Virtue Ethics in Corporate Leadership

Question 1: Do you think virtue in corporate leaders is a more important criterion in selecting them than it was in the past, or do you just hear more about it?

Question 2: Should management focus only on maximizing firm profitability (this assumes laws are obeyed), or are there broader concerns to take into account? Provide arguments for both positions.

Choose the question 1 or 2 then discuss and response each posted # 1to 3 down below

Posted 1

Question 2: Should management focus only on maximizing firm profitability (this assumes laws are obeyed), or are there broader concerns to take into account? Provide arguments for both positions.

No, although companies need profit to survive and profit is very important for the shareholders, they are not the only stakeholder of a corporation. There are other important stakeholders like employees, customers, suppliers, governments, lenders, and activists with other important concerns.

Focus only on the maximization of firm profitability can bring some benefits in short term, companies can immediately cut costs and increase their margins but it would be difficult to keep high margins in a long term. The tendency is a decline in their revenues and loss of value of the company. According to Brooks & Dunn (2017) “usually, the public takes a very dim view of companies that put profits ahead of life, health, or the preservation of our habitat” (p197). If in the name of profitability, management neglects the wellness and safety of their employees, the environment of the communities around the company’s facilities, and ethical and fair customer service, consumers would avoid services and products of the company.

Posted 2

Do you think virtue in corporate leaders is a more important criterion in selecting them than it was in the past, or do you just hear more about it?

In my opinion, virtue in corporate leaders is more important than it has been in the past. One needs only to look at the financial scandals at Enron and WorldCom to see what happens when CEOs and CFOs are corrupt and act unethically. In both instances, the CFOs misstated the company’s financial statements by booking deceptive journal entries, omitting required information, and/or taking fraudulent positions. The CEOs were complicit in this fraud. Had any of those leaders involved been governed by their own morals or strong character, the scandals could have likely been avoided. Arthur Andersen would also still be a viable accounting firm. Clearly, a leader’s character shapes his or her behavior and can have a huge impact on the company.

Ethical behavior starts at the top in a company. It is difficult to expect virtuous behavior from employees if company executives are not exhibiting similar behavior. A leader cannot expect employees to be honest when he or she lacks integrity. Also, when there are decisions to be made, a company needs a leader who will use morals and ethics to help guide his or her sound decision making. Such morals would not allow a leader to fudge numbers on financial statements, or engage in unsavory conduct, for example. Virtues and morals are those character traits that dispose a person to act ethically (Brooks & Dunn, 2018).

Virtuous leaders make good business sense and ultimately can have a positive impact on the bottom line. Morale is improved, which makes employees more productive. Conducting business in an ethical manner can attract potential investors and keep current shareholders satisfied and loyal. It can also build customer or client loyalty. Additionally, conducting business in an ethical manner wards off bad press, attracts better employees and promotes a better workplace environment. All these items could result in bigger profits and better sleep at night for a company’s hiring directors and its executives.

Posted 3

a more important criterion in selecting them than it was in the past, or do you just hear more about it?

I believe that virtue in corporate leaders has become more of an important criterion as time has progressed. In the times before the digital era and social media, firms did not have to worry as much about the reputation of their leaders since there were not as many ways to spread information about questionable morals and characteristics of leaders to the population at large. Most of the news was communicated via the newspaper and even then, there was no guarantee that the papers had information on the actions of the leadership of a firm or that such information would reach all the consumers of products made by the company the leaders worked for. This limited the field of stakeholders to mainly just the shareholders, like creditors and investors, that saw reports or attended shareholder meetings to find out the profitability of the firm. As long as the firm was profitable most shareholders would not really pay attention to the leadership in their ethics and morals as long as the money kept flowing in.

However, as time moved on, we saw the innovation of the digital era and the arrival of social media which allowed information to flow more freely and reach people at a rate it had never before. This resulted in almost everyone carrying a phone or digital device that allowed them to document and exchange information about anyone, including the leadership of major companies. So, if a leader was caught doing an illegal activity, like dogfighting, and it was captured on video, then customers that despise such an act might refuse to buy products from a company run by someone that would partake in such a horrendous activity. This, more than ever, shifted the power to customers who could make or break a firm if their leaders were to act in a less than virtuous way. All it would take nowadays is a bad report on a media station or a string of bad reviews from customers about leadership to ruin a CEO and a company. This meant that companies needed to make sure that their leadership, as the face of the company, are viewed by the consumers as upstanding individuals who will do what is right and would never end up in the spotlight in a bad way. This resulted in companies focusing on hiring leaders that would increase profits and possessed the virtuous qualities that consumers valued. As an example, I enjoy buying Laughing Man coffee because it is a good blend of coffee and is owned by Hugh Jackman, whom as a person I like due to his virtuous qualities. If he were not a good individual, then I would not buy his product because I, like many others, value companies run by noteworthy individuals.

As for hearing about it more, I believe that due to technology the actions of leaders are more widely spread and talked about among the masses because it is so easy to send out a text or write an email. So I would say that I can see both points of the question and agree with both of them.