Navigating a workforce through stressful times
COVID-19 has created a cascade of unprecedented changes to how we work, live and interact.
With many organisations moving online, managing restructures, significant job loss and transformation of existing roles and responsibilities, leaders need to be consciously aware of the impact of stress on individual and team performance.
Certain aspects of organisational behaviour can trigger threat reactions in people that impede their effectiveness and limit their ability to contribute to the success of the team. Research in neuroscience can inform our response to such situations, as the neural functioning of individuals within the workplace underlies the social nature of high performance.
What happens to us in stressful environments
The brain is a social organ. Studies by UCLA have found that when we feel excluded from play or rewards, our brains trigger a response from the same neural regions associated with the distress that comes with physical pain. This neurophysiological link has been explained as evolutionary, a developmental hangover from the dependency of infancy. As UCLA neuroscientist Matthew Liebermann puts it, “To a mammal, being socially connected to caregivers is necessary for survival”.
This neurological response has a number of implications for business and leaders navigating this current crisis – especially in regards to remote working and communicating organisational changes driven by COVID-19.
A person who feels their position and work to be valued, by their leaders, solely as an economic and rational transaction (labour for money) will likely feel betrayed, unrecognised and disengaged.
Research shows that each time a person feels like this, it is physiologically and psychologically analogous to a ‘blow to the head’ and is processed in the brain in the same way as physical pain. Naturally, our conscious selves rationalise the discomfort, but if this situation is chronic and ongoing, it is more likely that employees will begin to desensitise in self-protection. They will effectively push the discomfort away, so as to not feel it consciously. This shutting down of large parts of our response pathways disables us, making high-performance impossible.
Many studies, including Paul MacLean’s infamous “Triune Brain” theory, look at how fear responses negatively impact the quality of mental functioning. In more mild circumstances, the emotional centres associated with the limbic brain will interfere with the circuitry of the logical neo-cortex. In extreme circumstances, our ‘fight, flight, freeze’ response gets triggered, creating a chemical reaction that entirely hijacks the brain’s emotional centre, the amygdala, making logical thinking impossible.
However you conceptualise it, high emotion is disastrous for the adaptive thinking required for complex problems – so critical for ethical decision making.
Physiologically, the threat response ties up glucose and oxygen, as lower areas of the brain, more intimately concerned with survival, take precedence over higher centres. In threat situations, these resources are withheld from working memory, impairing the processing of new information or ideas, and slowing analytic thinking, creativity and problem solving.
Addressing the needs of the individual and the organisation
We’ve all heard that adults are poor learners, fundamentally intractable, or that their natural response to change is resistance. While elements of these statements are true, what is also true is that the adult brain continues to be highly plastic; albeit not as much as children or infants. That means that not only can behaviours change, but that the neural networks that underlie all thought and behaviour are in fact changing every day.
To increase the chances of your business being high-performing, David Rock’s SCARF Model, as outlined in his paper “SCARF: A Brain-Based Model for Collaborating with and Influencing Others,” suggests that leaders should look at how the organisation deals with the following aspects of individual functioning in the collective social system.
1. Certainty
Our brains are wired to crave certainty. This desire is underpinned by neural circuits that register unexpected events as gaps or errors. Because an assumed pattern is no longer functioning as it should, it is registered as a threat.
Think about how you respond when the car in front slams on the brakes. Normally, we can do multiple things at the same time when we drive – hold a conversation, listen to music, monitor what’s going on around us, think about the shopping list – but faced with a potential accident, your working memory is diminished. All other activities and thoughts must cease as you shift full attention to the potential threat ahead.
Some uncertainty can be intriguing and enjoyable; too much leads to panic and bad decisions. For many people right now, the levels of uncertainty – combined with imminent health and employment risks – will be triggering this aspect of the ‘fight or flight’ response. This impedes their capacity to access creative thinking and good decision making.
Of course, certainty is an illusion. However, people need a semblance of certainty in order to perform. Leaders need to build confidence in their people so they, in turn, can trust in individual and collective capability to work through whatever comes. Keeping a clear and regular stream of communication around how decisions are being made increases trust and promotes engagement. Chunking larger problems into shorter time frames also helps people feel more certain.
2. Status
As humans, our relative status within social systems matters. This is the basis for all competition, social hierarchy, and, conversely, much social unrest. Many organisations have processes and practices that threaten people’s status. Hierarchy reinforces a notion of ‘greater than’ and ‘less than’, while performance appraisals and coaching generally place one person in the position of being more knowledgeable, capable and powerful than the other. Unless these interactions are carefully considered and thoughtfully executed, they will feel threatening to an individual’s status.
Actions that enhance status include private, as well as public, recognition. In addition, the quality of interactions from leaders with their people can raise the self-status of those who sit lower in the hierarchy. Therefore, one of the most important (albeit intangible) skills of a leadership team is their capacity to interact with others in a respectful and status-enhancing way.
With staff working digitally, and from home, leaders need to innovate and find new ways to show this recognition. This will make people feel seen and valued for the work they do.
3. Autonomy
When people feel they can execute their own decisions, without interference, their felt stress is lower. In a 1977 study, residents of aged care facilities who had more agency and decision making rights, lived longer and healthier lives. While what they were deciding about was insignificant; their autonomy was critical. In another study, franchise owners principally left corporations citing work-life balance. Once in their own business, they generally worked longer hours, for less money, and nevertheless reported better work-life balance, because they were making their own decisions.
Delegation systems, hierarchy, confusing reporting lines, moribund policy and procedure, and parochial mindsets can all contribute to less agency for individuals in businesses. Often people are not aware that they are not delegating, that they are effectively withholding decision making from others.
Lack of autonomy is also closely linked with the phenomena of people not working ‘at the right level’. When leaders find themselves working at a level of complexity lower than where they should be working, the flow on to the rest of the organisation is usually inevitable.
4. Relationships
Perceived difference is another human threat-trigger. Collaboration, trust and empathy are predicated on perceiving that the ‘other’ is from the same social group as we are. The decision of friend or foe is usually made in milliseconds.
The organisational implications for bringing groups together are profound. Forming new relationships at this time, such as buddy systems or mentor programs, need to be carefully thought through so as to minimise the potential to ‘spook the horses’. The creation of productive strategic relationships requires repetition via multiple, sequential opportunities and reinforcement through the removal of organisational impediments.
5. Fairness
Fairness is a cognitive construct that motivates people so strongly they will persist in situations that are manifestly unfavourable because they value a perceived fairness on the part of an organisation or a cause. Consider how people historically have volunteered to fight in wars that are not their own, such as the Spanish Civil War, and are prepared to die based on apparent fairness.
People not only want to avoid being unfairly discriminated against, they will also often feel uncomfortable if they find themselves being unfairly favoured by a person or a situation.
