The concept of “tone from the top” has become a widely recognized principle in corporate governance, suggesting that the behavior and values exhibited by an organization’s executive team establish the standards for the rest of the workforce. Ideally, when leaders demonstrate integrity and ethical behavior, it inspires similar actions among employees, fostering a company culture rooted in shared values. However, recent corporate scandals and discrepancies between executive actions and stated values have led many to question the efficacy and sincerity of this principle.
As corporate governance continues to be scrutinized, the alignment—or misalignment—between leadership’s declared priorities and their actual conduct is increasingly coming under the spotlight. According to Robert Ordever, European managing director at workplace culture specialist O.C. Tanner, all leaders inherently set a tone that influences organizational expectations, whether consciously or through their actions. Ordever warns of the potential pitfalls when there is a disconnect between corporate rhetoric and executive behavior, suggesting this inconsistency can undermine employee trust and engagement.
Recent incidents involving corporate leaders have underscored this issue, revealing a troubling trend that often highlights a significant lack of self-awareness or moral accountability. For instance, Brian Niccol, the new CEO of Starbucks, faced backlash for his decision to travel nearly 1,000 miles on a private jet to reach the company’s Seattle headquarters. This decision raises questions about the company’s commitment to sustainability, especially considering Starbucks’ public stance on environmental responsibility.
Other leadership missteps have further illustrated the challenges of maintaining credibility as ethical role models. Chris Ellison, managing director of Australian mining company Mineral Resources, made headlines for comments suggesting that he wanted to “hold staff captive all day long” to curb expenses related to employees purchasing coffee outside of work. Such statements not only reflect a disconnect from employee morale but illustrate a broader cultural issue surrounding how companies value their workers. In another notable incident, KPMG’s UK chairman Bill Michael was forced to resign after a disastrous virtual meeting where he dismissed concerns about the COVID-19 pandemic, demonstrating a lack of empathy and understanding of employee struggles.
The high-profile resignation of Barclays CEO Jes Staley in 2021 due to an inquiry into his ties with the disgraced financier Jeffrey Epstein raises further questions about accountability in leadership. Following this scandal, Staley was fined and banned from senior management roles in the financial services sector, illustrating the severe repercussions that can follow ethical lapses at the highest levels of corporate governance.
Experts suggest that the corporate landscape has shifted significantly in recent years, leading to raised expectations for accountability and ethical leadership. Piers Rake, a partner at legal services firm Astraea, argues that stakeholders now include a broader range of interests beyond merely shareholders and customers. Increasingly, society holds businesses accountable for their impact on diverse constituencies, leading to a more pronounced scrutiny of corporate actions and communications.
Liz Sebag-Montefiore, director of HR consultancy 10Eighty, echoes this sentiment, emphasizing that employees today demand genuine ethical leadership from their organizations. The challenge lies in ensuring that corporate actions align with their stated values. If businesses fail to uphold these standards—exploiting workers or acting in ways inconsistent with social expectations—they risk alienating their workforce, jeopardizing long-term success.
Despite the shortcomings of the traditional “tone from the top” framework, many experts question whether it should be entirely abandoned. Melissa Hewitt, head of HR outsourcing at Morson Group, advocates for a more diverse approach to ethical leadership that includes elevating human resources representatives to board-level positions. This change would enable a more integrated perspective on company culture and ethics, addressing the growing demand for responsible leadership.
Sarah Miller, CEO of ethics advisory firm Principia, notes that the conventional reliance on senior executives to establish the ethical tone is becoming increasingly outdated. With the growing complexity and scrutiny of modern organizations, there is a compelling argument for distributing leadership responsibilities more broadly. Fostering ethical decision-making skills among middle management can create significant ripple effects, enhancing cultural reinforcement throughout the organization.
While some advocates for an evolved approach to ethical leadership are optimistic, others remain committed to the traditional hierarchical model. Kevin Gaskell, former CEO of Porsche UK, cautions that a fundamental aspect of leadership is its inherent structure; if executives fail to exemplify ethical behavior, the organization risks entering a state of confusion or inconsistency. He emphasizes the importance of transparency and authenticity in leadership, asserting that executives must be held accountable for their actions and decisions.
Mike Greene, an entrepreneur and executive coach, warns against an over-reliance on middle management or employee-led initiatives to set ethical standards. He argues that experienced executives are vital for navigating the complex ethical challenges organizations face today. Greene maintains that effective leadership is characterized by the willingness to make difficult decisions, often unpopular, for the greater good of the organization.
In reflection, while the notion of “tone from the top” may require reevaluation, there currently exists no universally accepted alternative that addresses the complexities of ethical leadership in contemporary corporate environments. The ongoing evolution of societal expectations necessitates a thoughtful response to ensure that leadership not only meets these expectations but actively embodies the principles of integrity, accountability, and responsibility for the greater organizational good. As the dialogue continues, the focus will remain on finding the balance between traditional hierarchical structures and the imperative for a more inclusive and values-driven approach to leadership.