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Introduction

“The Power of Ethical Management,” co-authored by Kenneth Blanchard and Norman Vincent Peale, is a seminal work in the field of ethical leadership. The authors argue that ethical behavior is not only the right thing to do but also essential for the long-term success of any organization. They challenge the notion that ethics and business profitability are incompatible, providing numerous examples and actionable advice.

1. The Five P’s of Ethical Power

The foundation of Blanchard and Peale’s ethical management philosophy is built upon the Five P’s: Purpose, Pride, Patience, Persistence, and Perspective.

Purpose:
An ethical purpose serves as a compass guiding every decision and action within an organization. Organizations must identify and commit to a clear set of values aligned with their mission.

Action: A person can create a personal or organizational mission statement that clearly outlines ethical commitments. For example, a business may pledge to operate transparently and prioritize customer trust.

Pride:
Blanchard and Peale stress taking pride in ethical behavior and in doing the right things. This builds self-respect and morale within an organization.

Example: In the book, a small business owner who refused to compromise quality for profit despite short-term losses ultimately gained customer loyalty and long-term success.

Action: One can regularly celebrate ethical victories within the organization, acknowledging employees who exemplify the company’s ethical standards.

Patience:
Ethical behavior often requires patience and a long-term perspective. The immediate rewards of cutting corners might be tempting, but lasting success is built on consistency in ethical actions.

Example: The story of a manager who chose to invest in fair labor practices rather than exploiting cheaper, unethical labor. Over time, this decision led to a more motivated and loyal workforce.

Action: Encourage open dialogues about the long-term impact of decisions and remind teams to prioritize ethical choices even when immediate rewards are not apparent.

Persistence:
Staying committed to ethical principles in the face of challenges is crucial. Persistence reinforces trustworthiness and integrity.

Action: Develop a periodic review process for business practices to ensure they continually align with ethical standards, and strive for consistent improvement.

Perspective:
Maintaining a broad perspective helps balance personal, organizational, and societal interests. Ethical decisions often require considering the broader impact on stakeholders.

Example: A company considering the environmental consequences of its production methods and opting for sustainable practices even if it initially costs more.

Action: Implement stakeholder impact assessments for major decisions to ensure all perspectives are considered.

2. The Ethics Check Questions

Blanchard and Peale introduce three ethics check questions that serve as a quick filter for decision-making:

Is it Legal?
Compliance with laws and regulations is the minimum standard for ethical behavior. However, legality alone does not equate to ethicality.

Example: A firm legally exploiting loopholes in tax laws may still face reputational damage and internal moral conflict.

Action: Always cross-check decisions with legal counsel but go a step further to assess fairness and ethicality.

Is it Balanced?
This question asks whether a decision is fair and balanced from multiple perspectives such as employees, customers, stakeholders, and society.

Example: When deciding on layoffs, considering not only the financial benefit but also the human cost and seeking alternatives like reducing working hours temporarily.

Action: Hold stakeholder meetings to gather diverse perspectives and strive for decisions that balance the interests of all affected parties.

How Will it Make Me Feel About Myself?
The final check involves personal reflection on whether the decision aligns with one’s values and integrity.

Action: Before making major decisions, take a moment for personal reflection, assessing the alignment with one’s core values and long-term vision for self-respect and fulfillment.

3. Building and Sustaining an Ethical Culture

Creating an ethical culture requires intentional actions and ongoing commitment from leadership and employees.

Establish Clear Ethical Standards:
Organizations must have a well-defined code of ethics that guides behavior and decision-making.

Example: A case where a company created a detailed code of ethics and conducted regular training, ensuring every employee understood the standards and expectations.

Action: Develop and prominently display a code of ethics, and incorporate ethical training into onboarding processes and regular professional development.

Model Ethical Behavior:
Leaders must lead by example, embodying the ethical standards they expect from others.

Example: The CEO who personally returned an overcharged amount to a customer, setting a powerful example for the entire company.

Action: Make transparency and integrity visible in top-level decisions and communications, demonstrating commitment to ethical principles.

Reward and Recognize Ethical Behavior:
Acknowledging and rewarding employees for ethical actions fosters an environment where ethical behavior is valued and encouraged.

Example: Rewarding a team for refusing to accept a lucrative deal that required unethical concessions, thereby reinforcing the company’s dedication to its values.

Action: Implement an ethical behavior recognition program, publicly acknowledging individuals and teams who exemplify ethical conduct.

Encourage Open Communication:
Creating a culture where employees feel safe to voice concerns about ethical issues ensures that potential problems are addressed proactively.

Example: Establishing an anonymous hotline for reporting unethical behavior in the workplace ensured transparency and trust within an organization.

Action: Create multiple channels for employees to report ethical concerns without fear of retaliation, and ensure follow-up on every report.

4. Real-World Ethical Dilemmas

Blanchard and Peale offer numerous real-world examples to illustrate the complexities of ethical decision-making and the process of finding balanced solutions.

Case of the Whistle Blower:
Highlighting the trials faced by employees who expose unethical practices within their organizations, the book emphasizes the need for structures that protect whistle-blowers.

Example: A middle manager who reported financial misreporting faced significant backlash but eventually helped rectify the company’s practices.

Action: Implement protective policies for whistle-blowers and ensure each report is carefully investigated and resolved.

Fair Competition Practices:
Companies often face ethical dilemmas related to competitive practices. For instance, sabotaging a competitor might offer temporary gains but harms long-term reputation and industry standards.

Example: A marketing team deciding not to use misleading comparative advertising against competitors, focusing instead on genuine value propositions.

Action: Develop marketing strategies that focus on a company’s strengths and values without resorting to negative tactics about competitors.

Transparency in Communication:
Providing truthful and transparent information to stakeholders, even when it’s not in the company’s immediate interest, builds long-term trust and loyalty.

Example: A technology firm openly discussing a product defect and swiftly taking corrective actions, thereby maintaining customer trust.

Action: Create a crisis communication plan that prioritizes transparency and honesty in all stakeholder communications.

Conclusion

“The Power of Ethical Management” empowers leaders and organizations to integrate ethical considerations into every aspect of their operations. By emphasizing Purpose, Pride, Patience, Persistence, and Perspective, and using tools like the ethics check questions, Blanchard and Peale provide a robust framework for making ethical decisions. Ensuring sustained commitment, modeling ethical behavior, rewarding integrity, and encouraging open communication are pivotal steps to fostering an ethical culture. Each piece of advice in the book is actionable, reinforcing the idea that ethical management is not just an ideal but a practical and profitable approach to leadership.