Ethical Leadership – A Must For Customer Loyalty

Posted on 24. Feb, 2009 by in Leadership ethics

Businesses still do not understand that customer loyalty begins with executive leadership who demonstrates consistent ethics and values found within the organization’s strategic business action plan. When the executive leadership behaves badly, these actions are shared inside and outside of the organization.

For example, Indiana is an at will employer. Businesses can terminate employees without any notification. Yet most of these same firms expect 2 weeks notice when employees leave. Now does this attitude or belief demonstrate high ethics and values; or is there a thread of hypocrisy running through these organizations?

With the tightening of the global market place (and yes it is global even if you believe all your business is local), many organizations are cutting back on employees from downsizing to outright terminations. Usually what this means for mid-size to larger organizations is the slashing of the Education and Training Departments’ budgets as well as personnel.

Why is this area usually is the first to go is because of these two continued beliefs within the American business culture:

  • Education is not really valued.
  • The inherent value of human capital is not really understood by many American companies
  • In business, there exists what I have labeled the Osmosis Learning Belief. Stand next to someone and you instantly become a great leader or a super star goal achiever. Employees need to be developed where they demonstrate ethical leadership. They require assistance in developing their talents and further strengthening them so that the organization becomes even more competitive.

    American companies and organizations with the exception of a few such as Southwest Airlines do not value human capital. Many employees especially below the executive level are viewed as “throw aways” for the belief is that the firm can always find someone cheaper and better. For some enlightened companies such as Toyota, they have realized the tremendous cost of downsizing their employees because of the investment that has already been made.

    Each terminated employee represents at bare minimum 1.5 years annual tangible salary and benefits loss to the bottom line ranging from $30,000 to $200,000 plus. The intangible losses greatly increase that red ink and include:

    • Relationships those employees have established with external customers and other internal employees
    • Understanding of the ins and outs of the business
    • Additional growth in intellectual property (learning, training and development) by those same employees
    • Established loyalty and productivity

    TAKE ACTION ETHICAL COACHING TIP: Evaluate your organization from an executive leadership perspective. Are you leading forward, proactively during these difficult times or are you leading backward, reactively? Customer loyalty is the result of ethical leadership beliefs and actions. So before you terminate that next employee, take the 30,000 foot view and determine the real losses to your business.

    Want to develop ethical leadership? Take this free leadership skills assessment.

    P.S. Do you know what your talents are? Learn more about your ethical leadership talents to help you maximize education based marketing.

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