Ethics are Essential to Leadership

Many leaders find themselves with the dilemma of being popular versus making the sometimes difficult, yet necessary decisions. True leaders understand that leadership requires managing by following one's principles, and being guided by what is ethical and responsible.

In many organizations, this battle is exacerbated by the fact that it is often difficult to find qualified leaders, as well as by the fact that the vast majority of organizations do not have any type of true leadership training. In the past three decades, I have observed that while most organizations believe that they engage in leadership training, since this training does not encompass those necessities of leadership, and are generally neither professionally prepared or presented, little is achieved. The obstacle is that since most existing leaders are neither trained nor fully qualified, and therefore do not fully understand how to train leaders, it is often difficult for those "leaders" to "let go," and permit an organized, consistent and ongoing leadership training program to be conducted.

In general, human nature is such that most people strive to be liked and/or admired. However, since being liked is not a guiding principle for effective leadership, there is often a breakdown in the leadership process. Doing the right thing for the organization, without fear of hurting one's popularity, is, in fact, essential to effective leadership.

Leaders must be guided by the principles of morality, ethics, and, specifically, being guided by what is in the best interests of the organization. Effective leaders realize that doing that many not be popular, but is often necessary. Undoubtedly, there would be more effective and qualified leaders if organizations prioritized professional and ongoing leadership training.

In observing organizations for three decades, I am consistently amazed that following principles and ethics is the exception rather than the rule. If an organization is to fluorish, it needs effective leadership.

Economic Analysis - - Hype vs Reality - Confusion

No wonder most people don't understand the economy. Often what might seem good on one hand, has bad side effects on the other. For example, the stock market rises- one would think that was good! But that was mostly due to the rising price of oil- bad news. But, often the price of oil rises because the "experts" believe the economy is improving and thus more oil will be needed in production- good news! But that rise in oil prices causes the cost of living to increase- bad news. But that helps the Gross Domestic Product (GDP)- good news! But that then causes inflation- bad news. But that inflation means the economy is improving- good news! But then the Fed becomes concerned about inflation and raises interest rates- bad news! Which causes the value of the dollar to improve- good news! But that hurts exports because now American products cost more overseas- bad news! But that means foreign products cost less in the US- good news! But that hurts American companies competitiveness- bad news!

If we think that political analysis and political chatter is often more hype than anything else, the same can certainly be said about analyzing economic news! You can readily see why economic news often seems co confusing. Economic news often seems confusing because it is - - what is good for one consumer, might be bad for another- what is good for one company, bad for another- what might be good for one sector of economy- bad for others.

The stock market is often the most confusing. On days when there is "bad news," the market often goes up, while on some "good news" days, the market sometimes goes down! While the Dow, or the S&P, etc., might go up, it does not mean that the stock(s) you own, will follow suit.

Too often, for the sake of a sound-byte, the media tries to over-simplify economic news. Yet the economy is by definition quite complex. The one issue there should be some agreement on is that high unemployment is not good. Yet even in that case, the "experts" can't agree upon, nor act upon a viable solution.

The best way to think about the economy is this-- the difference between a recession and a depression is that it's a recession when it happens to someone else-- it's a depression when it happens to you!
It is my belief that a healthy economy requires certain factors to be in place - - low joblessness; high consumer confidence; a strong manufacturing sector; and reduced government deficits. That is what we must demand!

Leadership Training Priorities

In my three decades of management and leadership consulting and training, it has become abundantly clear to me that adequate and effective leadership is a major obstacle and challenge for most organizations. Most organizations neither effectively qualify potential leaders nor have a mechanism in place to assure that leaders maximize their potential to succeed. I generally recommend that organizations emphasize and prioritize leadership training. These are the basics of leadership training, and the components that all successful programs include:

(1) An organization must have programs for various levels of leadership. The first level is entry level, or early leadership identification and development. These individuals are also known as the future leaders. Next, there is intermediate leadership training, or training leaders at the local and/or lower levels of the organization. There must then be advanced training, for those entering Board or Trustee levels of leadership. Finally, there must be elite training, for those involved in the highest leadership positions of an organization.

(2) Organizations must train in what is required to be a leader. In other words, "How to be a leader?"

(3) What are the skills required for leadership? These include communication,effective listening, negotiations, staff oversight, member relations, decision making, etc.

(4) How to market the organization? This means getting existing members more involved, lapsed members excited again, and potential members to join, as well as exciting donors and potential donors./

(5) How to clearly elucidate the mission statement of the organization? This includes clearly creating one that effectively yet briefly explains the importance of the organization, what it does and what it stands for.

(6) Leaders must understand all aspects of motivation.

(7) Leaders must be trained to be able to both write an effective letter, and give an adequate and motivating speech and/ or address.

(8) How to answer objections? Leaders must fully be able to use the five steps to answering an objection.

(9) How to effectively work with co-leaders and staff? What should a leader expect?

(10) What is the difference between micromanaging and effective management? What must be done before a leader can effectively delegate responsibilities?

(11) Leaders must fully understand the organization.

(12) Leaders must be trained to fully utilize all aspects of the decision making process, and understand all potential ramifications, both positive and negative, of either making a decision and taking action, or conversely, what might occur if no action is taken.

(13) What are the components of leadership judgment? What is involved in the process?

(14) Leaders must learn the basics of negotiation, as well as the pitfalls of contracts.

(15) When should a leader and an organization use a consultant, and when not to do? What should an organization look for in a consultant?

