps in collaboration with not-for-profit organizations. For example, executives might encourage employees to give to the local United Way while also donating corporate funds to that agency. A moral leader might also set a personal example of donating his or her time to not-for-profit community endeavors while encouraging other employees to do the same, perhaps by providing them with organizational incentives. Increasingly, such philanthropy is deemed strategic if it contributes not only to broad social goals but also to firms' long-run economic performance by enhancing corporate reputations and increasing community goodwill.

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