This Idea will help you understand how responsible leadership (RL) can enhance your personal reputation, your company’s reputation, and help strengthen those bonds with the society you serve. Furthermore, we will explore how to regard RL as a central feature of how you do business.
Responsible leadership is a concept that can help link corporate social responsibility (CSR) and performance to actions on the part of policy makers and leaders. In a world where public trust in leaders is low and reputations of firms are often called into question, RL can help bridge the gap between that negative perception and increased accountability to all stakeholders.
Based on a qualitative analysis of 25 business leaders and entrepreneurs, including Richard Branson of Virgin and Peter Voser of Shell, this research identified four different orientations that leaders use to demonstrate responsibility and implement CSR.
It highlighted the differences in leaders’ perceptions of responsibility – ranging at one end from those who saw their job as serving the needs of shareholders and/or owners, complying with regulations, and perhaps creating jobs; to the other end, a relatively small group of leaders who were more altruistic, viewing the business as a force to solve society’s problems.
1. Traditional Economist
Characterized by short-term economic value creation targeted towards shareholders. This type of responsible leader is likely to be risk-averse, highly rational and analytic, possibly quite autocratic in approach. Any CSR initiatives would be determined on a strict cost-benefit basis, with compliance to industry norms being the driving force.
2. Opportunity Seeker
Like the traditional economist, the opportunity seeker may have similar economic goals of investing in CSR to improve financial performance, but takes a longer-term approach to value creation with the aim of realizing competitive advantages, such as new market opportunities, or a better reputation. In other words, CSR is viewed as good for business, it is a good PR tool.
This type of RL goes beyond economic, legal or PR concerns, incorporating a broader perspective on business responsibilities. That is, if you run a business responsibly and purposefully, profits will result anyway, as Paul Polman, CEO of Unilever, exemplifies: “I drive this business model by focusing on the consumer and customer in a responsible way, and I know that shareholder value can come.”
In contrast to opportunity seekers, the integrator’s stronger sense of accountability means they try to deliver on multiple bottom lines, responding to the aims of all stakeholders, not just those interested in the economic bottom line.
Finally, an idealistic approach to RL occurs predominantly among leaders who act as social entrepreneurs. They are driven by strong ethical intentions, seeing the company as a means, not an end, to allowing them to tackle social problems or respond to environmental needs, even if that is at the cost of business growth.
The late Dame Anita Roddick is an obvious example, as is Joe Madiath, founder and general director of Gram Vikas, who sums up the altruistic approach of such leaders: “My motivation was always the self-satisfaction I get when I can in some way change the lives of people for the better.”
So we have four orientations of responsible leadership, ranging from the reactive stance of the traditional economist, to the opportunity-seeker who strives to prevent reputational damage, to the more proactive integrator, and finally to the idealist, viewing the business as a vehicle to serve particular stakeholders.
Where on the spectrum does your RL orientation lie? Are you a Traditional Economist, Opportunity-Seeker, Integrator, or Idealist? Would you change your style to embrace aspects of one orientation that will enhance your own?
Perhaps the key to successful RL is to be willing to adapt one’s orientation at the individual level, in order to refine the CSR strategy of the organisation as a whole. For example, adopting more characteristics of the opportunity seeker might help move a traditional economist orientation to a more enlightened perspective which views the business in relation to ALL stakeholders. While adopting the integrator’s approach of combining strategic thinking with social ideals could have important implications for strategy formulation, decision-making and brand building.
Finally, recognise the benefits of training to help skew your orientation. The altruistic leader might undergo some management training in finance and operations to avoid the ‘underperformance’ trap, while the economist-driven leader might benefit from getting to know all relevant stakeholders, avoiding the ‘myopia’ trap.
Methodology: This study collected data for 25 top-level business leaders and entrepreneurs from different industries and countries. Data came from a variety of direct and online sources, including interviews, speeches, and blogs.
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