Organisationally, the implications are similar and connected to that of certainty. People will be much more accepting of decisions and processes, as fair, if they are transparent.
Fairness is also related to status in that people will feel fairly dealt with if they perceive they are respected as a person and employee. These principles are often coded as ‘natural justice’. In some ways, fairness is an amalgam of the previous four areas of concern.
What leaders need to think about
The upshot for leaders is this – when you trigger a threat response in others, you make them less effective. When you make people feel good about themselves, clearly communicate your expectations and give agency through appropriate delegations, people feel a reward response which is intrinsically engaging – something your people want more of.
In situations where threat is felt to be ongoing, people typically experience burnout. This emotional exhaustion is a result of chronic over-stimulation of the fear centres of the brain. Physiologically, high levels of adrenalin and cortisol can only be supported for so long before they start to damage the nervous system.
Where these sorts of threatening social conditions are widespread, ongoing or both, each individual’s sub-optimal reaction is reinforced by the reactions of the people around them, magnifying the pattern. This looks like ‘learned helplessness’, passivity or protective withdrawal. Sometimes it drives an aggressive pattern where individuals seek authoritarian control over whatever small part of their world they feel they can have an effect on.
Practical steps that can be taken during COVID-19
If you’re an organisation transitioning working roles or letting go of staff due to the impacts of COVID closures, ensure you are both transparent and compassionate in your communications.
Be clear and straight forward about how government policy impacts your workers, keep them informed of the decisions being made and communicate the rationale behind them, particularly when they impact others.
When communicating changes, respect for the people affected is crucial. While your decisions have economic drivers, there are very real human costs associated with the outcomes.
Relationships and connection are of heightened importance now. Take care in implementing processes to foster positive relationships between people – whether by virtual catch ups, a mentor support system, or regular virtual check ins by managers with their staff to see how they are coping and adjusting.
Tension will also be high, and any perceived difference may trigger as a threat. Leaders will need to be conscious of how relationships are managed between staff who may be actively competing for scarce resources or roles, if facing redundancies.
None of these strategies ameliorates the situation
It is the responsibility of the leaders of the transformation to monitor if what is going on in their organisation is supporting or undermining people’s performance. If performance is being undermined, it is their responsibility to raise those instances to awareness of their peers in the leadership team, to mobilise and support staff to break the prevailing patterns and to experiment with alternative approaches.
Navigating the changes ahead won’t be easy, and for many this may be the hardest professional challenge they’ve had to face given the stakes have never been so high. But careful attention to how decisions are made and communicated is critical to staff safety and wellbeing in the current climate. And that’s never been more important.
You can contact The Ethics Centre about any of the issues discussed in this article. We offer free counselling for individuals via Ethi-call; professional fee-for-service consulting, leadership and development services; and as a non-profit charity we rely heavily on donations to continue our work, which can be made via our website. Thank you.
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BY Michelle Bloom
Michelle Bloom is the Director of Consulting and Leadership at The Ethics Centre. Drawing on 30 years as a consultant, clinician, and organisational development specialist, she has worked with Australia’s largest organisations in developing and delivering solutions to assess and build value-driven leaders and cultures.
BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Facing tough decisions around redundancies? Here are some things to consider
One of the most difficult decisions an employer will ever have to make is whether or not to dismiss employees during an economic downturn.
Invariably, those at risk of losing their jobs are competent, hard-working and loyal. They do not deserve to be unemployed – they are simply the likely victims of circumstances.
As one employer said to me recently, “I hate the idea of having to be ruthless – but I need to sack forty to save the jobs of four hundred”. So, what are the key ethical considerations an employer might take into account?
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Save what can be saved
There is no honour in destroying all for the sake of a few. Even the few will eventually perish in such a scenario.
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Give reasons
Be open and truthful. Throw open the books so that people can see the proof of necessity.
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Retain the essential
Some people are of vital importance to the life of an organisation. However, when all other things are equal, protect the most vulnerable.
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Cut the optional
The luxuries, the ‘nice-to-haves’ should not be funded. Use income for the essential purpose of preserving jobs.
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Treat everyone with compassion
Both those who leave and those who remain will be wounded by the decisions you make – no matter how necessary.
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Share the pain
consider offering everybody the opportunity to work less hours, for less money, in order to save a few jobs that might otherwise be lost.
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Seek volunteers
If sacrifices must be made, invite your colleagues to be part of the decision. Some might prefer to step down – their reasons will vary. Honour their choice.
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Honour your promises
If you have made a specific commitment to a member of staff, then you are bound by it – even in a crisis – unless it is impossible to discharge your obligation.
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Minimise the damage
Those who lose their jobs should not be abandoned. How can they be supported by means other than a salary?
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Look to the future
Make sure that your organisation has a purpose that can inspire those who remain – and justify the losses suffered during the worst of times.
You can contact The Ethics Centre about any of the issues discussed in this article. We offer free counselling for individuals via Ethi-call; professional fee-for-service consulting, leadership and development services; and as a non-profit charity we rely heavily on donations to continue our work, which can be made via our website. Thank you.
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‘Woke' companies: Do they really mean what they say?
Virtue-signalling has a bad name. It is often derided as the boasting people do to feel superior – even when they have no intention of living up to the ideal.
It is like when they posted Facebook videos of pouring icy water over their own heads, hashtagged #IceBucketChallenge, but raised no money for research into Motor Neurone Disease.
Or when $US5.5 billion fast food company KFC appeared to use the challenge as a branding exercise, offering to donate up to $10,000 if its own buckets were used.
But here’s the thing: despite free riders and over-eager marketers, the 2014 viral campaign raised more than $A168 million in eight weeks and was able to fully fund a number of research projects.
If some of those getting in on the act gave nothing for the cause, does it matter? It is possible that, by flooding social media with the images, they helped build momentum for an extraordinarily successful campaign.
So, can virtue signalling also have a positive spin?
Conservative British journalist and former banker, James Bartholemew, claims to have invented the term “virtue signalling” in a column for The Spectator in 2015. He wrote: “It’s noticeable how often virtue signalling consists of saying you hate things.”
He says virtue signalling is often a person or brand attempting to aggrandise or promote themselves.
If you were frank, Bartholemew explains, what you would actually say is: “I care about the environment more than most people do” or “I care about the poor more than others”.
“But your vanity and self-aggrandisement would be obvious…”
Bartholemew says the term “virtue signalling” is pejorative in nature: “It is usually used as a judgement on what somebody else is saying. It is a judgement just like saying that somebody is boring or self-righteous. So it is not going to be used to praise somebody, but for taking a particular position.”
Virtue signalling: An attempt to show other people that you are a good person, for example by expressing opinions that will be acceptable to them, especially on social media.
Cambridge Dictionary definition.
It is social bonding
Philosopher and science writer, Dr Tim Dean, says virtue signalling has a social purpose – even when it is disingenuous. It expresses solidarity with a peer group, builds social capital and reinforces the individual’s own social identity.
