Leadership Dilemmas

There’s nothing casual or white about a lie that leads to stock devaluation, job loss, or a company’s demise. The allure of money, success, and power cause many a good leader to blow it. But what about business situations that present problems not so black and white as whether or not to participate in insider trading or accounting fraud? Leaders and nonleaders often face dilemmas that are not only right versus wrong but also ones that seem to be right versus right. The toughest choices are those that pit one “right” against another.

In leadership assessments, over 50 percent of 13,000 peers and direct reports felt that their leaders could improve in being honest and ethical.

Consider the following situations:

• An employee is asked by her manager to explain why her team’s project is late, but a truthful explanation would reveal personal information that was given in confidence by one of her team members. Should she be truthful, or should she honor her commitment to confidentiality?

• A manager must decide whether to fire an employee who lied about his past work experience—the disciplinary action required by the company’s handbook—or whether to overlook the incident after learning about the employee’s desperate need for the job and its health care benefits to provide for his sick daughter.

Sometimes being dishonest seems like the better choice. But keep in mind: Honesty is a universal ethic, accepted by all cultures and religions as the right choice. In his book, How Good People Make Tough Choices, ethicist Rushworth M. Kidder explains that a departure from the truth is always a right versus-wrong dilemma, with lying always being a wrong.

When leaders are not supported by an organization with a core value of honesty that is explicit and lived, choosing to be honest can be even more difficult. As a middle manager in a large manufacturing plant, Eileen is aware that salary cuts in her department are imminent. However, her boss has told her “not to breathe a word.” In fact, she was told that if asked, she should tell her people “it’s not going to happen,” and she has been warned about repercussions if she does not do as she has been told. Eileen’s situation pits her reputation against her future with the company. Her credibility will suffer when people find out that she has been lying to them. What does she do? Unfortunately, she must choose between being honest, maintaining her integrity and credibility, and bucking her boss and possibly losing her job.

People often lie at work because they are afraid of retribution. They think that to speak the truth or “tell it like it is” is career suicide. Or they believe that honesty will not do any good because nothing will change anyway—and actually, sometimes they are right. In October 2002, an Aquila, Inc., employee was fired 2 hours after he responded to the CEO’s organization-wide e-mail encouraging workers to send their “thoughts and concerns” about the utility company. In a response e-mail, the employee, Stephen Millan, questioned whether a $7.6 million severance package for a recently departed CEO (who was the new CEO’s brother) was ethical at a time when Aquila was making various cutbacks to save money, including removing free hot chocolate from company break rooms. Perhaps Millan overstepped an ethical line himself when he also copied several of his coworkers on the email to the CEO. Aquila’s message was clear, however: Speak the truth, and be prepared for harsh consequences ( Kansas City Star, 10/5/2002). Is honesty always rewarded? No, not always. The truth can set you free, but it also can challenge the status quo, make people angry, and even get you fired.

Leaders with credibility are expected to always be honest, no matter the consequences, because it is the right thing to do—not because it will get them something. And yet

• In recent assessment surveys, only 26 percent of more than 4800 employees were highly satisfied with their leader’s performance in communicating in a direct and straightforward manner.

• According to a survey of over 2000 U.S. workers, less than half believe that their senior leaders are people of high integrity (Hudson Institute).

• A survey of 12,750 employees from all job levels and major industries found that less than half of employees think senior management is honest (Watson Wyatt, February 2002).

If CEO salaries were based on perceptions of honesty rather than meeting revenue targets and improving shareholder value, it appears that most would be shopping at St. Vincent’s Thrift Shops.

Leaders are often privy to information that others are not. When they are in situations in which their direct reports or colleagues prod for information that cannot be revealed, many play the fool: “I don’t know.”

“Sometimes I feel I’m not getting all the information available,” one executive said of her boss. “I begin to get the sense that she’s working another agenda than the one being discussed. Then I start feeling that if I’ve told her something confidential, it might not remain confidential. The lack of trust begins to bleed over into everything.”

When leaders are evasive, relationships suffer. And yet there are other options. To increase or maintain credibility, a leader must be honest in all transactions; however, honesty does not demand full disclosure. When a leader knows something and is unable to be fully transparent, the honest answer is “I know, but I can’t tell you.” A leader’s commitment to honesty while still maintaining the required confidentiality will be respected and appreciated.

When faced with a messy situation that you are not prepared for, consider the vastly underused option of saying “No. I can’t discuss this right now” or “I’m unable to reveal that information” or “I’m committed to being honest with you, but I need some time to think about this before responding.” If appropriate, help your listeners to understand why you cannot discuss the topic.

Also understand that a commitment to honesty requires leaders to give followers opportunities to ask for it.

Following a reorganization at a major beverage company, Pat, a senior executive, held a meeting with her division. Morale was low, and there were rumors of more layoffs to come. Because Pat did not want to be confronted with questions she could not answer, she did not allow a question-and-answer session to take place. Consequently, her credibility took a hit—she was perceived as withholding information and not caring about people who were rightfully concerned and even confused. Abetter choice would have been to allow questions and to answer them honestly—even if the answer had been “I can’t give that information at this time.”

In recent assessment surveys, only 26 percent of more than 4800 employees were highly satisfied with their leader’s performance in communicating in a direct and straightforward manner.