The Bottom Line: More CEO Education Required

Transform executive development to build Corporate Responsibility leadership

By Neil Smith

In the foreword of “Authentic Leadership,” author Bill George, former CEO of Medtronic, writes, “We need …people of the highest integrity, committed to building enduring organizations. Leaders, who have a deep sense of purpose and are true to their core values. We need leaders with the courage to build their companies to meet the needs of all stakeholders, and who recognize the importance of their service to society.”   

Corporate responsibility has always been about values and value creation. Yet in an economy where corporate acquisitions and layoffs of tens of thousands of workers are more the norm, and serving the greater good often is a distant second, few CEOs have successfully transformed their strategic thinking or how their organizations do business along the lines that George espouses. Why?

Research on CSR and leadership suggests that leading with a deeper moral purpose depends a lot on the personal attributes and qualities of top decision-makers. In their study of CEO transformational leadership and corporate responsibility, Professor David Waldman at Arizona State University, along with his colleagues, found that the leadership characteristics of executives who made the leap from CSR as another tactic to “strategic CSR” were rooted in “strong ethical values that guided their actions and policies and as a result, inspired their employees to do the same.”

These leaders had a clear mission that included balancing the interests of all stakeholders.  For them, according to Waldman, CSR is not just another new initiative but instead “is part of who they are.”

One could also argue that resistance to corporate responsibility starts with the language itself. The notion and benefits of corporate responsibility have evolved well beyond its origins in opposing “sin stocks” in the 1920s. However, like most new business theories, CR has been somewhat stuck in its own language, too frequently lacking clear definition and therefore widespread acceptance among business leaders. Moreover, terms like responsible, progressive, and ethical are highly charged, putting corporate executives quickly on the defensive and easily tripping up many corporate managers hoping to win their boss’s support for these new ideas.  

In our zeal to “save the planet” or “engage multiple stakeholders,” we forget that top executives, like the rest of us, find comfort in talking about what they know best, and in words they routinely use and understand. A 2004 CEO survey by the World Economic Forum revealed that among five obstacles blocking more interest in CR, was “trouble defining and explaining the business case for corporate citizenship or corporate social responsibility to analysts.”

Closer-to-home anecdotes confirm the survey findings. Consider the CEO who offers an overview of the firm’s commitment to corporate responsibility, but leaves explaining the details to her public affairs manager. Or, the CFO who gives a rousing speech on corporate responsibility at a conference, yet argues with his own managers against investing in CR.

In its recent study on corporate leadership and sustainability, Avastone Consulting points out that how the language and rhetoric of CR gets heard by others depends largely on a leader’s “mindsets—the frames of reference from which they see CR or sustainability and its importance.” Framing CR in words that resonate with managers’ individual goals, along with their capabilities “to translate it into day-to-day action,…can go a long way towards not only increasing their awareness of CR and the attention they give to it, but also changing his or her interpretation of what is experienced and what they can influence.”

Without this transformation, says Avastone, it’s unlikely that a “new vision for living and leading” basedon a deeply moral purpose will ever take hold in a business, let alone serve a broader role in society.

To achieve these ends, more attention must also be paid to leader education.
After all, CEOs of most multinationals were never trained and educated to lead such complex organizations, while still being accountable to multiple stakeholders whose cultural norms may redefine CR as we know it, as well as dictate entirely new expectations.

A review of the core curricula at the top graduate schools in business management, still considered a prerequisite for aspiring corporate leaders, finds some courses, at least, touch on areas that prepare students to think beyond satisfying only shareholders. However, more transformative opportunities in leadership development are still largely the domain of Executive Education programs, whose students are rarely CEOs.   

Neil Smith is managing partner of SmithOBrien, a management-consulting firm on corporate responsibility in New York City, and a part-time faculty member at The New School University. Since 1992, SmithOBrien has specialized in advising corporations on culture change and leadership development, operational practices that exceed legal requirements, and financial measurement.