Enough. It’s Time to Hire (and Develop) Better Judgment

Frustrated Hispanic businessman sitting on steps

Dominic Barton, Canada’s Ambassador to China, should be 100 per cent focused on his current job, which is key to our nation’s performance on the international stage, not to mention helping secure the release of the two Michaels being held as political hostages by Beijing. But Barton has been distracted of late by a scandal at his old employer McKinsey & Co., which under his leadership from mid-2009 to mid-2018 literally offered deadly advice on how to maximize sales of an addictive drug.

Canadian Defence Minister Harjit Sajjan is currently under fire for allegedly refusing to even look at evidence supporting claims of top-level sexual misconduct in the military.

Thanks to Julie Payette’s impressive résumé as a former astronaut, our image-conscious government eagerly handed her the keys to Rideau Hall. But Canada now needs a new governor general because Payette, who was not properly vetted for the role, resigned in January after reportedly creating a “toxic” and “hostile” workplace.

While frolicking on a beach in St. Barts over the holidays, former Ontario Finance Minister Rod Phillips shamelessly tried to mislead voters about his whereabouts by releasing a pre-taped video—which had him sporting a sweater and sipping eggnog by a fire while thanking constituents for making the personal sacrifices required to fight the pandemic.

Mark Machin, the former head of Canada’s largest pension fund, was recently forced to resign after traveling to Dubai for a personal trip and jumping the Canadian line for COVID-19 vaccines.

Rod Baker, another casualty of vaccine tourism, stepped down from his former CEO position at Great Canadian Gaming Corp. after being charged (along with his wife, the actress Ekaterina Baker) under the Yukon’s Civil Emergency Measures Act. In addition to failing to self-isolate upon arrival in the territory, the Bakers allegedly posed as local motel workers to deceive authorities giving COVID-19 vaccine shots.

Unfortunately, we could go on since an alarming number of leaders have been failing to serve as role models for future generations at a time when leading with integrity has never been more important. And we are not just talking about politicians and CEOs. Recent headlines have highlighted leadership failures at charities, hospitals, and educational institutions. But the list above is enough to make our point.

It doesn’t have to be this way.

According to management guru Tom Peters, McKinsey’s suggestion that its client Purdue Pharma consider paying rebates to pharmacies based on deaths and addictions tied to OxyContin represents a new low for capitalism, something he blames on “a poisonous combination” of high-IQ individuals being taught to maximize profits without considering any “moral responsibility of enterprise.” In a Financial Times opinion column, he writes:

I have long argued that we should “shut down every damn business school”. This rant is hyperbolic, but my reasoning is that business schools typically emphasise marketing, finance, and quantitative rules. The “people stuff” and “culture stuff” gets short shrift in virtually all cases.

In a follow-up blog, Peters expressed doubt that much will change at McKinsey because the internal company response has apparently focused on revising processes. He writes:

It is a culture and values and morals issue that runs to the core of the way McKinsey does business. It will in no way be solved with process change and a lecture or two. It requires deep reflection about “who we are and what we believe”—as human beings far more than “professionals.”

We couldn’t agree more. But with all due respect to Peters, we also think business schools can be part of the solution to the poor leadership judgment that has been generating headlines in recent months, creating a crisis in confidence when public trust is needed most.

Educational institutions are far from perfect. For years, business schools collectively failed to practice what they preach about diversity, equity, and inclusion. That fact was widely recognized amid last year’s protests over persistent social injustices, thankfully sparking many initiatives aimed at improving diversity and eliminating the systemic racism and biases that have been embedded for far too long in business-school cultures.

But when it comes to the role of capitalism, forward-looking business schools started evolving years ago. At Ivey Business School, which supports this publication, today’s students are more likely to engage in discussions about Aristotle’s teachings on character, Plato’s writings on justice, or the Business Roundtable redefining the purpose of a corporation, than Milton Friedman’s outdated ideas on shareholder primacy.

Furthermore, leadership research at Ivey has been laser-focused on what Peters calls “the people stuff” and “the culture stuff” since the 2007–2009 financial crisis. Using the economic meltdown as a laboratory, Ivey’s Ian O. Ihnatowycz Institute for Leadership deconstructed the personality traits, values, and virtues that helped distinguish companies that survived or prospered from those that failed or were severely damaged. This resulted in the development of the Ivey Leader Character Framework—which is highly relevant to organizations seeking to ensure that they are not responsible for the next scandalous headline that attacks trust.

Following the Payette leadership fiasco, management consultants Petros Kusmu and Alyssa McDonald wrote a Toronto Star opinion piece highlighting the prevalence of toxic leaders along with the related costs. “Not only are they a public-relations nightmare waiting to explode, [toxic leaders] lead to increased, lasting levels of stress and anxiety, loss of confidence, and lower job satisfaction among those they supervise. At the organizational level, toxic bosses reduce morale and productivity and increase costs of insurance and employee-assistance programs.” And since toxic managers also push employees out the door, the authors concluded that it is time to start listening “to the deluge of HR books, lectures and corporate training and hire strong leaders possessing a combination of passion, humility, adaptability, great listening skills and unimpeachable integrity.”