“It sometimes becomes more important to believe and to express things because they are the beliefs that are held by my peer group, than it is to say things because we think they are true or false,” he says.
A secondary purpose according to Dr Dean is to distinguish that social group from all others, sometimes by saying something other groups will find disagreeable.
“I think a distant tertiary function is to express a genuinely held and rationally considered and justifiable belief.
“We are social first and rational second.”
Organisations use virtue signalling to broadcast what they stand for, differentiating themselves from the rest of the market by promoting themselves as good corporate citizens. Some of those organisations will be primarily driven by the marketing opportunity, others will be on a genuine mission to create a better planet.
A classic act of virtue signalling was the full-page advertisement in the New York Times, taken out last year by more than 30 B Corporations to pressure “big business” into putting the planet before profits. B Corps are certified businesses that balance profit and purpose, such as Ben and Jerry’s, Body Shop, Patagonia and the Guardian Media Group.
“We operate with a better model of corporate governance – which gives us, and could give you, a way to combat short-termism and the freedom to make decisions to balance profit and purpose,” the B Corps declared in their advertisement.
Their stated aim was to chivvy along the leaders in the Business Roundtable: 181 CEOs who had pledged to pledged to do away with the principle of shareholder primacy and lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.
Whose business is it?
There are some questions leaders should consider before they sign their organisations up to a campaign. In whose interests is a company acting if it lobbies for a social or political cause? How does it decide which issues are appropriate for its support?
The questions are of particular concern to conservatives, who have watched the business community speak up on issues such as gender targets, climate change and an Australian republic.
When the CEO of Qantas, Alan Joyce, pledged his company’s support in favour of the right of gay couples to marry, in 2017, it raised the ire of the conservative think-tank, The Centre For Independent Studies (CIS).
Last year, the centre published Corporate Virtue Signalling: How to Stop Big Business from Meddling in Politics – a book by its then-senior research fellow, Dr Jeremy Sammut.
At the launch of his book last year, Sammut noted recent developments that included Rio Tinto and BHP becoming the first companies to support Indigenous recognition in the Australian Constitution, a group of leading company directors forming a pressure group to push the Republican cause in Australia, while industry super funds were using their financial muscle to force companies to endorse “so-called socially responsible climate change” and industrial relations policies that aligned with union and Labor Party interests.
“If the proponents of CSR [corporate social responsibility] within Australian business, get their way, the kind of political involvement that we saw from companies during the same-sex marriage debate will be just a start,” Sammut said.
“It’s going to prove to be just the tip of the political meddling by companies in social issues that really have very little to do with shareholders’ interests, and the true business of business.”
Sammut pointed the finger at CSR professionals in human resources divisions and consultancy firms: “… they basically have an activist mindset and use the idea of CSR as a rubric, or a license, to play politics with shareholders money.”
Their ultimate ambition is to “subvert the traditional role of companies and make them into entities that campaign for what they call systemic change behind progressive social, economic, and environmental causes – all under the banner of CSR.”
Decide if it is branding or belief
It is not only the conservatives who view corporate virtue signalling with deep suspicion, those who may be considered “woke” (socially aware) can also view the practise with cynicism – especially when they have seen so many organisations pretend to be better than they are.
Dr Tim Dean notes there is a difference between corporate virtue signalling and marketing. While the former reinforces social bonds within a particular group, marketing appeals to people’s values in an attempt to elevate the company’s status, improve the brand and increase sales.
“I have some wariness around corporate statements of support for issues that are outside of their products and services, because I see there is a certain amount of disingenuousness about it.”
When a company promotes a stance on a social issue, it is often unclear whether it is supported by the CEO, the board, or the employees.
“ … if it’s separate from the work that they do, or does not relate directly to the structure, that’s where I think it’s a little more difficult to know exactly what the motivation is and whether we can trust it,” says Dean.
“Now, there are certainly times when we need to stand up for our moral beliefs and make public statements, even when we think they’re going to be strongly opposed. But I think I see that as more of an individual obligation rather than a business’s obligation.”
He says, when organisations are considering taking a moral stance, they should first ask themselves:
- Why are you doing it? Is it an honestly-held belief, or marketing?
- Whose views are you representing? What proportion of employees supports your stance?
- Is it any of your business’ business? Does it fit with the values of your organisation?
- Why do it as an organisation, rather than as individuals?
The Ethics Centre is a world leader in assessing cultural health and building the leadership capability to make good ethical decisions in complexity. To arrange a confidential conversation contact the team at consulting@ethics.org.au. Visit our consulting page to learn more.
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BY Fiona Smith
Fiona Smith is a freelance journalist who writes about people, workplaces and social equity. Follow her on Twitter @fionaatwork
BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.
BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Getting the job done is not nearly enough
If a company wants to be trusted, it must be much more than merely competent. And, compared with community expectations around ethics, an ability to do the job is a relatively minor concern.
We now know ethical concerns are three times more important than being able to do the job to the expected standard, thanks to a recent global poll by the Edelman Trust Barometer.
Australia has been in a state of distrust for almost a decade, with an increasingly cynical and disappointed public, drip-fed on a regular diet of corporate and institutional scandals.
The recent bushfires made matters worse, with Australians feeling they were no longer in control, according to Edelman Australia CEO Michelle Hutton.
“The lack of empathy, authenticity and communications crushed trust across the country,” she told the Australian Financial Review.
The majority of the mass population do not trust their institutions to do what is right, according to the Barometer.
Executive director of The Ethics Centre, Dr Simon Longstaff, warns that important institutions in Australia are getting “perilously close” to losing their legitimacy – which creates anger, insecurity and fear.
None of those things allow a society to enjoy the kind of settled peace that it would aspire to, he said recently.
“Trust is an issue because most of our institutions have betrayed their purpose. I don’t think they set out to do it in a deliberate way. I think they forgot their purpose, whether it’s churches or banks or in politics,” he said on the ABC’s Q&A programme in February.
Longstaff defines trust as an ability to rely on somebody to do what they have said, even when no one is watching them.
The Edelman Trust Barometer divides company trust scores into four elements, and ability (or competence) accounted for 24% of the total. Ethical concerns make up the remainder: integrity 49%, purpose 12%, and dependability 15%.
The researchers find the reason for the general lack of trust in institutions is that none are regarded as both competent and ethical.
Among the institutions – business, government non-government organisations (NGOs) and the media – only the NGOs were seen as ethical (but not competent) and only business was found to be competent (but not ethical).
Part of the explanation for the poor regard for business ethics could be explained by the tendency of companies to give a higher priority to communicating their performance than their commitment to ethics and integrity, or their purpose and vision for the future, say the researchers.
“At the same time, stakeholder expectations have risen,” they say.
