What Is the Moral Responsibility of a Business Leader?

Business leaders cannot afford to overlook the ethical challenges posed by technological advances, as even a single misstep can be enough to undo a reputation.

By David Schmidt, chief ethicist for iDNA

September 12, 2007 — CIO — There is no question that the current climate has prompted many more companies to tackle ethics issues. Many are making a set of moral values a part of their corporate cultures. And some forward-looking companies are providing ethics training to managers and workers.

While company-wide ethics awareness is a wonderful thing, the recent information about the online persona assumed by Whole Foods CEO John Mackey reminds us that the moral center of every company lies within its leaders. Those leaders are and should be held to higher standards of ethics and morality—because they are leaders. If, as in the case of Mackey, they are running companies designed around a social responsibility premise, the standards are, and should be, that much higher. The Mackey incident is more about the Achilles' heel of a standard bearer than it is about illegality or immorality.

The Mackey Incident
Whole Foods Market Chairman and CEO Mackey spent years earning a positive reputation as a corporate leader not afraid to take a stand on ethics issues. Before other companies figured out that it pays to be environmentally friendly, Whole Foods led by setting standards for humane animal treatment. In 2006 Mackey took the bold step of reducing his own annual salary to one dollar, pledging money instead for an emergency fund for his staff. Not shy about expressing his views, Mackey challenged leading thinkers, like Nobel prizewinner Milton Friedman, on business ethics issues. Like many leaders, Mackey seemed to relish the public spotlight.

But on July 20, Mackey got more publicity than he bargained for. The Wall Street Journal reported that Mackey had long used the pseudonym "Rahodeb" to make postings in Yahoo Finance forums that flattered his own company and leveled criticisms against the competition. Serious financial and possibly legal repercussions continue to unfold from this incident, and the final consequences may not be known for some time. Amid the furor following this disclosure of Mackey's secret online alias, it is vital that we not lose sight of the critical issues it raises about ethics and leadership in a rapidly evolving business world.

Implications for Leadership and Ethics
By now "business ethics" is an established part of doing business, not just in the United States, but also increasingly around the world. Jokes like "business ethics is an oxymoron" have long since worn thin, as society has come not merely to expect, but to demand, that business conduct itself according to basic rules of ethics and integrity. Business ethics, as an academic topic as well as a growing body of real-world practices, is not a new fad, but is something that has developed since publicized price-fixing and other corporate scandals in the late 1960s and 1970s. The most recent major business scandals, such as Enron, actually served to reinforce widespread perception that "business as usual" can no longer attend only to the financial bottom line.