Tuuli Laakso, Julia Lampinen, Riina Streng
Responsible leadership is a broad concept that includes topics such as ethicality, morality, and responsibility of leadership. Today, topics like work well-being, mental health and inclusivity are discussed openly and the younger work force requires those to be accounted for at a workplace. Also, younger generations are more vocal about their rights and mistreatment at work. Recently, being environmentally friendly and reducing waste have also become ever more important to stakeholders. Ignoring those actions can lead to a bad reputation for a company and lead to non-sustainable business, as social media allows for information to be spread quickly. This imposes a lot of pressure for leaders to lead responsively while holding up to today’s standards. This article handles responsible leadership and enlightens it also through an interview.
Ethics of responsible leadership
Responsible leadership means that decisions are considered from an economic, social, and ethical point of view, while considering the company’s stakeholders. The skills to recognize moral problems is the first step in becoming a responsible leader. (Kujala 2017.) The ability to perceive alternative ways of working is an essential part of responsible management. Responsibility is not merely about potential responsibilities, but also of the good and right ways of working.
Developing the moral understanding of individuals strengthens the ethical culture of organizations and their readiness to develop new, responsible, and sustainable solutions to the challenges of our society. Solving ethical problems also requires the ability to take the position of others and the desire to understand things from many different viewpoints. In addition to financial rationality, leaders need a desire to look broad and far and the ability to take on the challenges of responsibility. If, for example, quitting or laying off an employee is only seen as an economic issue, its ethical dimensions cannot be considered, and the humane treatment of employees may be forgotten. (Kujala 2017.)
An ethical leader strives for two things, high well-being, and productivity. Leading ethically has a significant impact on people’s daily lives, workflow, and atmosphere. If the competence is weak, the results are reflected in both absence and productivity. An ethical approach reduces risks even before they arise. Fair treatment is associated with a 13-48% lower risk of sick leave. In addition, equal management is associated with a 29% lower risk of heart disease when other risk factors were considered. Organizations with the most employee-friendly practices, such as flexible working hours, training, and coaching, made a return of 103 percent in five years. The organizations with the weakest practices returned an average of 53% over the same period. The greatest leaders are interested in organizations that care for personal growth and experience and so on and carry their social responsibility more than just for profit. (Heiskanen 2021.)
Equal treatment and climate change as issues in responsible leadership
Finland has a set of laws for equal treatment of employees and job-hunters. These laws guide companies to be more responsible and protects employees and job-hunters from being mistreated. The laws are set in Employment Contracts Act (55/2011), Act on Equality between Women and Men (609/1986, Tasa-arvoL), Non-discrimination Act (1325/2014), and the Criminal Code of Finland (39/1889). These laws aim for equal treatment of people despite their age, health, nationality, ethnicity, gender, language, religion, opinions, beliefs, family relations, and labor union and political activity. There are penalties for not obeying these laws. (Äimälä 2022, part 10.)
Following these laws can ease the pressure of being inclusive and seeming unbiased, as it is the aim of the laws. Leaders can be mindful of their communication style as it can show bias towards certain groups or ideas. They should avoid stereotyping new employees or job-hunters. Also, management should show and set the work community the communication standards of the company; this includes holding themselves and others responsible for inappropriate communication at the workplace.
As climate change accelerates, organizations may either be content to be a part of it or take an active role in tackling it; no organization is out of reach of the effects of climate change (Laaksonen 2020). The leaders of today play a big role in deciding who to collaborate with, what materials to use and other ways of being environmentally friendly. For example, many influencers have stopped collaborations and advertisements around fast fashion brands and the mass production of clothing. Swedish Influencer Thérese Lindgren has made this decision this winter. She has had enough of the negative impact fast fashion has on the environment and the bad working environment the factories have. “When I reach a million people on Youtube and Instagram, it is something I take seriously and want to use for something important.” says Therése Lindgren in an interview for the Swedish magazine Aftonbladet (Willander 2022.) When someone like her has a great number of followers, it is important to harness the actions for something good, like trying to fight the climate change in any ways one possibly has the chance to do so.
Responsible leadership in practice: the interview
For this article, The CEO of a Finnish metal company was interviewed. The company produces precision metal parts for large international companies as custom work. In the interview, we found out about the CEO’s thoughts on responsible leadership and how it has affected his leadership style and decision-making. It also showed how his mindset has changed over the years. The CEO has been in office for almost ten years and is the owner of the company. He made major structural changes after the acquisition of the company and the company is more prosperous than ever before. All operations in the company come from the CEO’s mindset of responsibility.
The leader told in the interview that his leadership style has always been straightforward, with no fear for making changes in the organization and business. It is important for him to create a safe environment for employees, as well as pay attention to be environmental issues. The company has replaced the use of oil with air heat, and the electricity used is completely renewable. At present, the company is 95% carbon dioxide free. The company also recycles surplus materials to produce new material. The company delivers products only within Finland, yet most of the products end up abroad on behalf of another companies.
According to the CEO, responsibility is reflected in the company’s every day by practical actions like fostering occupational safety and paying a salary in accordance with the collective agreement. Moreover, the working hours are in accordance to the law, and holidays are held as agreed. Employees have health check and free occupational health care. Employees also reply to an annual well-being at work survey that shows the needs of development to be made. This is also reflected in the fact that employee turnover is zero. Every employee is treated equally.
The company is engaged in B2B sales, and no new customers are currently being sought. When customers were acquired, the values of the partner company were important to the company in terms of cooperation. They want to work with companies that operate ethically and responsibly.
According to Raukko (2019, 9), responsibility requires sustainable leadership, and it promotes and strengthens the company’s strategic goals. The aim is to achieve a prosperous work community, profitable business, and satisfied stakeholders. Nowadays, climate change and other world events have awakened people to want better and more responsible operations from companies. Responsibility always starts with the management level and the understanding of responsibility in businesses. The CEO himself has made decisions that have driven the company to better operating results and towards being more environmentally friendly. He has carefully selected people as supervisors whose views match his own views on decision-making.
Responsible leadership includes vision and values. The company’s vision for the future is to be 100% carbon free and the best possible levels of well-being and job satisfaction. The vision also includes a steady increase in the company’s productivity overall. The four core values of the company now are honesty, openness, customer satisfaction and cooperation. The vision and values are in line with Lämsä’s (Paulanharju 2021, 32) model of responsible management, based on which the features of responsible management can be found: trust, openness, fairness, exemplariness and caring. The target company uses the features of the model in its own world of values.
Coping well with the recent responsibility issues is vital to successful leadership. These issues have become imperative as the market has become more competitive and it is “always-on”. (Badaracco 2003, 4). Badaracco’s idea is a bit different compared to traditional ideas on responsible leadership, but they go hand in hand. There is a certain level of struggle in today’s world on being responsible, ethical and inclusive enough, but not too much as not to look like you are favoring a certain group or idea.
We as a group discussed this topic in a quite large scale. We think that responsibility is an important topic and should be looked into more below the surface. Because the topic is broad it is hard to choose only a few points to write about. Responsibility is much more than just climate change and well-being. Other important topics are for example, child labour and discrimination against age, race, ethnicity and religion that we wish we could have discussed.
Badaracco, J. 2013. The Good Struggle: Responsible Leadership in an Unforgiving World. (Pages 1-6)
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