“Consumers expect the brands they buy to reflect their values and beliefs, employees want their jobs to give them a sense of purpose, and investors are increasingly focused on sustainability and other ethical commitments as a sign of a company’s long-term operational health and success.
“Business is already recognised for its ability to get things done. But to earn trust, companies must make sure that they are acting ethically, and doing what is right. Because for today’s stakeholders, competence is not enough.”
Dr Longstaff says regaining trust starts with owning up to mistakes.
“What we can expect of ourselves firstly sincerity, and then think before you act. Do that, and you can reasonably be assured that the trust that you hope for will be bestowed.”
How to rebuild trust:
Adopting a minimum threshold of fundamental values and principles can restore trust and minimise the risk of corporate failure.
- Respect people. Everyone has intrinsic value – regardless of their age, gender, culture, and sexual orientation. A person should never be used merely as a means to an end or as a commodity. This principle forbids wrongs, such as forced labour and supports the practice of stakeholder engagement.
- Do no harm. The goods and services should confer a net benefit to users without doing harm. Those who profit from engaging in harmful activity should disclose the nature of the risk.
- Be responsible. Benefits should be proportional to responsibility. One should look beyond artificial boundaries (such as the legal structures of corporations) to take into account the “natural” value-chain, such as how supply chains are viewed and concerning matters like corporate tax and its avoidance and evasion. This principle takes into account asymmetries in power and information to the detriment of weaker third parties.
- Be transparent and honest. These values are fundamental to the operation of free markets, in which stakeholders can make fully-informed decisions about the extent (of their involvement with the corporation. Corporations need to disclose details of the ethical frameworks that they employ when deciding whether or not a decision is “good” or “right”.
Source: Edelman Trust Barometer. An online survey in 28 markets of more than 34,000 people. Fieldwork was conducted between October 19 and November 18, 2019. A supplementary study was conducted in Australia in February 2020 to account for the bushfires. In Australia, 1,350 people were polled.
The Ethics Centre is a world leader in assessing cultural health and building the leadership capability to make good ethical decisions in complexity. To arrange a confidential conversation contact the team at consulting@ethics.org.au. Visit our consulting page to learn more.
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BY Fiona Smith
Fiona Smith is a freelance journalist who writes about people, workplaces and social equity. Follow her on Twitter @fionaatwork
BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
How to build a successful culture
They say that what gets measured, gets managed (or improved). But when it comes to measuring corporate culture, that’s an idea that needs unpacking.
The corporate sector has traditionally taken a quantitative approach to risk management and governance. Compliance, regulation, risk and legislative frameworks are applied, analysed, audited and reported-on to varying degrees of accuracy and certainty.
Unfortunately, these management mechanisms do not in themselves lead to effective governance as evidenced by a multitude of corporate scandals and collapses. Overconfidence in the science of risk management can lead to faulty corporate governance – and could well lead to disaster.
The art of risk management and governance lies in the capability of directors and executives to navigate and understand the highly complex and unpredictable set of human behaviours and interactions that make up a modern organisation.
The current scientific approach to risk management is insufficient when seeking to mitigate non-financial risks to business success – leaving companies vulnerable to catastrophic levels of exposure. There is now a shift in thinking and an appreciation that the intangible qualities of culture are critical to the issue of risk management and corporate governance.
Can you measure culture?
The subtle aspects of an organisation, such as values, motivations and political dynamics, are difficult to measure, influence and describe, let alone govern effectively. Performance management and processes, culture and engagement surveys, leadership competency assessments and organisational development initiatives are designed to create visibility of these aspects of organisations, but they often fall short by not accounting for the hidden, unspoken and un-self-aware aspects of human agents and the social systems in which they operate.
For over 20 years The Ethics Centre has been developing a unique approach to navigating these complexities – and, in the process, to accurately measure and understand culture.
Our Everest process assesses the level to which an organisation’s lived culture, and the actual systems and processes that drive the business, align with their intended ethical framework. Through in-depth exploration and analysis, gaps between the ideal and the actual culture of a business emerge, along with areas where formal systems and behaviours are misaligned to the stated values and principles.
Everest digs far deeper than a standard organisational review, identifying themes that relate to experiences over time and between groups of people, and reflecting them against the organisation’s formal policies and procedures. It enables companies to build a climate of trust for clients, shareholders and regulators; to unify employees around a common purpose and encourage values-aligned behaviour; to develop consistency between what you say you believe in and how you act; and to enable consistent decision making. Ultimately reducing the risk of ethical failure and poor decisions.
The Ethics Centre’s Everest process is a tried and tested methodology that produces invaluable insights and recommendations for change. In just the past five years, Everest has been deployed to assess the organisational culture of one of Australia’s largest banks, a major superannuation fund, a leading energy company, a major telco, a mining company and a wagering company – amongst many others.
Transforming organisations
Whilst most of our clients have chosen to keep their Everest reports confidential, two recent clients – The Australian Olympic Committee and Cricket Australia – elected to publicly release the reports into their organisations.
In both instances, these acts of “radical transparency” acted as a circuit-breaker following periods of widespread negative coverage. The release of these reports allowed the organisations to re-boot with renewed purpose and energy.
According to Matt Carroll, the widely-respected CEO of the AOC, “the review conducted by The Ethics Centre provided us with the platform to reset the organisation. We are committed to building a culture that is fit for purpose and aligned to our values and principles.”
Our report on Cricket Australia – following the infamous ball-tampering incident in 2018 – ran to 147 pages and contained 42 detailed recommendations. Our key finding was that a focus on winning had led to the erosion of the organisation’s culture and a neglect of some important values. Aspects of Cricket Australia’s player management had served to encourage negative behaviours.
It was clear, with the release of the report, that many things needed to change at Cricket Australia. And change they did. Cricket Australia committed to enacting 41 of the 42 recommendations made in the report, along with widespread renewal of their executive team and board.
“With culture, it’s something you’ve got to keep working at, keep your eye on, keep nurturing,” says CA’s chairman Earl Eddings. “It’s not: we’ve done the ethics report, so now we’re right.”
Most of the corporate collapses and scandals that have occurred lately were not the result of inadequate risk management, poorly crafted strategy or an absence of appropriate policies. Nor were they caused by incompetence or poorly trained staff.
In almost every case, it is becoming apparent that the causes lay in the psychology, ethics and beliefs of individuals and in an organisational culture that rewards short term value extraction over long term, sustainable value creation.
This misalignment between the espoused purpose, values and principles of an organisation and the real-time decisions being made each day can increase reputational and conduct risk leading to an erosion of trust, disengagement and poor customer outcomes.
Even companies with no burning platform benefit from the rigorous corporate health-check that Everest provides. To quote Ian Silk, CEO of another Everest client Australian Super:
“In my darkest moments I just wondered if we had all drunk the Kool-Aid, and whether the staff surveys reflected the facts. So I thought a really good way to test this would be to get The Ethics Centre to come in and do an entirely independent, entirely objective test of the culture and the ethics in the organisation.”
