Ethical leadership: When love breaks down
It was hard to avoid reports and allegations of unethical behaviour in the media last weekend. From the “systemic plunder” of BHS, to the “broken culture” of Uber, the “lies” of UKIP leader Paul Nuttall, and the “storm over drugs” which seems to keep raining down on Team Sky, the International Olympic Committee, and Mo Farah. Oh, and in other news, the US President accused his “sick” predecessor of covert surveillance.
As I reflected on these reports and others involving the likes of Tesco, Barclays, Volkswagen, and Rolls-Royce, I was almost surprised that as many as 45% of Brits surveyed by Edelman recently said they trusted business to “do what is right”. Those of us disappointed to find out that more than half the country don’t trust us, can at least take some consolation from the fact that politicians (36%) and the media (32%) fare even worse!
Why do things go wrong?
Self-gain won’t typically be the main reason for unethical behaviour. The desire or pressure to win or succeed, and the culture this creates in an organisation, is much more likely to be the primary driver.
Several characteristics often combine to increase the risk profile of an organisation. These may include high value transactions, a fine line between winning and losing, rapid growth, regulation, globalization, dependency on intermediaries, and the scale and complexity of the organisation. Once you’ve factored in all the decisions employees will need to make independently every day, you’ve got quite a lethal cocktail of risk.
The extent to which these risks are managed will largely depend on the leadership and governance provided by those at the top. Enron, FIFA, and The News of the World are well-known examples where leadership failure contributed to widespread unethical practice. However, in almost all instances it is extremely difficult for senior leaders to distance themselves when things go wrong.
Claiming you didn’t know what was going on is typically not a credible defence. It just shifts the issue from one of integrity to one of incompetence, and prompts other questions. Had you become detached from what was going on? Had you failed to establish appropriate governance? Had you presided over a rotten culture? These questions (and many more) will be asked.
What can you do to help manage your risk?
Lead by Example
Your leadership shadow will set the tone for the rest of the organisation. None of us are perfect, but you need to consistently act in line with the stated values and the standards of your organisation. You’ll also need to lead in creating a culture where employees feel able to speak-up if they’re not comfortable or disagree. Take care with symbols – or at least more care than the Enron CFO with a cube on his desk which read “When ENRON says it’s going to ‘rip your face off’…..it means it will rip your face off!”. If you do inadvertently get something wrong, acknowledge it, deal with it, and demonstrate humility.
Clarify what is expected
The expected standards and values of your organisation need to be clear to everybody, and remain front of mind. They should form part of the every-day behaviour, narrative, and decision-making, and keep them live by discussing real workplace dilemmas. A simple and relevant code of conduct can help provide employees with a helpful and consistent point of reference. Avoid long lists of values. They won’t get remembered, and will dilute the meaning of those that are genuinely important. Obvious I know, but a Maitland report refers to 10 of the FTSE 100 having 10 or more published values. Also, steer clear of management speak or jargon. “Always be hustlin’” might not resonate with all Uber employees around the world!
A code of conduct will never cover all the grey areas your employees will encounter, so enabling colleagues to speak-up is key. This isn’t just about whistle-blowing hot-lines, it’s about ongoing dialogue and challenge being the norm. Examples like Enron and RBS highlight that without this challenge arrogant or destructive leadership can prevail. The consequences can also be profound. Several sexual predators went unchallenged at the BBC for many years as colleagues didn’t want to “rock the boat”, and celebrities like Jimmy Saville were treated as “more valuable than the values” of the BBC.
When things go wrong, face up to them
Pretending bad things didn’t happen won’t help your organisation move forward. Rolls-Royce were commended for their “extraordinary” cooperation with the Serious Fraud Office – the approach not only reduced their financial penalty, but also enabled them to understand what had gone wrong and build that into a new ethics programme. In the digital age, trying to conceal the past is unlikely to work anyway. Uber CEO Travis Kalunick probably wouldn’t have issued a statement saying he needed “to fundamentally change as a leader” if a video of a heated-exchange with a driver hadn’t spread via social media. The Rolls-Royce investigation included a review of over 30 million documents and e-mails, and the Team Sky explanation of the delivery of a suspect package to France in 2011 started to look flaky when details of flights, car rentals, and TV footage were closely scrutinised. Better to acknowledge reality than subject your integrity and reputation to a digital footprint test.
So, some difficult reading this weekend, but as I put down my newspaper I reassured myself that it would be much more difficult reading for the central characters in the stories, and those in their families and organisations. Then I noticed another story on the last page. A shopper in Stoke-on-Trent had been charged with theft after in-store CCTV recorded her putting a £20 note she’d found on the floor into her pocket. Hmm, interesting. Now, how would we all have responded in that situation?
At Infinite Perspective we have helped businesses develop best-practice responses to the discovery of unethical practices, and can apply our learning to help reduce the risk of things going wrong. Please do get in touch if you’re interested in discussing our work.