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What is responsible leadership and why is it important in today’s society?

Put simply, responsible leadership is about making sustainable business decisions which take into account the interests of all stakeholders, including: shareholders, employees, clients, suppliers, the community, the environment and future generations.

A great example of responsible leadership is beauty and cosmetics company Lush. All its products are vegan and ethically sourced – Lush knows every aspect of its supply chain intimately and it does all it can to reduce its carbon footprint. On top of all of that, it also donates money to a large number of human right groups every year.

Lush’s operations are sustainable and cater to all stakeholders. Shareholders benefit from sustainable profits, as the company differentiates itself by treating its employees well and offering customers trusted, good quality products.

Meanwhile, the charity work and environmentally-friendly operations support the community and future generations.

The challenges of responsible leadership

Responsible leadership isn’t as simple as caring about everyone – there are lots of challenges you could face as a leader. Employees, suppliers, shareholders and policymakers all demand different things, as each group has unique concerns and needs. Sometimes, you’re going to have to make tough decisions that don’t please everyone.

There are challenges which will emerge from outside your company too – how will dramatic economic changes alter the way you operate? Or political events like Brexit? Quick fixes won’t cut it – responsible leaders make decisions which are sustainable as well as ethical. Finding a balance can be difficult, and you will need to consider everyone’s opinions in your decision-making.

What do you need to become a responsible leader?

To become a responsible leader, you first need evaluate the types of questions you’re asking regarding the way your business operates. If you can identify the barriers to responsible leadership, you stand a good chance of being able to make a positive change.
Here are some examples of the types of questions to ask about your business:

  • Are the businesses operations and activities sustainable?
  • Is the workforce well looked after?
  • Does the company ever take short-term risks that could damage the businesses’ reputation?
  • Are your subcontractors’ practises ethical and in line with your own company policies?

There are also a number of hard skills you will need to acquire as a responsible leader. For example, having a good understanding of what responsible and sustainable practices are in order to develop your personal and professional value. Knowing strategies for engaging with various stakeholders is also a key skill.

Don’t underestimate the value of soft skills, though, as there are some key ones you will need to be a responsible leader.

Here are some of the soft skills and personality traits possessed by successful responsible leaders:

  • Honesty
  • Integrity
  • Long-term perspective
  • Open-minded
  • Empathy
  • Respectful of others
  • Serves others

These are the types of skills you will learn and develop through our Online Masters of Business Administration (MBA), which has an entire module dedicated to responsible leadership.

Why is responsible leadership important?

We are currently experiencing an incredibly ethically-conscious generation. Millennials (those reaching adulthood in the early 21st century) regard ethics and values higher than a generous salary. According to research carried out by Global Tolerance, 62% of millennials want to work for an organisation that makes a positive impact and 53% said they would work harder if they knew they were making a difference to others.

This generation is important, as it is the biggest in history. Millennials may not have as much money as those born before 1981, but they are prepared to spend more, particularly in industries such as fashion and beauty. They even spend more money on their weekly shop compared with older consumers.

Companies need to boost and promote their ethics and values now more than ever, and this can’t be achieved without responsible leadership. Mark Price, managing director of Waitrose, has also recognised this change in attitude.

“Ethics are becoming as important in the recruitment of the young as salary or other benefits,” he said. “This is a recent and potentially seismic change for the better. The best businesses are a force for good and bear an important responsibility to the communities they serve.”

The internal value-driven messages and conversations occurring across an organisation is going to have a big impact on employees. Young people want to work at ethical organisations which make a difference and care about the impact they have on the world. Therefore, creating and broadcasting such messages is important, not just for attracting new talent, but keeping employees happy, engaged and productive.

It's not just about recruitment, though. If companies want to maintain and grow their consumer base, they will need to lead the way in corporation social responsibility, and they can only achieve this if they have employees who understand responsible leadership and have the right skills and knowledge.

If you’re looking to strengthen your knowledge in responsible leadership and want to know more take a look at NTU’s module on Responsible Leadership here.