If you are interested in discussing any of the topics raised in this article in more depth with The Ethics Centre’s consulting team, please make an enquiry via our website.
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Ready or not – the future is coming
We are living in an exceptional era of human history. In a blink of the historical time scale, our species now have the skills to explore the universe, map and modify human genes and develop forms of intelligence that may far surpass their creators.
In fact, given the speed, unpredictability and sheer scale of what was previously unthinkable change, it’s actually better to talk of the future in the plural rather than the singular: the ‘futures’ are coming.
With the convergence of genetic engineering, AI and neurotechnology, entirely unique challenges arise that could test our assumptions about human identity and what connects us together as a species. What does the human experience mean in an era of augmentation, implantation, enhancement and editing of the very building blocks of our being in the future? What happens when we not only hack the human body, but the human mind?
The possible futures that are coming will arrive with such speed that those not ready for them will find themselves struggling to know how to navigate and respond to a world unlike the one we currently know. Those that invest in exploring what the future holds will be well placed to proactively shape their current and future state so they can traverse the complexity, weather the challenges, and maximise the opportunities the future presents.
The Ethics Centre’s Future State Framework is a tailored, future-focused platform for change management, cultural alignment and staff engagement. It draws on futuring methodologies, including trend mapping and future scenario casting, alongside a number of design thinking and innovation methodologies. What sets Future State apart is that it incorporates ethics as the bedrock for strategic and organisational assessment and design. Ethics underpins every aspect of an organisation. An organisation’s purpose, values and principles set the foundation for its culture, gives guidance to leadership, and sets the compass needed to execute strategy.
The future world we inhabit will be built on the choices we make in the present. Yet due to the sheer complexity of the multitudes of decisions we make every day, it’s a future that is both unpredictable and emergent. The laws, processes, methods and current ways of thinking in the present may not serve us well in the future, nor contribute best to the future that we want to create. By envisioning the challenges of the future through an ethics-centred design process, the Future State Framework ensures that organisations and their culture are future-proof.
The Future State Framework has supported numerous organisations in reimagining their purpose and their unique economic and social role in a world where profit is rapidly and radically being redefined. Shareholder demand is moving beyond financial return, and social expectations toward the role of corporations are shifting dramatically into the future.
The methodology helps organisations chart a course through this transformation by mapping and targeting their desired future state and developing pathways for realising it. It been designed to support and guide both organisations facing an imminent burning platform and those wanting to be future forward and leading – giving them the insight to act with purpose – fit for the many possibilities the future might hold.
If you are interested in discussing any of the topics raised in this article in more depth with The Ethics Centre’s consulting team, please make an enquiry via our website.
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BY John Neil
As Director of Education and Innovation at The Ethics Centre, John collaborates closely with a talented team of specialists and subject matter experts to shape the tools, frameworks, and programs that drive our work forward. He brings a rich and varied background as a consultant, lecturer, and researcher, with expertise spanning ethics, cultural studies, sustainability, and innovation. This multidisciplinary perspective allows him to introduce fresh, thought-provoking approaches that energise and inspire our initiatives. John has partnered with some of Australia’s largest organisations across diverse industries, to place ethics at the heart of organisational life. His work focuses on education, cultural alignment, and leadership development to foster meaningful and lasting impact.
BY The Ethics Centre
The Ethics Centre is a not-for-profit organisation developing innovative programs, services and experiences, designed to bring ethics to the centre of professional and personal life.
Explainer: Getting to know Richard Branson's B Team
If you ever dreamed of rubbing shoulders with the brightest shining stars of business, you probably couldn’t turn down an invitation to join Richard Branson’s B Team.
The team of luminaries was launched by the Virgin Group founder in 2013 to power a movement to use business to build a better world.
Its goals
The B Team aims to “confront the crisis of conformity in leadership”.
“We need bold and brave leaders, willing and able to transform their own practices by embracing purpose-driven and holistic leadership, with humanity at the heart, aligned with the principles of sustainability, equality and accountability,” according to its website.
“Plan A – where business has been motivated primarily by profit – is no longer an option. We knew this when we came together in 2013. United in the belief that the private sector can, and must, redefine both its responsibilities and its own terms of success, we imagined a ‘Plan B’ – for concerted, positive action to ensure business becomes a driving force for social, environmental and economic benefit.
“We are focused on driving action to achieve this vision by starting ‘at home’ in our own companies, taking collective action to scale systemic solutions and using our voice where we can make a difference.”
Membership
Aside from Branson himself, who has charisma to burn, his hand-picked team of leaders include:
- Co-founder and former Puma chair, Jochen Zeitz
- Chairman & CEO of Kering, François-Henri Pinault
- Chairman Emeritus, Tata Sons, Ratan Tata
- Chairman, Yunus Centre, Professor Muhammad Yunus
- General Secretary of the International Trade Union Confederation Sharan Burrow
- President and CEO, Mastercard, Ajay Banga
- Founder and CEO of Thrive Global, Arianna Huffington
- Former Chairman and Chief Executive Officer, Dow Chemical and DowDuPont, Andrew Liveris
Its influence
Branson is a master of marketing, and has long cultivated an image of a fun-loving, brilliant, rule-breaking entrepreneur with a socially-responsible heart. He has launched around 400 companies and has become one of the world’s most influential leaders, with a personal wealth estimated at $7.7 billion.
A stay at his luxury resort Necker Island in the British Virgin Islands is the modern-day equivalent of Charlie Bucket’s “golden ticket” to the chocolate factory (from the Roald Dahl children’s book). It was, for instance, the first holiday destination for the Obama family after they left the White House in 2017.
Branson has long harnessed his star power to humanitarian ventures and he has now provided B Team “vehicles” for others to do the same.
Its projects
The B Team has three causes:
Climate: committing to a just transition to net-zero emissions by 2050.
Workplace equality: creating working environments that recognise and respect the human rights and talents of all people.
Governance: raising the bar on what good governance looks like – and keeping accountability, sustainability and equality at the centre of these efforts.
Recent achievements
At the UN Climate Action Summit in September, B Team Leader and Allianz CEO Oliver Bäte led a group of 12 asset owners with $A3.5 trillion in assets under management in committing to net-zero emissions by 2050—a target aligned with a pathway to 1.5°C warming – and helping companies within their portfolios to achieve the same goal. They join the 87 companies who also made this commitment.
In 2015, The B Team was instrumental in ensuring that a commitment to net-zero emissions by 2050 was included in the text of the Paris Agreement.
