An ethical approach to management
By Simon Hooper for CNN
Stonecipher was ordered to step down despite increasing Boeing's share price by 50 percent.
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(CNN) -- As Oscar Wilde might have put it, to lose one CEO may be regarded as a misfortune. To lose two looks like carelessness.
When Boeing ordered Harry Stonecipher to step down last month the U.S. aviation giant found itself looking for a new chief executive officer for the second time in a little more than a year.
Stonecipher's predecessor, Phil Conduit, resigned in December 2003 amid a scandal which saw the company's chief financial officer, Michael Sears, sentenced to four months in prison.
Sears had illegally hired a former U.S. Air Force official who had helped to arrange the lease of 100 Boeing jets to the military in a $23 billion deal.
By comparison, Stonecipher's misdemeanor appeared somewhat trivial. The 68-year-old was ousted because of what Boeing described as an improper relationship with a female executive.
Yet in 15 months Stonecipher had increased the company's share price by more than 50 percent, prompting some industry experts to question why a personal matter should affect a highly-successful business career.
But according to Bob and Lyn Turknett, the authors of "Decent People, Decent Company," the Stonecipher affair is evidence of a new preoccupation in the corporate world with ethical leadership. To be a great leader, they argue, you need great character.
"We explicitly believe that leadership character is very fundamental to someone being able to be an effective leader," said Bob Turknett. "We also believe that creating a culture where character is a main focus is very important for the long-term success of a company."
Stonecipher is hardly the first person to blur the boundaries between personal life and working life. A recent survey in the U.S. reported that 62 percent of unfaithful husbands and 46 percent of unfaithful wives had affairs with someone at work.
But the Turknetts argue that indiscretions, even ones not directly related to your work, can have a ripple effect which alters your ability to lead.
"As a leader you have certain roles and responsibilities and if people don't view you as having high integrity and you don't have trust then it's going to be very difficult for you," Bob Turknett said.
In the wake of corporate scandals such as Enron and World.com, the Turknetts say it is more important than ever that senior managers are beyond reproach.
"People need to be clear about what their values are," said Lyn Turknett. "They need to pay attention to whether they're leading in a way that is consistent with those values and whether they're doing things that develop their reputation for integrity."
Companies should eschew traditional stereotypes of hard-nosed executives and place ethical integrity at the heart of their management culture, they argue, citing Herb Kelleher at SouthWest Airlines as an example.
"We're talking about the character basis of leadership," said Lyn Turknett. "Individuals need to pay attention to their leadership character, organizations needs to build a culture of character and lead a conversation about ethics constantly. It needs to be part of decision-making, that you discuss ethical implications as well as financial implications."
The Turknetts say that, post-Enron, there are signs of a shift towards a more positive business climate, such as the creation of corporate ethics officers.
Ironically, Stonecipher played a part in that movement, being credited with cleaning up Boeing's ethical reputation.
One of his first initiatives as CEO was getting staff to sign a code of conduct which committed them to reporting any behavior that "may raise questions as to the company's honesty, impartiality, reputation or otherwise cause embarrassment."
But by those very standards, his position became untenable.
"Harry was really the staunchest supporter of the code of conduct," said Boeing chairman Lew Platt following the announcement of Stonecipher's departure.
"He drew a very bright line for all employees, let everyone know that even minor violations would not be tolerated and when one does that you have to live by that standard."