Author: Hashi Syedain
Corporate ethics are often just soundbites. But failing to find your moral compass can be fatal
A regular visitor to a popular HR message board recently told an instructive story that says much about diversity in the workplace – and a fair bit about values, too. She used to work in the HR department of a UK management consultancy. She also happens to be black, and would regularly receive calls from the PR or marketing teams asking her to stand among groups of colleagues in the lobby, either when photo shoots were happening or important clients were visiting.
The unspoken reasoning behind the requests was that the firm needed desperately to appear more diverse. She complied, through gritted teeth, not wanting to rock the boat.
Is such corporate insensitivity an ethical matter? At first glance, it might appear more of an inconvenience than anything else, but the story strikes at the heart of what we really mean by ‘ethics’ – guiding principles we try to live by and use to make decisions in our everyday interactions. Most of us can probably identify our own ethics to some degree (declining to allow people to define us solely by our racial background might be one, for example). But it’s not just individuals who benefit from locating their moral compass: companies need ethics too.
“Ethical questions – about what we should do and be – aren’t optional,” says Dr Sam Clark, a moral philosopher at Lancaster University. “Ethics aren’t just for private life. To say, for example, ‘I just pursue my organisation’s aims when I’m at work’ is already an ethical decision, and a very dubious one.”
Even so, we tend to be more comfortable with ideas of law and compliance at work than we are with ethics. But when scandals break – whether it’s mis-sold insurance, dodgy accounting or failings in patient care – the issue is rarely limited to a compliance failure. The initial wrongdoing will have got out of hand because a number of people turned a blind eye, got drawn in or just found themselves in an impossible position.
As Simon Webley, research director at the Institute of Business Ethics, puts it: “Ethics start where the law ends.” An ethical dilemma is a choice between one right and another, or between the lesser of two evils. “Ethical dilemmas are rarely as clear cut as they sometimes appear,” says Webley. “If it’s a simple choice between right and wrong, it shouldn’t be a dilemma at all.”
Ethics are mostly expressed at work through the concept of values, which have become an intrinsic part of corporate life. Values can, of course, be useful to set a tone, particularly when they are co-created with employees. But they are also ubiquitous – only two members of the FTSE 100 now don’t proclaim a set of values in either an annual report or online – and frequently meaningless. While Google’s semi-official motto, ‘Don’t be evil’, at least captures what makes the search giant different to its rivals, and puts down a line in the sand when making decisions, elsewhere there is an interchangeable proliferation of ‘respect’, ‘trust’, ‘integrity’ and ‘honesty’.
These are nice words but they hardly deal with the nitty-gritty of everyday organisational life.And they won’t help solve the predicament on People Management’s cover, or the examples on these pages, where the right thing and the expedient thing can be directly contrasting matters.
The CIPD is considering these issues as part of its ongoing Profession for the Future strategy, which attempts to define how HR teams will champion better work and working lives in the future.
“We’re collaborating with a wide range of stakeholders, within and outside HR, to define and test a new set of principles that will help HR professionals make good decisions, and advise business leaders what to do, no matter what the context and no matter what the future may hold,” says Laura Harrison, strategy director. “We expect the principles to be broad and ambitious, and applying them in practice will take real professional judgement, backed up with a thorough understanding of the business context as well as specialist knowledge about people and organisations.”
Clark, who is working with the CIPD on Profession for the Future, talks about how this might work in practice. For example, if you use ‘fairness’ as a lens for considering decisions when designing a disciplinary procedure: “Ask yourself ‘How would I design this if I knew I was going to be in the worst position my design creates… if I were falsely accused of a firing offence?’ A procedure that you wouldn’t accept if you were in that position should be rejected as not fair.”
Ideas like fairness or merit – an alternative lens to fairness – are useful, but don’t tell people why they should behave ethically. To motivate people to do the right thing, organisations need to ask even more fundamental questions, says Roger Steare, who has been advising businesses on ethical behaviour for more than a decade. As the ‘Corporate Philosopher’, he made his reputation helping companies including BP and numerous banks in the aftermath of existential crises.
Today, he says, more boards see the value in exploring ethics even if nothing terrible has happened, and the starting point is knowing why the organisation exists – whether it’s purely to generate money or, hopefully, to create a broader kind of value for staff and stakeholders. After that, it’s time to consider who you are, individually and collectively, the things you believe in and how you decide what’s right.
