Leadership and loyalty.

Editor's note: Beginning with this issue, Leader's Edge will be written by Ivey Professor Professor Jeffrey Gandz. It will appear regularly in the Ivey Business Journal.

Leaders expect their followers to be loyal and to be able to depend on their loyalty. This is why we have such a visceral reaction when a David Radler turns on a Conrad Black or an Andrew Fastow cooperates with the prosecution to give evidence against his superiors at Enron. Emotive phrases like "ratting" or "biting the hand that has fed you" find their way into otherwise sober commentary. They conjure up childhood prohibitions on snitching and sneaking.

Leaders themselves have been known to go into paroxysms of rage followed by periods of deep hurt and even depression when they find that support on which they had counted is no longer there. And individuals have paid a steep price when their leaders conclude that they are no longer loyal and cannot be trusted to do their bidding, and so find themselves marginalized in decision-making and personally shunned.

Good leaders understand that there is a difference between real loyalty and a related but different concept--fealty.

Give me loyalty, not fealty

Both loyalty and fealty share some things in common; they call for allegiance, faithfulness, and fidelity. But they differ in one remarkable respect. Loyalty embraces the concept of allegiance to an authority to whom such faithfulness is lawfully and morally due. Fealty, on the other hand, describes the fidelity of a vassal, slave or feudal tenant to his lord and master or, in modern parlance, the unqualified fidelity of a person to his or her boss.

Fealty is dangerous in corporations as well as in other social organizations. It leads to unethical, corrupt and often illegal actions spreading to the many rather than the few, to covering up those actions sometimes to the point of obstructing justice. Loyalty, on the other hand, is a positive dimension of business since it provides a force of energy that binds people together in the pursuit of worthwhile goals.

Fealty can be coerced or bought. Consequently, when the power relationship no longer exists or a better "deal" is available elsewhere--from another employer, or a prosecutor offering a more lenient sentence--the bond of fidelity is snapped. This is not an act of disloyalty but, rather, a belated recognition that the bond was composed only of self interest. The more enlightened that self-interest, the more individuals will act in ways that are beneficial to them.

Loyalty is made of sterner stuff. It is built on sound moral foundations, of which lawfulness is one but is not the only one. People who are bound by common values and moral beliefs are not easily deterred from supporting each other. They are neither discouraged by adversity nor deflected by better offers.

It explains why many people do work for which there is little extrinsic reward, why they serve their countries or churches or other social movements as volunteers or in poorly-paid positions; why they choose to work for companies that pursue socially responsible and responsive policies; why they are attracted to companies that have reputations for treating individuals and groups with dignity and respect, who are committed to their development, who provide employees with the opportunity to speak up and speak out about things with which they disagree, who have good whistle-blowing policies and who do not tolerate leaders who do not support these value-driven actions.

Such moral beliefs are not necessarily inconsistent with the capitalist system or the obligations of private sector managers to maximize shareholder value. Creation of economic activity leads to better lives for people, generation of profits results in investment in growth and contribution of taxes, and so on. Business can be and often is a force for good. But, sometimes, business activity does create conflict between personal morality and financially attractive activities. Ask me to be involved in a company selling tobacco products and I will say "No!" Ask me to endorse advertising approaches that deliberately mislead potential customers and, again, you cannot expect my loyalty to the company, my boss, my colleagues on the executive team to guarantee my assent to the advertising campaign. Generate profits for shareholders at the expense of environmental depredation, and you violate my sense of corporate social responsibility. Do this often, and any bonds of loyalty that might have been generated in the past, erode.

Moral beliefs are not unchangeable. Not that long ago, many people had deeply held beliefs about separation of races, the evil of religions other than their own, or relationships between same-gender couples. These values were supported by the laws of those times. There are still people who hold to these beliefs, who are prepared to go to extraordinary, sometimes illegal lengths to preserve them and who willingly give their loyalty to leaders who espouse them. These time-warps are troubling to many people yet they form part of today's operating environments for business.

Individuals' moral development is also dynamic. Some have strong foundations through family or early institutional influences while others grow up in more free-thinking environments. Some views change over time, others remain stable.

Some people are quick to realize that what they are being asked to do by their bosses is wrong, others either don't question, accepting that their boss must be doing the right thing because he or she is their boss, or going along with the request because they accept that "that's the way it's done in this business." Such moral naivety is not evil but it can lead to bad things.

Smart leaders understand that fealty is demanded whereas loyalty is earned. And they earn this loyalty by doing a number of things;

* They understand the values of the people they lead and try to build their business strategies, plans, processes and practices in ways that are congruent with those values. This is the acid test of the "respect for the individual" that we see in so many organizations' value statements.

* They are sensitive to and respect changes in moral values within the societies in which they operate. Occasionally this will put them at odds with prevailing societal values and they must make difficult personal decisions either to conform or quit.

* When they see other leaders in their organizations acting in ways that are morally offensive, they speak up ... sometimes at personal risk. They channel their dissent constructively .... chaining oneself to railings is not usually an effective way to challenge corporate decisions! But they seldom just go along with the decision as an act of fealty.

* They promote debate about contentious issues to ensure that there is openness and transparency and that people do not feel that expressions of doubt are interpreted as "disloyalty."

Above all else, smart leaders understand: Never, never expect or depend on fealty--earn loyalty!

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About the Author

Jeffrey Gandz

Jeffrey Gandz is Professor, Managing Director, Program Design--Executive Development, Program Director--Ivey Executive Program, Ivey Leadership Program at the Richard Ivey School of Business. He is the author of four books and more than 100 case studies. He has been a faculty member at Ivey since 1977.

Jeffrey Gandz is Professor, Managing Director, Program Design--Executive Development, Program Director--Ivey Executive Program, Ivey Leadership Program at the Richard Ivey School of Business. He is the author of four books and more than 100 case studies. He has been a faculty member at Ivey since 1977.