Definition of responsible leadership

Responsible leadership is about making business decisions that, next to the interests of the shareholders, also takes into account all the other stakeholders, such as workers, clients, suppliers, the environment, the community and future generations.

When it comes to responsible leadership, here are examples of some questions to consider:

  1. Are your business activities sustainable and are not polluting the surrounding environment?
  2. Do you identify systemic risks that your activities might contribute to, or do you take short term risks for quick profits that could endanger the reputation of your company?
  3. Do you care about the welfare of your workforce?
  4. Have you checked that your subcontractors do not use child labour?

Example case study
Take Getulio who is a plant manager for a supplier in the automobile industry and is also a responsible leader.

He develops a social dialogue in the plant, building strong relationships with workers and trade union leaders.  He promotes fair wage increases through collective bargaining, ensures the latest health and safety procedures are in place.  He set up a day care centre for the working parents and also negotiates many other items, like parental leave, health packages, continuing education and career paths for his staff.

Getulio followed the recommendations of a committee, he created, to explore ways of recycling and developing renewable energy. As a consequence, solar panels were installed on the plant roof.

Getulio also meets regularly with many of the local officials of the town nearby to make sure his company is considered as a good citizen in the community. He also promotes philanthropic activities. For example, he collected and contributed funds for the renovation of a school and he created an annual toy fare, where all the under-privileged children of the city get a toy for Christmas. [1]

The financial crisis in 2008 resulted in deep and prolonged criticism of business schools for “mismanaging” the leadership education of their MBA students. There have been two broad criticisms.

Firstly, that business school finance theorists were crucial in spawning the high-risk speculative investments such as the collateral debt obligations and securitised derivatives and products that were the primers to the financial crisis. Business schools have been accused of failing to imbue such theories, and also their finance courses, with ethics.

The second criticism is that business ethics have generally not been taught as a core course for MBA and EMBA programmes and courses in business ethics have failed to engage hearts and minds sufficiently with the governance and responsibility dimensions of management. Soul-searching has continued amongst global business leaders at the World Economic Forum in 2010 and in 2011 on the need for business reformation and renewal.

The phrase that is emerging to capture a more determined approach to governance and business ethics is responsible leadership.

Responsible Leadership, as a business school subject area, is less about ethical theory and more about ethical practice based on case studies. The practice has a particular focus on an individual’s values system and the pragmatic application of an individual’s values in the real-life challenging dilemmas of business.

Some business schools require their MBA students to engage in a responsible leadership course which provides them with the opportunity to experience social and environmental challenges and to utilise their skills and talents within an economic framework to “do good”.

Example

Increasingly, business schools are developing their MBA curricula to address the societal challenges, dilemmas and questions arising in governance, sustainability and ethics courses. This movement is being promoted by an association of the world’s leading business schools and companies under the Globally Responsible Leadership Initiative (GRLI) with the aim of “reframing the purpose of management education”.

The GRLI, together with the Association of MBAs, the UN Global Compact and the Association to Advance Collegiate Schools of Business (AACSB), among other institutions, have established a steering committee to create and promote the Principles for Responsible Management Education (the PRME). The PRME was launched in 2008, inspired by internationally accepted values such as the principles of the UN Global Compact. By March 2011, 357 academic institutions have signed up to the PRME initiative. [2]

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