Dada Adefolami

Dada Adefolami Suraju.

Ethical leadership is the answer to the problems of Nigeria, but an ethical culture can only be fostered by top management in public and private sector of the economy. Ethical Leadership is leading by knowing and doing what is right. The principal problem with that is that it is difficult to define “right”. Ethical leadership is divided into two parts. The leader must act and make decisions ethically, and second, the leader must also lead ethically in their attitudes and interactions.

Dramatic economic, social and political changes are sweeping the global economy. It is vital therefore that ethical leadership should energise and mobilise people, putting them on the right path to solving existing problems, and making the necessary improvements.

There were many financial scandals in the country, caused by big regulation gaps and stakeholders focused on profit rather than long-term value. The goal of an ethical culture is to minimise the need for enforced rules and to maximise principles that contribute to ethical reasoning even in tough times. However, an ethical culture in the country / companies must come from top management – those who are responsible for corporate governance.

Ethical leadership is the answer to the problems in our economy. Without ethical leadership problems will only multiply and values, vision, virtues and voices are unable to be expressed and heard. In contrast, ethical leadership creates the climate in which people turn challenging opportunities into remarkable successes. When leaders act ethically, they usually model the way, inspire a shared vision, challenge the process, enable others to act, and encourage the heart of citizen/employees. This comes from the idea that credibility is the foundation of ethical leadership.

Ethical leaders have to know where they are heading, and have a vision for the future. The ability to look forward is what distinguishes leaders from other ethical individuals. Consequently, what’s most needed are leaders who know how to guard their credibility, since this builds a good governance and corporate culture and citizens feel proud of their country. Further, credible and ethical leaders should adopt the following ethical leadership model.

VALUES

Ethical leadership begins with the understanding and commitment of individual core values. This means discovering the core value needs, identities, then integrating unique values among the citizens.

VISION
The ability to form actions, particularly in service to others, within a picture of what ought to be.

VOICE
Claiming your voice is the process of articulating your vision to others in an authentic and convincing way that motivates others for action.

GOOD QUALITY
The attempt to strive for what is right and good for all and not only the individual. In this way, people develop the character of virtue – striving for the common good. Ethical leaders should frequently ask themselves how values, visions, and voices are in line with the common good.

REASON FOR FAILURE:
It has been suggested that the ultimate reason for business failure is poor leadership. According to business guru, Brian Tracy, ‘Leadership is the most important single factor in determining business success or failure in our competitive, turbulent, fast-moving economy. Based on a study by the US Bank, the main reasons businesses fail are:

1. Poor business planning
2. Poor financial planning
3. Poor marketing
4. Poor management.

Proper application of these key factors is a function of good leadership. According to the study, in the business planning category, 78% of businesses fail due to the lack of a well-developed business plan. “The old saying: ‘If you fail to plan, you plan to fail.”’

Leadership is about planning for success before it happens. Sun Tzu, the 6th century Chinese philosopher, in his epic work The Art of War, gave some sound advice that still applies to business today: “When your strategy is deep and far-reaching, then what you gain by your calculations is much, so you can win before you even fight. When your strategic thinking is shallow and near-sighted, then what you gain by your calculations is little, so you lose before you do battle.”

In the financial planning category, 82% of businesses failed due to poor cash flow management skills, followed closely by starting out with too little money. Business leadership is about taking financial responsibility, conducting sound financial planning and research, and understanding the unique financial dynamics of one’s business. More than 65% of small businesses fail within the first three years because of cash flow problems. They either run out of money or run out of time. Consumer debt, personal bankruptcies, and company insolvencies are all now on the increase.

The third business failure factor profiled in the study, and a critical one, was marketing. Over 64% of the businesses surveyed in the marketing category failed because their owners ignored the importance of properly promoting their business, and then ignored their competition. Again, as a business leader, you must be able to effectively communicate your idea to the right people and understand their unique needs and wants. Leadership is all about taking initiatives, taking actions, getting things done, and making decisions. If you are not doing anything of significance to market and promote your business, you are most likely headed for business failure.

You must also know your competition. Leadership is about providing value to customers; if your main competitors are all providing a better quality and lower priced product, how can you possibly create any value? Either you harness your strengths to provide different benefits (such as speed, convenience, or better service), lower your price and improve quality, create a different product for an unmet demand, or get out of the game.

Finally, one of the most important reasons businesses fail is due to poor management. In the management category, 70% of businesses failed due to owners not recognising their failings and not seeking help, followed by insufficient relevant business experience. Not delegating properly and hiring the wrong people were additional major contributing factors to business failure in this category.

Other Symptoms:
1. Failure to focus on a specific market because of poor research.
2. Failure to control cash by carrying too much stock, paying suppliers too promptly, and allowing customers too long to pay.
3. Failure to control costs ruthlessly.
4. Failure to adapt your product to meet customer needs.
5. Failure to carry out decent market research.
6. Failure to build a team that is compatible and has the skills to finance, produce, sell, and market.
7. Failure to pay taxes (insurances and VAT).
8. Failure of businesses’ need to grow. Merely attempting stability or having even less ambitious objectives, businesses which did not try to grow didn’t survive.
9. Failure to gain new markets.
10. Under-capitalisation.
11. Cash flow problems.
12. Tougher market conditions.
13. Poor management.
14. Companies diversifying into new, unknown areas without a clue about costs.
15. Company directors spending too much money on frivolous purposes thus using up all available capital.

FINALLY
Through compliance with rules and regulations . We must have ethical leadership in organisations, but this depends on those leaders adopting the credibility dogma and applying the four versus that will enable their organisation to excel and distinguish itself from others. Hopefully though, the economic uncertainty will generate and grow future leaders who will be ready to rule our world, our companies and our societies on an ethical basis.

Dr. Dada Adefolami Suaraju MBA PhD CPF Acct., is a Finance / Management Consultant
Certified Professional Forensic Accountant ([email protected] 08052043855).