6 Reasons a Leader’s Personal Business Is the Company’s Business

Updated on November 13, 2012

By David Gebler

Just after Gen. David Petraeus resigned from his post as head of the CIA, there was an outpouring of sympathetic media. Before possible national security issues came to light, friends, allies, and commentators wondered aloud why the four-star general’s private behavior should have any relevance to his performance as a valuable leader in the war against global terrorism.

New developments in the story might have quieted these critics a bit. However, it’s important for all business and government leaders to grasp how their personal behavior affects the organization’s culture. In short, reckless risk taking by a leader begets reckless risk taking by his or her subordinates, managers, and employees. Dishonesty begets more dishonesty.

Here are six reasons a leader’s private behavior really IS their people’s business.

1. It condones rule breaking. A leader has to be the role model for his or her people. “Do as I do, not as I say”: That’s the mantra leaders need to live by in order to get their people following the company’s rules. It’s particularly true in organizational cultures, such as the military or competitive innovation firms, that require stringent ethical behaviors, conformity, and loyalty.

2. It confuses the rank and file. Some military insiders have pointed out that our all-volunteer military has created a “military apart” culture that operates off the public radar screen–with its own rules and cultural norms. (See NYT article.) But this is also true of businesses headed by powerful or charismatic founders, who see themselves as commanders of their own business universe. The problem is, when employees are fiercely loyal to a brilliant but unethical leader, they may lose touch with their own ethical objectivity.

3. Leading demands good judgment.The ability to make difficult decisions consistently and use good judgment is part of why leaders get paid the big bucks. If leaders are vulnerable to self-denial and self-deception about their ability to manage an affair undetected, it raises the obvious questions about whether they are also in denial about other matters that more directly impact the business.

4. Leaders are responsible for reputation. A sullied leader lowers the reputation of the whole organization, calling into question its cultural norms and core values. Like it or not, stakeholders expect leaders to uphold the organization’s reputation and enhance, not degrade, its standing by having an impeccable character.

5. It creates conflicts of interest. If one is the CEO, everyone is a subordinate. Whether by having an extramarital affair or by engaging in inappropriate favoritism with a coworker, the leader creates allegations of unfairness that impact people’s reliability and performance. Relationships that are unprofessional and inconsistent with the organization’s values cause a ripple effect of dissention.

6. Integrity matters. Whether they like it or not, when leaders betray their spouses and family, it’s human nature for their employees to wonder if their leader is trustworthy. People will begin to wonder, if a leader can treat loved ones like that, how will he or she treat us? Without trust, a leader has no authority.

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David Gebler is the founder and president of the Skout Group, a consultancy that helps companies evaluate the cost-effectiveness and scandal-potential of their corporate cultures. He’s a lawyer specializing in business ethics, and author of The 3 Power Values: How Commitment, Integrity, and Transparency Clear the Roadblocks to Performance(2012, Jossey-Bass).

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