“Decision-making at work is generally done badly because organisations haven’t answered the first questions. They haven’t done the thinking,” says Steare. “Doing the right thing comes from knowing your purpose and values as well as knowing how you’ve made the right decision. Then you can say: ‘What will we do now? Do we have the courage to do the right thing?’”
Stuart Woollard, managing partner at leadership organisation Maturity Institute, says companies’ purpose ought to be societal – about delivering something of value to steer ethical behaviour. “In most businesses, the purpose is to serve the needs of shareholders, and maximise profits, regardless of what is said. That undermines value. Although most organisations can provide a value to society, very few define their purpose with clarity.”
Swedish banking group Handelsbanken and outdoor clothing maker Patagonia are examples of companies that do this well, says Woollard. Patagonia, for example, facilitates repairs of its clothing as part of its commitment to sustainability. Major supermarkets, on the other hand, show what happens when the purpose is to drive down costs: “As a consequence, people did unethical things with suppliers and accounting.”
The public sector is not immune to this problem, adds Steare. The equivalent of the profit motive is organisations that exist to meet political targets, and managers who ‘deliver the numbers’ rather than delivering a service. Organisations operated in this way will be characterised by hierarchical decision-making and rule compliance, says Steare: “We all know how it feels to be on the end of that as a customer.”
Steare has put more than 130,000 individuals through an online test (see box, page opposite) to assess which factors come into play when they make decisions. And one message that comes through loud and clear – aside from the fact that HR thinks more deeply than other functions – is that most people are more considerate in their decision-making when they are at home. This is a positive thing, argues Steare: “The key is for people to realise how they are already being ethical when they are not at work. When we come to work, we have a tendency to become compliant robots or pedants – or both. The challenge and opportunity for better decision-making is for people to bring their humanity to work.”
This is a particularly pertinent conversation for HR. The profession is often the arbiter when individuals’ beliefs conflict with organisational values (consider, for example, the negative publicity that has ensued when retail staff decline to handle pork products for religious reasons and the company hasn’t taken account of the operational implications).
HR professionals are often seen as the sane voice that should prevail in a moral crisis. When BBC bosses were called to testify to the UK Public Accounts Committee in 2014 about what were seen as excessive pay-offs, it was former HR director Lucy Adams who came in for particular criticism for not acting as a brake on proceedings. She later said she didn’t believe HR should be the “moral conscience” of an organisation.
If companies actively consider ethics early on, things needn’t reach such a fevered pitch. At BT Openreach, the top team has been working on strengthening ethical decision making for the past year. During that time, says HR director Alison Hilton, executives have acquired a better understanding of team dynamics and improved the levels of honesty, courage, fairness and humility they bring to work. The organisation has developed four principles to use when making decisions, which it calls the Four Ps – people, policy, principles and profits. When faced with a decision, says Hilton, employees will “walk through the Four Ps and consider the impact of the decision on each one”.
Has it made a difference to the decisions taken? It’s more about implementation, says Hilton. For example, the company runs a voluntary redundancy programme. After applying the Four Ps, Openreach decided to give employees whose application was accepted an extra week at work before their departure. “We wanted people to have more time to make it a less rushed experience,” says Hilton. “It seemed more congruent with the length of service of many of our staff.”
Other organisations have approached the issue by creating ethical codes – often in response to previous failings. BAE Systems established a Code of Conduct in the wake of a huge bribery scandal in 2007. In the banking sector, Barclays has put together an ethical Code of Conduct to govern the way it does business following a series of scandals, including the rigging of Libor, a key banking industry interest rate.
These examples may seem surprising. But companies in any sector can still conduct business ethically, says Webley. “For organisations in the ‘sin’ industries, the questions are, is it legal, how are they doing business and are they minimising the negative effects?”
Indeed, for anyone feeling smug about the sector they operate in, Steare’s surveys offer interesting reading. People in finance, for example, tend to score above average for moral values – and well above those in the media industry who are holding them to account.
The highest-scoring sectors are ones typically characterised by lower pay, including healthcare, retail, and food and drink. Bottom of the list are politics, print media and chemicals. But the people with the strongest moral values are those who don’t go out to work all. It’s a sobering thought for all of us that the job that tops the list for moral behaviour is ‘homemaker’.
To find out more about the CIPD’s Profession for the Future strategy, and to read Sam Clark’s report, Ethical decision making: eight perspectives on workplace dilemmas, visit cipd.co.uk/pff
Read a full breakdown of the findings from Roger Steare’s survey of HR professionals and ethics at peoplemanagement.co.uk
This article was originally published in the September 2015 issue of People Management.