The Environmental, Social and Corporate Governance (ESG) movement is instilling a sense of urgency in forward-thinking enterprises to show their stakeholders — Wall Street, customers and employees — how fast they can do the right thing. For businesses looking to lead on ESG, leadership development can give them an edge.
What is character?
Funny enough, a book that was released in 2015, well before the world drastically changed, is radically relevant today. In “Return on Character: The Real Reason Leaders and Their Companies Win,” Fred Kiel, a renowned business consultant, revealed an undeniable and dramatic link between a CEO’s character and the company’s bottom-line.
Kiel defined character as a composite of four key principles: integrity, responsibility, forgiveness and compassion. Leaders with character stand up for what’s right, care about the social good, move on from mistakes and show empathy. In stark contrast, CEOs without character are “self-focused,” which means they lie to get ahead and are willing to throw others under the bus for their own gain.
One can easily see that self-focused CEOs are the wrong leaders for the ESG era. But, how can you measure character in your leaders? Can you prove with hard numbers that soft skills make a difference to the bottom line so you can help advance the organization’s ESG agenda?
A road map to find the currency of character
Kiel surveyed CEOs and employees at 84 U.S. companies and nonprofits to determine how consistently their CEOs and management teams embodied the principles of character and how often leaders displayed traits of being self-focused. Then, he compared those numbers against each organization’s financial data. CEOs with character outperformed the self-focused CEOs on financial metrics by five times, and they received higher employee ratings for strategic vision, focus, accountability, and executive team character.
Are your leaders ESG era ready?
Organizations that have established a coaching culture and can demonstrate “Return on Character” in their leaders have an advantage in the ESG era while businesses with self-focused leaders have work to do.
Kiel stressed that character isn’t something that you are born with. Character can be learned. It takes cultivating self-awareness in leaders, which self-focused leaders often lack. In fact, self-focused leaders in the same survey rated themselves much higher on the character scale than their employees did.
Kiel’s research from six years ago deserves a fresh look today as the current corporate climate demands leaders with character and businesses strive to assign hard numbers to what has been considered soft metrics. Organizations that have leaders with character at the helm and can prove it boosts the bottom-line have an edge during a time when head and heart matters.