Is there a place for personal values in leadership?

Margaret Hodge MP accused Google of being "devious, calculated and, in my view, unethical”. Photograph: Andrew Winning/REUTERS

In the banking sector, standards have been widely condemned in the wake of the global economic crisis. This year, corporate values were in the spotlight again when Google was accused by Margaret Hodge MP of being "devious, calculated and, in my view, unethical".

To be successful in the cut-throat world of business, you may think there's no place for soft values and morals. But holding on to personal principles as a leader is not just about ethics – it can also boost your career and organisation.

Being true to your values helps performance in the long term, according to Petra Wilton, of the Chartered Management Institute. "Not only does it have consequences for reputation and trust in business, it also has a huge impact through employee engagement, productivity and outcomes."

"Too often people's personal principles go out of the window when they take up leadership positions, when they've got the pressures of targets and bad examples to follow. You can certainly behave unethically and still get good business results in the short term, but it's likely to come back and bite you at the end of the day."

With an increased focus on corporate responsibility since the banking crisis, many companies have made efforts to embrace an ethical culture among employees. But, although company values may provide a useful framework, the ethics of an organisation are ultimately set by the example of its leaders.

"It's what you're doing, not what you're saying, that people will use as an example," says Philippa Foster Back, director of the Institute of Business Ethics. "People recognise that to get on they maybe need to behave like their boss. So the culture of the organisation is set by the top."

If sticking to your principles seems like an obvious objective, why do so many leaders seem to get it wrong?

Petra Wilton suggests: "Most people don't get up and say: 'I'm an unethical individual, I'm going to go and make the wrong decisions'. A lot of the time it happens when people try to meet the corporate and business objectives without having any real measure of the human consequences."

One of the main problems for business leaders is subjectivity – there are no clear cut rules on ethics. "The meaning of ethics changes from person to person," explains Sankalp Chaturvedi, associate professor at the Imperial College Business School.

"What is ethical to me may not be ethical to you. And business processes themselves are very contextual – what is ethical in one country may not be in another."

It's easy to see how principles may not always translate to other people. For instance, Starbucks has been ranked in the world's most ethical companies for six years in a row. Yet its tax avoidance methods have sparked protests and criticism.

Given the ambiguity of ethics, your personal principles may not be shared by everyone. So for leaders, valuing principles must be about honesty and having an open conversation. Chaturvedi says: "Problems happen when people are not authentic – when they say one thing and do something else – so it's about being consistent about what you're saying.

"Being a leader is not just about making decisions, but also making sure people understand what the intention is behind it."

But balancing business and principles is not always easy: challenging decisions can require compromises. "There will always be ethical dilemmas where it's hard to weigh up the consequences of a decision you are making," says Wilton.

"Sometimes there's no clear right or wrong answer. But valuing your principles is about considering the implications of what you're doing and, when in doubt, challenge things where possible."

Back adds: "It comes back to the choices that individuals make, and what they feel comfortable with. What's important is having a mental checklist while you're making decisions and being open about things you're not comfortable with. True leadership is having the courage to say no."

Ethics are not just important for the sake of companies, but also for the leaders themselves. Back says: "If you're not true to your values then you're likely to end up with stress and unease as you have to take on a different persona as you walk in through the door at work. So it is very important for individuals."

And holding on to principles can help guide you through your career. Steve Nicholls, who coaches executives and managers, says that as you climb up the career ladder into more senior roles, there is often less in terms of peers and reality checks.

"It's important to hang on to personal values because, as a leader, there may not be anyone who you see as a peer to put an arm around your shoulder. One of the most difficult things as a leader is the management of ambiguity in business contexts. Yet you need to do this alongside having clear communications."

"At the end of the day, leaders have got to lead and they've got to be strong."

Chaturvedi adds: "Research has shown consistently that culture has an impact on performance in a company. If people share values consistently then there's a strong culture – and that is definitely going to have an impact on the performance of the individual, as well as the company."

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