The Business Ethics Blog

When and Why are Leaders Responsible?

The idea that leaders bear ultimate responsibility for the success or failure of their organizations is an old one. Maritime tradition has long held that “the captain goes down with the ship.” And US Harry President Truman’s desk was famously adorned with a plaque that read, “The buck stops here!” Leaders historically have accepted, at least in theory, that they bear responsibility for both the good and the bad.

It’s worth pointing out that the responsibility at stake here is not direct causal responsibility. Sometimes leaders make disastrous decisions, but responsibility goes well beyond such cases. The reason the captain goes down with the ship (or, more precisely, is expected to be last off) is not that the boat’s sinking was necessarily her fault. And the fact that Truman eschewed passing the buck didn’t imply that he thought everything that happened in a very large federal government was literally his fault: he was saying that morally he accepted responsibility, which meant that accepting responsibility was his job.

Ships and governments aside, accepting responsibility is something we expect in a business leader, too. Unfortunately it’s alarmingly common to see CEOs fail to accept responsibility for their companies’ financial ups and downs, let alone for any moral failings.

But then, in a complex organization, why should a leader accept responsibility?

One possible answer is that, well, someone needs to do it. When passing the buck is common, but there’s a need for accountability, the buck has to stop somewhere. And maybe that’s part of what defines the job of head honcho: you’re the one who takes the blame. But that’s not much of an explanation. If it were merely about the need for someone to take the fall, surely we wouldn’t choose the one person who had been hired because she or he has the talent to make things better. The CEO, in other words, would be an unlikely sacrificial lamb, if a sacrificial lamb were all that was required.

Another possibility is that it is merely a contractual term: you’ll get to be boss, and we’ll pay you well, but if things go south, you’re going to get the blame. Taken literally, this would imply a kind of strict liability: it doesn’t matter what you did, you’re going to be punished anyway. This arguably makes the leader into a kind of whipping boy, which, in the historical sense, was a boy who could be punished by a prince’s tutor for the transgressions of the prince who, as royalty, was himself immune to being punished personally. But surely for leaders an actual causal connection to the success or failure of the organization is part of the puzzle.

A third approach would be to understand ultimate responsibility in terms of motivation: when you know that you’re going to be held responsible if things go badly, then presumably you’re going to work hard to make sure that things go well.

If that’s the case, it’s worth spelling out the structural features of leadership that make attribution and acceptance of ultimate responsibility make sense. That is, what features of being a leader make it possible for a leader reasonably to accept that she will ultimately be held responsible for any- and everything that goes wrong?

A number of distinct features of most leadership positions (and certainly all corporate leadership positions) are worth singling out:

1. The power to choose your team: Corporate leaders have ultimate (direct or indirect) control over who is hired, and who is fired. If someone screwed up, it’s because you either hired them, or you hired the person who hired them. So, you’re responsible.

2. The power to put policies in place: Corporate leaders are responsible for seeing that the right policies are being put in place. If things went badly because people followed bad policies, it’s your fault. If things went badly because people didn’t follow policy, that’s your fault too (see #1 just above).

3. The power to shape culture: Culture is the tool that allows leaders to shape behaviour in ways that have impact even when they’re not personally around. This starts with tone at the top, but includes everything from how compensation schemes are structured to the behaviours that get celebrated and the stories that get told and retold.

When leaders have these powers, it makes sense not just for them to have formal responsibility, but for them to be seen as having a level of control that implies sufficient causal responsibility to underpin ultimate moral responsibility.

Of course, where leaders (at any level) lack one or more of these tools, it is harder to make sense of holding them accountable. This itself has two implications.

First, we need to be cautious when blaming leaders for the failures of their organizations. We need to look at whether the leader in question actually had (in theory and in practice) the power to hire and fire, the power to shape policy (which is sometimes constrained by legislation, collective agreements, and so on), and the power to shape culture (which often takes a very long time).

The flip side of that coin is that we need to realize that precisely because leaders are going to be held responsible, we need to make sure they do have the relevant powers. The principle of ultimate responsibility doesn’t just apply to CEOs and other top-tier leaders: it regularly gets applied to leaders at all levels. This implies one more responsibility for top-tier leaders, namely the responsibilityto make sure that leaders throughout the organization have the tools they need.