These fifteen items are just the "tip of the iceberg." However, when one evaluates and compares the most effective organizations and compares that to those that flounder, in the vast majority of cases, a significant difference is the concentration on leadership training and qualification. Today, many organizations seem to be suffering from a dearth of leadership and involvement, and one of the major causes of that, is the lack of concentration on developing and training its leaders.

Steps to Getting It Done!

There comes a time when we all grow weary of those individuals who are constantly putting their "two cents" in, but never follow through on anything. In my three decades of consulting, I have come to refer to these individuals as the "talkers," or the annoying individuals who love to give suggestions, but almost never do anything about it.

Organizations and their leaders need to recognize the need to "get it done." This means that while coming up with an idea is a good starting point, that is all it is, and should not be misconstrued as any type of actual action! It is always far easier to criticize a plan or an idea, than it is to actually give an alternative. Since no plan, no matter how well designed and planned, is ever perfect, and there is always room for improvement, there is always something available to criticize. However, when I consult to an organization, or conduct a leadership training program, I "forbid" empty criticisms that merely object, unless they are accompanied by alternative courses of action. Therefore, I recommend that all leaders, and all organizations, develop a course of action, or, in other words, "Steps for Getting It Done." Organizations and leaders would be well served to use the following suggestions to develop their own customized "steps":

(1) Fully develop the concept. That means that an idea should be thought of in terms of what its goals are, what the timetable is, the reason for the change; and the possible positive and/ or negative ramifications.

(2) What are the financial impacts, both in terms of out-of-pocket expense or investment, as well as in terms of time commitment?

(3) Will this plan endanger any other aspect of the organization?

(4) How will members view this plan?

(5) How will you communicate the plan to members, donors, etc?

(6) What is the action plan? Who will be responsible for overseeing the plan? What will the oversight consist of?

(7) What is the timetable?

(8) Why might someone object to this idea?

(9) Will this plan be a top, intermediate, or low priority?

(10) What will be the follow through?

(11) How will you track this plan?

(12) Is this a short-term, intermediate or long-term endeavor?

(13) What do you hope to achieve?

(14) Are the goals achievable?

(15) Since a leaders tenure in office is limited, how will you ensure its continuity?

These are just a few of the questions that organizations and leaders should always ask, and that most organizations do not. Probably the biggest challenge that most organizations have is a dearth of true leadership, because most organizations do not commit enough time, resources or energy to prioritizing leadership training. Because of this, in most organizations, leaders ascend to positions that they are not prepared for, and many organizations either flounder or, at the very least, do not achieve their optimum results!

Trustees have Fiduciary Responsibilities

While each individual is entitled to make his own investment judgments regarding appropriate vehicles for his personal funds and accounts, not-for-profit trustees are entrusted with specific fiduciary responsibilities. These fiduciary responsibilities have been established to ensure the safety, stability and security of not-for-profit's funds. Unfortunately, these rules have been rather general rather than specific in most cases, and that has led to financial disaster for certain not-for-profits.

We have all heard and read about the impact of the monies managed by Bernie Madoff, on not-for-profits that invested in those vehicles. Putting aside the issue of the legality and legitimacy of Madoff's transactions, many believe that hedge funds in general, because of their sometimes speculative nature, and lack of certain controls that other investments possess, would be inappropriate vehicles under any circumstances for any not-for-profit. The logic behind these rules is that while an individuals who speculates with his own monies only impacts himself and his family, non-profits that speculate may put at risk monies that have been entrusted to it to serve specific causes or missions.

TheFreeDictionary.com defines the "prudent man rule" as "the requirement that a trustee, investment manager of pension funds, treasurer of a city or county, or any fiduciary (a trusted agent) must only invest funds entrusted to him/ her as would a person of prudence, i.e. with discretion, care and diligence. Thus solid "blue chip" securities, secured loans, federally guaranteed mortgages, treasury certificates and other conservative investments providing a reasonable return, are within the prudent man rule."

The "prudent man rule" has been the standard since around 1830, when there was a dispute settled by the Massachusetts courts. There have been many adaptations since then, because of the different and increased number of types of vehicles available to invest in today. One of the updates has been, for example, to include the concept of "diversification" into the definition, so an organization is not over- exposed to one particular investment. Thus, if we apply that towards the Madoff investments, even if the trustees felt that the investments might have some appropriateness as one of their investments, the many non- profits who were ruined or nearly ruined financially by holding this investment were obviously not being prudent by having a very large percentage in these investments. Trustees must not be blamed when an unforeseen circumstance causes otherwise suitable investments to financially implode, but the trustees must be held to the intent of the "prudent man rule" when making investment decisions.

Trustees must re-examine investments on a recurring basis, and assure that any changing circumstances has not changed the suitability status of a particular investment. They must insist that the portfolios be diversified as to type of investment (common stocks, preferred stocks, treasury bonds, corporate bonds, etc., as appropriate), industries invested in (no over-concentration on what investment area, e.g. technology, health, pharmaceuticals, etc.), and that the portfolio is suitably diverse. Many organizations have begun to utilize some facsimile of what is known as the "20/5 Rule." This means that, for example, that no more than twenty percent of the portfolio be invested in any one industry, and that no more than five percent be invested in any single investment.

Trustees have the fiduciary responsible to assure compliance with the "prudent man rule." This is important, not solely for legal reasons, but also for moral, ethical, and safety reasons as well.

Leadership Training Is A Necessity For Organizations

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Richard Brody's Published Articles

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