In Australia
The local arm of the B Team launched in October 2018 and includes Branson, Sharan Burrow as vice-chair, ANZ Bank chair David Gonski as co-chair, and Chief Executive Women director Lynette Mayne as co-chair. Other members are:
- Scentre Group CEO Peter Allan
- Suncorp Group CEO Michael Cameron
- Former Chairman and CEO of Dow Chemical, Andrew Liveris
- CEO of MLC, Geoff Lloyd
- CEO of Mirvac Susan Lloyd Hurwitz
- Australian Council for International Development president Sam Mostyn
- Chairman of the Light Warrior Group Radek Sali
- Executive Chairman of Carnival Australia Ann Sherry
- EnergyAustralia managing director Catherine Tanna.
MLC’s Lloyd says the group aims to use the power of its influence to make the conversations “go viral”.
“It is about a core group of leaders who will represent those principles and drive those initiatives and connect through to the global B Team. We are trying to create a conversation and lead that conversation through the individuals in those businesses that are part of it.
“The principles are really all there to help leaders lead their businesses and provide a course, if you like, direction, some guidance as to how we should think very differently about work.
“There is a community expectation that business is there to do good.”
The 100% Human project
This initiative brings together more than 150 organisations around the world to shape and identify the elements that define a 100% Human organisation: respect, equality, growth, belonging and purpose. The aim is to recruit to the cause one million companies globally.
100% Human has been collecting examples of innovative thinking in its published Experiments Collection, which provides details of around 200 workplace initiatives, which are trying out new ways of working. These “experiments” include: providing opportunities for refugees and migrants; championing diversity, inclusion and belonging; and supporting employees’ mental health and wellbeing.
The initiative was launched in Australia in June, 2019 with the five principles of: strategically planning for technology, creating career growth opportunities, focusing on the whole person, establishing support networks, and being publicly accountable.
The former CEO of Perpetual Ltd, Lloyd joined MLC Wealth a year ago to engineer its separation from the National Australia Bank. He says he introduced some of 100% Human’s leadership philosophies to Perpetual in 2015 and is now using them to help develop a new, individual workplace culture at MLC.
“At MLC, we’re reviewing all of our people processes and policies and aligning our culture towards that of allowing people to be 100% human at work,” he says. “So, that’s from our leave policies, our carer leave, our flexibility, the way in which we lead ourselves, the way in which our leadership team really do express, and understand that our team have complex lives and needs.”
This article was originally written for The Ethics Alliance. Find out more about this corporate membership program. Already a member? Log in to the membership portal for more content and tools here.
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BY The Ethics Alliance
The Ethics Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business. The Alliance is an initiative of The Ethics Centre.
BY Cris
Pay up: income inequity breeds resentment
Public outrage over multi-million dollar CEO salaries will never go away when employees are underpaid. It offends our sense of fairness and the increasingly threadbare notion of Australia as an egalitarian nation.
This point is not lost on many who read about Woolworths’ admission it underpaid nearly 6,000 staff over ten years by a total $300 million.
The supermarket chain had failed to account for the actual hours that staff were working, with out-of-business-hours work patterns attracting penalty rates, which were not being added to their salaries.
Other companies which have been caught out with similar underpayments include Qantas, ABC, Commonwealth Bank, Bunnings, Super Retail Group and Michael Hill Jewellers.
While some business leaders laid blame on the complexity of modern awards, Fair Work Ombudsman, Sandra Parker said employers were at fault with “ineffective governance combined with complacency and carelessness toward employee entitlements”.
Human resources leader, Alec Bashinsky, was succinct in his response: “This is 101 stuff and not acceptable in any scenario”. For 14 years, Bashinsky was Asia Pacific talent leader for Deloitte, which employed more than 3,000 people in Australia alone.
Revelations such as the underpayments just add more fuel to the conflagration of distrust and anger, which has led to the rise of anti-establishment political movements around the world.
In Australia, it builds on a mountain of evidence of businesses behaving badly, following revelations of the deliberate underpayments and worker exploitation in the franchising sector and the litany of unethical decision-making unearthed in the recent Royal Commission into financial services.
CEO’s get richer, worker pay stagnates
While company reputations have been trashed over the past couple of years, business leaders have continued to prosper. Company boards responded to public resentment over CEO salaries by reducing the pay of incoming CEO’s… while handing out the second-biggest bonuses of the past 18 years.
Thanks to those bonuses, the median realised pay for an ASX100 CEO reached $4.5m in the last financial year, according to a report by the Australian Council of Superannuation Investors.
Leaders whose companies were directly involved in recent scandals have been punished. Big bank CEO’s saw their remuneration fall over the past year. However, total remuneration for top 50 CEO’s increased by 4 per cent on average, compared to general wage growth at 2.2 per cent, according to the Australian Financial Review.
Macquarie Bank’s Shemara Wikramanayake was the highest paid with $18 million, followed by Goodman Group’s Gregory Goodman with $12.8 million.
Labor MP and economist, Andrew Leigh says the growing gap between the leaders and the led poses a threat to the Australian ethic of egalitarianism.
“Australia is a country where we don’t have private areas on the beaches, we like to say ‘mate’ rather than ‘sir’, we sit in the front seat of taxis and we don’t stand up when the prime minister enters the room,” says Leigh, who is also Deputy Chairman of the Parliamentary Economics Committee.
Former chairman of the Australian Competition and Consumer Commission, Allan Fels, has written: “The increase in pay levels for CEO’s has occurred at a time when public trust in business is at a low ebb and wages growth in the broader economy can best be described as anaemic”.
The rising levels of income inequality create serious social harm, according to the Australian Council of Social Service (ACOSS).
Someone in the highest one per cent now earns more in a fortnight than someone in the lowest 5 per cent earns in an entire year.
“Excessive inequality in any society is harmful. When people with low incomes and wealth are left behind, they struggle to reach a socially acceptable living standard and to participate in society. This causes divisions in our society,” according to ACOSS, after the release of its Inequality in Australia report in July.
“Too much inequality is also bad for the economy. When resources and power are concentrated in fewer hands, or people are too impoverished to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished.”
Reining in the excesses
Investors have a mechanism to act if they believe boards have been overly-generous in executive remuneration. In 2018, 12 companies in the ASX200 had shareholders vote down board remuneration reports in a “first strike” action. A further seven were close to experiencing a first strike.
According to the “two-strike rule”, if subsequent remuneration reports are voted down by at least 25 per cent of shareholders, the board positions may be subject to a spill motion. At this point, no company has experienced a board spill as a result of this rule.
The two-strike rule came into effect in 2011 after a Productivity Commission Inquiry into Executive Remuneration found that executive pay went up over 250 per cent from 1993 to 2007.
Labor went into the last Federal election with a policy aimed at encouraging more moderation in executive pay, requiring companies to publish the ratio of the CEO remuneration to the median workers’ pay.
At present, ASX-listed companies have to publish their policies for determining the nature and amount of remuneration paid to key management personnel. However, without a requirement to divulge what the median worker is paid, a ratio cannot be calculated.
