The Moral Capital of Leaders
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The Moral Capital of Leaders

Why Virtue Matters

Alejo José G. Sison

Sison studies a wide range of recent management cases from the viewpoint of moral capital: the sorry state of US airport screeners before 9-11, the Ford Explorer rollovers and Firestone tire failures, the battle for the ‘HP way’ between Carly Fiorina and the heirs of the founding families, the dynamics of Microsoft’s serial monopolistic behavior, the pitfalls of Enron’s senior executives, the sincerity of Howard Lutnick’s commitment to Cantor Fitzgerald families, how Andersen’s loss of reputation proved mortal and a fresh look at Jack Welch’s purported achievements during his tenure at GE.
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Chapter 7: Measuring and Managing Moral Capital

Alejo José G. Sison


I. MANAGING TO MEASURE Moral capital or virtue can be found on several levels that are closely linked with each other. In the case of individual agents, we have seen how moral capital builds up through one’s actions, habits, character and lifestyle. Similarly, corporate agents also develop moral capital through their products, protocols or standard operating procedures, corporate culture and history. Each of these levels corresponds to what we have called the currency, interests, bonds and estates, respectively, of moral capital. Likewise we have seen two different ways in which virtue or ‘personal excellence’ behaves as capital. One is through its capacity for unlimited growth or accumulation, as long as the proper investments in virtue-producing assets are made. A business leader could always ‘sharpen the saw’, not only of his own professional skills and competencies, but also of his positive character traits such as truthfulness, honesty, fairness, compassion, and so on. The sky is the limit in cultivating virtue. Some of the means a person could use to increase his moral capital are, to name a few, constant practice with zerotolerance for defects and participation in continuing education programs. Secondly, virtue could be assimilated to capital due to its usefulness to individuals and companies. More concretely, a firm profits from virtue – just like from any other form of capital – through the positive influence that virtuous workers exert on corporate culture. At the very least, virtuous workers diminish the legal, social and financial risks and liabilities – which may prove very costly...

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