“Leadership often feels earned, but it is a privilege granted by organizations that entrust certain individuals to selflessly and responsibly look out for the interests of their stakeholders.”

Unfortunately, the Star’s headline writer summed up the article in a way that suggested organizations should ignore résumés and hire leaders based upon their character instead. The real issue is that character needs to share an equal footing with the other pillars of good leadership—competencies and commitment—in our hiring practices, promotion decisions, and leadership development programs. But it doesn’t.

Like everyone else, leaders make mistakes, which we often attribute to bad morals. But in most cases, these mistakes and even some acts of misconduct occur as consequences of poor judgment resulting from weaknesses in character.

Leadership often feels earned, but it is a privilege granted by organizations that entrust certain individuals to selflessly and responsibly look out for the interests of their stakeholders. And with this privilege comes the corrupting forces of power and influence, which is why character must be developed and maintained. Specifically, Ivey’s research has revealed that character consists of eleven dimensions: accountability, collaboration, courage, drive, humanity, humility, integrity, judgment, justice, temperance, and transcendence. These dimensions need to work together to support good judgment.  In many situations, however, poor judgment is the result of one or more dimensions being underdeveloped. For example, in the absence of temperance the dimensions of courage and drive may create reckless behaviour; or the absence of courage to speak out against popular opinion in the boardroom may lead to a disastrous decision.

And therein lies the rub. While there is no question that character supports good judgment and ethical leadership, most organizations miss out by (a) failing to understand the key role that developing and maintaining character plays in improving judgment and mitigating the risks associated with some of the nastier byproducts of success such as overconfidence, ego, and entitlement; and (b) not seriously focusing on character when hiring.

In Developing Leadership Character, which offers a deeper dive into Ivey’s research on how the interrelationships of various dimensions of character support good judgment, the case for character development is broken down into four parts. First, individuals can work on developing their own character strengths. Second, organizations can contribute to the character development of both individuals and the character of the organization itself. Third, these processes must occur if individuals and organizations are to be successful in the contexts within which they operate. And finally, the results from character development will yield critical benefits to the individual and the organization, thereby justifying the effort it takes.

Developing and maintaining character within an organization is obviously easier when every promotion or job posting is seen as an opportunity to reinforce the importance of character. And yet, while there are long-established selection criteria for competencies, it’s relatively rare for employers to discuss the character dimensions required to succeed in leadership roles.

As things stand, we typically avoid these difficult discussions when hiring, promoting, or reviewing performance, especially when a candidate comes with a reputation, competencies, and experience that appear sterling, not to mention top-shelf contacts and recommendations. Meanwhile, when a systematic character assessment is conducted, it is seldom done well because it is often driven by an “absence of negatives,” rather than a focus on identifying positive character dimensions such as courage, collaboration, humility, or humanity that may be essential for leading an organization through a crisis.

But while character assessment and development can be difficult and uncomfortable, it is a must before anyone is hired or promoted to lead. Keep in mind that leading effectively requires knowing one’s own strengths and weaknesses, which is how leaders grow and develop into better leaders. And as a recent Harvard study has shown, self-awareness amongst leaders is in short supply while overconfidence runs rampant.

Simply put, in order to successfully manage the challenges of today’s disruptive world—which includes meeting market expectations for greater social responsibility and diverse, equitable, and inclusive workplaces—organizations need to look beyond competencies and commitment. When hiring and promoting, they need to ensure that leadership candidates have the essential dimensions of character required to selflessly lead others (humility, humanity, compassion, empathy, etc.), and are capable of maintaining a healthy balance of these dimensions via ongoing development and introspection.

Ivey’s Institute for Leadership drives this point home by sharing the following quote taken from Chris Hornick, head of HBSC Strategic Services: “There is an ancient proverb that says that leaders are a lot like teabags; you don’t know what’s inside them until you put them in hot water. A person’s measure is not where they stand in comfort, but how they perform during adversity. In times of crisis, if a leader is inherently fearful, that will come out, if they are egotistical, that will come out; if they genuinely care about others, that will undoubtedly be on display.”

Like business schools, the marketplace is evolving. As highlighted in a recent HBR article on succession planning by Richard Haythornthwaite and Ajay Banga—the former chair and current chair at Mastercard, respectively—the financial market company now talks “a lot about not just IQ and EQ, or emotional intelligence, but also DQ, decency quotient,” which goes beyond supporting good judgment and “translates into global benefits standards such as 16 weeks of fully paid maternity and paternity leave, a stock ownership program for which 95% of our employees are eligible, and above-market retirement savings contributions and vesting schedules.”

There is clearly a lot of work still to be done before character assessment and development in leaders is a standard practice, and that is where we believe enlightened business education can be a big part of the solution to our leadership woes.

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