The United Kingdom and the United States have both introduced new regulation to require their biggest listed companies to divulge and justify the difference between executive salaries and average annual pay for their employees.
This is going to put more pressure on CEO salaries as the public gets a clear picture. Research in the US shows, for instance, that the average person thinks the pay ratio is 30:1 when the average is actually closer to 300:1.
Those disclosures can have material impacts on a business. The US city of Portland has imposed a 10 per cent tax surcharge on companies with top executives making more than 100 times what their median worker is paid and a 20 per cent surcharge if pay gaps exceed 250 to one.
Leigh says the top 50 CEO’s in Australia are now earning packages at a ratio of around 150 or 200 of median wages in their organisations.
“Those ratios are truly out of whack. If you go back to the 1950s, and 1960s, workers at Australia’s largest firms could earn in a decade what the CEO earned in a year.
“Now, it would take multiple careers for workers in many firms to earn what the CEO earns in a year.”
Setting a fair pay formula
When you have these two issues running concurrently – ever-rising CEO pay and underpayment of workers – it seems appropriate to take a new look at what fair pay looks like.
Some companies have tried to ensure fairness by setting CEO pay as a multiple of the salary of an organisation’s lowest-paid worker.
Mondragon is a Spanish co-op famous for its egalitarian principles. Its CEO is paid nine times more than what its lowest-paid worker earns. In comparison, the CEO of an average FTSE 100 company is paid 129 times what their lowest-paid worker earns.
Mondragon is not well-known in Australia, but is a vast global enterprise, employing more than 75,000 people in 35 countries and with sales of more than Euro12 billion per year – equivalent to Kellogg or Visa.
US ice cream company Ben & Jerry’s took inspiration from Mondragon, setting a five-to-one salary ratio when it started in 1985.
Writing in their book Ben Jerry’s Double Dip: How to Run a Values Led Business and Make Money Too, the founders Ben Cohen and Jerry Greenfield say: “The compressed salary ratio dealt with an issue that’s at the core of people’s concerns about business and their alienation from their jobs: the people at the bottom of the ladder, the people who do all the actual physical work, are paid very poorly compared to the people at the top of the ladder.
“When we started our business, we were the people at the bottom. That’s whom we identified with. So we were happy to put into place a system whereby anytime the people on the top of the organisation wanted to give themselves a raise, they’d have to give the people on the bottom a raise as well.”
Ben & Jerry’s kept that arrangement in place for 16 years but, when Cohen wanted to retire, attracting a replacement CEO meant raising the rate to a seven-to-one ratio.
“ … as the company grew, the salary ratio became problematic. Some people in upper-level management believed that we couldn’t afford to raise everyone’s salaries, and the salary ratio was, therefore, limiting the offers we could make to the top people we could recruit,” wrote the founders in 1998.
“Other people – Ben included – thought money wasn’t the problem, and that we’d always had problems with our recruitment process. Ben points out frequently that eliminating the salary ratio, which we did in 1995, has not eliminated our recruiting problems.”
The New Zealand Shareholders Association has also called (in 2014) for CEO base pay to be capped at no more than 20 times the average wage.
Fairness is important to us
Leigh, who wrote a book Battlers and Billionaires on inequality, says people naturally benchmark themselves against those around them: “That is how we figure out what we are worth”.
The point is that people care less about the dollar figure they are paid than they do about how it compares to others. If they think it is unfair, their attitude at work and motivation suffers.
“People work less hard when they feel they have not been adequately recognised within the firm,” says Leigh.
Pay transparency – making salaries public knowledge – can be a two-edged sword. People further down the “pecking order” feel worse when they see how others are paid more. However, people should be able to find out where they stand and what they need to do to climb the salary ladder.
“If you are running a firm where the pay structure is only sustainable because you are keeping it secret, then you are walking on eggshells. Ultimately, good managers should be able to be transparent with their staff. Secrecy shouldn’t be a way of doing business,” says Leigh.
“If you are playing football with David Beckham, you don’t begrudge the fact that David Beckham is pulling in a higher salary package than you. The problem arises when there are inequities that aren’t related to performance.
“People are comfortable with the fact that a full-time worker will earn more than a part-time worker, that someone who has another 20 years’ experience gets rewarded for that experience. But, if you are being paid more just because you are family friends with the CEO or you share the same race as the CEO or the same gender, then that is not fair.
“So pay transparency can produce fairer workplaces.”
This article was originally written for The Ethics Alliance. Find out more about this corporate membership program. Already a member? Log in to the membership portal for more content and tools here.
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BY Fiona Smith
Fiona Smith is a freelance journalist who writes about people, workplaces and social equity. Follow her on Twitter @fionaatwork
BY Cris
Taking the bias out of recruitment
When recruiters sift through job applications, they take less than 10 seconds to decide whether someone will be lucky enough to get through to the next round. If your CV doesn’t grab their attention immediately, you’re done.
“Millions of people are getting hired and fired every single day,” says Kate Glazebrook, CEO and founder of the Applied recruitment platform.
“And if you look at your average hiring process, it involves usually 40 to 70 candidates applying to a particular job.”
Decisions made at this speed require shortcuts. They rely on gut feelings, which essentially are a collection of biases. Without even being conscious that they are doing it, recruiters and hiring managers discriminate because they are human, and they are in a hurry.
Glazebrook says most hiring decisions are made in the “fast brain”, which is fast, instinctive and emotional. “That’s the automatic part of our brain, the part of the brain uses fewer kilojoules so we can make hot, fast decisions,” she says.
“We’re often not even aware of the decisions we take with our fast brain.” The fast brain/slow brain concept references work by Nobel Prize-winning psychologist and economist Daniel Kahneman, who studied cognitive biases.
The “slow brain” refers to thought processes that are slower, more deliberative and more logical.
“And I think it’s clear that when you’re 69 candidates down, it’s 5pm on a Friday, you’re definitely less likely to be using your slow, deliberative part of your brain, and much more likely to be using your fast brain,” Glazebrook says.
‘We all overlook people who don’t look the part’
The inherent biases in traditional recruitment practices go some way to explaining the slow and limited progress of diversity and inclusion in our organisations.
“There’s, sadly, lots of meta-analyses showing just how systematically we all overlook people who don’t tend to look the part,” she says. “And there’s evidence to suggest that minority groups of all kinds are overlooked, even when they’re equally qualified for the job.”
Bias against people with non-Anglo sounding names was famously demonstrated in an Australian National University study of 4,000 fictitious job applications for entry-level jobs.
“To get as many interviews as an Anglo applicant with an Anglo-sounding name, an Indigenous person must submit 35 per cent more applications, a Chinese person must submit 68 per cent more applications, an Italian person must submit 12 per cent more applications, and a Middle Eastern person 64 per cent more applications,” wrote the authors of the 2013 study.
