In a presentation to Directors at the recent NACD conference in Washington I suggested this was a crucial question they needed to ask their CEOs and management. A key priority for Boards is appointing a CEO, and so considerable focus is placed on their technical competence. Much time and effort is expended to ensure the CEO has strategic capability, leadership qualities, commercial acumen and intellectual horsepower.
But very few, if any, questions are asked about their moral competence. This is the ability to choose wisely and well, to choose what is proper and good, in the midst of doubt and uncertainty, and often opposing demands.
Some leaders follow the law or an industry code, doing what is permissible. The difficulty with this is they will almost certainly face situations for which there is no clear legal response, or competing responses. How will they choose?
Other leaders make decisions guided by an internal moral compass which is oriented towards timeless human values and what is proper. These leaders are much more able to find good solutions to difficult ethical dilemmas.
The way leaders answer the question about moral dilemmas will give Boards considerable insight about the moral competence of the CEO. It will demonstrate their level of moral awareness, the reasoning processes they use, and the example they will set to others in the firm.
Since tone is set at the top Boards need to be aware what sort of behaviours are modeled by the CEO, and how this may influence the organisation.
For more details, take 20 minutes to watch the video, and hear the story about how I developed this thinking, and some of the people I met along the way.