On the Importance of Ethics and Leadership

Several weeks ago we had a post about the ethical missteps at Boeing, where I heaped lots of blame on now-fired CEO Dennis Muilenberg. That post generated many comments on LinkedIn, including a few that speculated: were these problems really due to Muilenberg, or was he undermined by subordinates who didn’t want him at Boeing?

It’s a great question to ask, because the answer speaks volumes about what ethical leadership actually is. 

The short answer is that of course it’s possible Muilenberg might have been undermined by subordinates opposed to him. At an organization as large as Boeing (153,000 employees worldwide), I’d be startled if at least some executives hadn’t been trying to undermine him for years. 

Well, so what? That’s part of the territory when you sit in the CEO chair. Which is why scheming subordinates are no excuse for Muilenberg’s poor leadership during Boeing’s period of crisis. 

Leadership is about building coalitions to pursue goals. Moreover, any large organization will have multiple goals that need to be put into a certain priority. The CEO’s job is first to define those goals and their order of importance; and then to hold together the right coalition of employees and investors to pursue those goals according the priorities the CEO has laid out. 

So when people say Muilenberg fell victim to palace intrigue, that simply means other coalitions within Boeing were stronger than the one he was trying to keep together. He failed in his job as a leader. 

Perhaps no CEO could survive a corporate failure as grave as the 737 MAX crisis. Muilenberg, however, did himself no favors because he kept alienating one crucial group after another. He worked to keep MAX jets in service even after two crashes, and alienated customers. He promised a quick return to service for the jets, and when that didn’t happen, he alienated investors. He kept quiet about evidence that Boeing test pilots knew the MAX navigational software was glitchy, and alienated regulators. 

You see the pattern. Step by step, Muilenberg alienated key parts of the coalition any CEO needs to stay in power. Then came his downfall.

Ethics & Corporate Culture

So what does all this talk of CEOs and coalitions have to do with corporate ethics & compliance? Lots, I think.

Every large organization talks about ethics. The real question is how much the CEO makes ethics a priority — that is, where he or she places the ethics goal relative to all the other goals we mentioned above. Because a focus on ethical culture resonates with people; they see it, and embrace it, and feel like they are part of something larger than themselves. 

That is, they feel like part of a coalition. And then they stick with the coalition, even in tough times.

So amid all the bickering and office politics that comes with large organizations, every CEO should work to build a coalition of employees who understand what the company’s ethical values are, and that ethical conduct takes priority over all other goals. 

That’s what phrases like “the CEO must lead a culture of compliance” actually mean. That’s what leadership is: building coalitions of people who agree on a vision. Ethical leadership is building coalitions of people who agree on a certain vision of ethical conduct.

That’s not what Muilenberg did. When he discovered in early 2019 that Boeing test pilots knew the 737 MAX navigation software was glitchy; and then sat on that information for nine months because disclosure might complicate a criminal probe by the Justice Department — Muilenberg was communicating that ethical priorities were subordinate to other priorities. 

Well, as soon as the CEO signals that ethical priorities can sometimes be subordinated to other business concerns, everything starts to unravel. The CEO is, indirectly, telling everyone else that they too can exercise judgment about subordinating ethics. 

Then your work to foster a culture of ethics and compliance sputters. You, the ethics and compliance function, can’t keep that ethical coalition together yourself, if they are hearing messages from the CEO that sometimes ethical priorities can be put aside. Only the CEO can set the proper tone. 

Anyway, once you lose that glue of an ethical culture — of people believing that they belong to a larger whole that’s worth supporting — everything else starts to fall apart, too. Factions proliferate, people bicker, whistleblowers take damning allegations outside the business rather than upstairs to senior leadership. The company ends up with people working against each other, or in parallel, or otherwise just out of step.

CEOs can’t long govern an organization like that. Success begins and ends with a strong ethical culture; and strong ethical culture begins and ends with the CEO.