Lack of diversity is a business risk. According to Applied, diverse teams bring different ideas to the table, so that teams don’t approach problems in the same way. This tends to make diverse teams better at solving complex problems.
Consequently, an increasing number of employers are committing to “anonymised recruiting”. Also known as “blind recruitment”, this process removes all identifying details from a job application until the final interviews.
In the initial candidate “sifting process”, recruiters and hiring managers do not know the name, gender, or age of the applicants. They can also not make any judgements based on the name of the university or high school the applicants attended or their home address.
When the State Government of Victoria trialled anonymised recruiting for two years, it discovered overseas-born job seekers were 8 per cent more likely to be shortlisted, women were 8 per cent more likely to be shortlisted and hired, and applicants from lower socio-economic suburbs were 9.4 per cent more likely to progress through the selection process and receive a job offer.
According to academics researching the trial, “… at the Victorian Department of Treasury and Finance we found that before de-identifying CVs men were 33 per cent more likely to be hired than women. After de-identification, this flipped and women were eight per cent more likely to be hired than men”.
Connecting to brain function
Glazebrook is an Australian-born behavioural economist working in the UK’s Behavioural Science Team, when she co-founded Applied in 2016 with Richard Marr. They aimed to use their understanding of how the brain works to offer a beginning-to-end anonymised hiring.
Applied runs the whole process, from crafting bias-free job specifications and advertising, to candidate testing and selection. Beyond removing identifying details, the company also breaks up assessment tasks among a team of people and randomises the order in which elements are looked at – to minimise the impact of other cognitive biases.
Applied’s clients include the British Civil Service, Penguin Random House and engineering firm the Carey Group. In the past three years, the company has dealt with more than 130,000 candidates.
“We’ve seen a two to four times increase in the rate at which ethnically diverse candidates are applying to jobs and getting jobs through the platform,” she says.
More than half of the candidates who have received job offers are women and there have been “significant uplifts” in diversity in other dimensions, such as disability and economic status.
Glazebrook says US companies spend $US8 billion annually on anti-bias, diversity and inclusion training. However, even with the best intentions of everyone involved, it seems to have limited effectiveness.
“The rate of change is quite slow,” she says.
There is even some evidence that anti-bias training can backfire. Glazebrook says a concept called moral licensing is a concern: “Once you do the training, you tick a box in your brain that says ‘Great. I’m de-biased. Excellent. Moving on’.
“And, actually, you are free to be more biased than you were before because we’re led to believe we have overcome that particular bias,” she says.
Studies show companies openly committed to diversity are as likely to discriminate as those who aren’t.
This article was originally written for The Ethics Alliance. Find out more about this corporate membership program. Already a member? Log in to the membership portal for more content and tools here.
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BY Fiona Smith
Fiona Smith is a freelance journalist who writes about people, workplaces and social equity. Follow her on Twitter @fionaatwork
BY Cris
Beyond the headlines of the Westpac breaches
As I look back on the week of turmoil that has engulfed Westpac, my overwhelming feeling is one of sadness.
I am sad for the children whose lives may have been savaged by sexual predators using the bank’s faulty systems. I am sad for the tens of thousands of Westpac employees who may feel tainted by association with the bank’s failings. I am sad for individuals, like Brian Hartzer and Lindsay Maxsted, whom I believe will be remembered more for the manner of their parting from the bank than for all the good that they did along the way. All of them deserve better.
None of this lessens my judgement about the seriousness of the faults identified by Austrac. Nor is sadness a reason for limiting the adverse consequences borne by individuals and the company.
Rather, in the pell-mell of the moment – super-charged by media and politicians enjoying a ‘gotcha’ moment – it is easy to forget the human dimension of what has occurred – whether it be the impact on the victims of sexual exploitation or the person whose pride in their employer has been dented.
Behind the headlines, beyond the outrage, there are people whose lives are in turmoil. Some are very powerful. Some are amongst the most vulnerable in the world. They are united by the fact that they are all hurt by failures of this magnitude.
For Westpac’s part, the company has not sought to downplay the seriousness of what has occurred. There has not been any deflection of blame. There has been no attempt to bury the truth. If anything, the bank’s commitment to a thorough investigation of underlying causes has worked to its disadvantage – especially in a world that demands that the acceptance of responsibility be immediate and consequential.
The issue of responsibility has two dimensions in this particular case: one particular to Westpac and the other more general. First, there are some people who are revelling in Westpac’s fall from grace. Many in this group oppose Westpac’s consistently progressive position on issues like sustainability, Indigenous affairs, etc. Some take particular delight in seeing the virtuous stumble. However, this relatively small group is dwarfed by the vast number of people who engage with the second dimension – the sense that we have passed beyond the days of responsible leadership of any kind.
I suspect that Westpac and its leadership are part of the ‘collateral damage’ caused by the destruction of public trust in institutions and leadership more generally.
When was the last time a government minister, of any party in any Australian government, resigned because of a failure in their department? Why are business leaders responsible for everything good done by a company – but never any of its failures?
Some people think that the general public doesn’t notice this … or that they do not care. They’re wrong on both counts. I suspect that the general public has had a gut-full of the hypocrisy. They want to know why the powerless constantly being held to account while the powerful escape all sanction?
I think that this is the fuel that fed the searing heat applied to Westpac and its leadership earlier this week. The issues in Westpac were always going to invite criticism but this was amplified by a certain schadenfreude amongst Westpac’s critics and the general public’s anger at leaders who refuse to accept responsibility.
So, what are we to make of this?
One of the lessons that people should keep in mind when they volunteer for a leadership role is that strategic leaders are always responsible; even when they are not personally culpable for what goes wrong on their watch. This is not fair. It’s not fair that a government minister be presumed to know of everything that is going on in their department. It’s not fair to expect company directors or executives to know all that is done in their name. It is not fair.
However, it is necessary that this completely unrealistic expectation, this ‘fiction’, be maintained and that leaders act as if it were true. Otherwise, the governance of complex organisations and institutions will collapse. Then things that are far worse than our necessary fictions will emerge to fill the void; the grim alternatives of anarchy or autocracy.
It’s sad that we have come to a point where this even needs to be said.
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BY Simon Longstaff
Simon Longstaff began his working life on Groote Eylandt in the Northern Territory of Australia. He is proud of his kinship ties to the Anindilyakwa people. After a period studying law in Sydney and teaching in Tasmania, he pursued postgraduate studies as a Member of Magdalene College, Cambridge. In 1991, Simon commenced his work as the first Executive Director of The Ethics Centre. In 2013, he was made an officer of the Order of Australia (AO) for “distinguished service to the community through the promotion of ethical standards in governance and business, to improving corporate responsibility, and to philosophy.” Simon is an Adjunct Professor of the Australian Graduate School of Management at UNSW, a Fellow of CPA Australia, the Royal Society of NSW and the Australian Risk Policy Institute.