What are millennials looking for at work?
Kat Dunn had a big life, but it wasn’t fulfilling. She was the youngest executive to serve on the senior leadership team of fund manager Perpetual Limited, but she went home each night feeling empty.
The former mergers and acquisitions lawyer tossed in the job two years ago and found her way into the non-profit sector, as CEO of the charity and social business promoter Grameen Australia.
Grameen Australia aims to take Social Business mainstream in Australia by scaling and starting up social businesses and advising socially-minded institutions on how to do the same.
Dunn says Millennials are more interested in “purpose” than money and security. She was speaking at the Crossroads: The 2019 Banking and Finance Oath Conference in Sydney in August.
Dunn said Perpetual tried to talk her out of leaving the fund manager. “I think they thought that I was going through some sort of early-onset midlife crisis.
“Because, after all, what sane person would give up a prestigious job, good money at the age of 33 when my priority should have been financial security, even more status, and chasing those last two rungs to get to be CEO of a listed company?”
‘I was living the dream’
Dunn said she was conditioned to believe she should want to climb the corporate ladder and make a lot of money.
“At 32 years old, I was appointed to be the youngest senior executive on the senior leadership team. The year before, I had just done $3 billion worth of deals in 18 months. I was, as some would say, living the dream,” said Dunn.
“So, you can imagine how disillusioned I felt when I went home every night feeling like I was a fraud. I was wondering how I could possibly reconcile my career with my identity of myself as an ethical person”.
Dunn had been put in charge of building the company’s continuous improvement program, but the move proved a disappointment. “I was so green because I thought [the role] meant I had the privilege of actually making things better for my colleagues.
“Later, I realised that it was just code for riskless cost-cutting … and impossible-to-achieve growth targets.”
Dunn said she had childhood aspirations to help create a sustainable future. “But, instead, I found myself perpetuating the very system of greed that I had vowed to change.”
“My whole career, I was told I had to make a choice between making a living or making a difference. I couldn’t do both and I found that deeply unsettling. I had cognitive dissonance.”
A desire to do work that matters
Dunn made the point that her motivations are shared by many – and not just be Millennials (she just scrapes over the line into Generation X).
By 2025, 75 per cent of the workforce will be Millennials (born between 1980 and 2000) and only 13 per cent of millennials say that their career goal involves climbing the corporate ladder, 60 per cent have aspirations to leave their companies in the next three years.
Moreover, 66 per cent of Millennials say their career goals involve starting their own business, according to a study by Bentley University.
“A steady paycheque and self-interest are not the primary drivers for many Millennials any more. The desire to do work that matters is,” said Dunn.
“Growing up poor, I thought that money would make me happy. I thought it would give me
security and social standing. I thought that if I ticked all of the boxes, that I would be free.
“At the height of my corporate career, though, I was anything but. I felt that making profits for profit’s sake was just deeply unfulfilling. For me, it was just the opposite of fulfilling – it caused me fear, distress and this stinging sense of isolation.
“What was strange is that no one else seemed to be outwardly admitting to feeling the same.”
The vision was impaired
Dunn recalled talking to a peer about strategy at the time and saying to him ‘I think our vision is wrong’.
She told him: “Our vision is to be Australia’s largest and most trusted independent wealth manager. I think it’s wrong. It’s not actually a vision. It’s a metric on some imaginary league table and it’s all about us.
“It doesn’t say anything about creating anything of value for anyone else.”
Her colleague retorted: “Kat, we have bigger fish to fry than our vision”.
She knew, at that point, she would not realise her potential in that environment.
Aaron Hurst, the author of the book, The Purpose Economy, predicts that purpose is going to be the primary organising principle for the fourth [entrepreneurial] economy.
He defines “purpose” as the experience of three things: personal growth, connection and impact.
“When he wrote the book, five years ago, Hurst said that by 2020, CEOs expected
demands for purpose in the consumer marketplace would increase by 300 per cent,” said Dunn.
“Now, what that means is that consumers deprioritise cost, convenience and function and make decisions based on their need to increase meaning in their lives.”
Dunn says that, as Millennials take on more leadership roles, this trend will become more evident in the job market.
“When you talk about how hard it is to find top talent to work in the industry, it is worthwhile knowing that for the top talent – the future leaders of the industry, of our country, our planet – work isn’t just about money.
“It is a vehicle to self-actualisation. They don’t just want to work nine-to-five for a secure income, they actually want to run through brick walls if it means they get to do work that they believe in, within a culture of integrity, for a purpose that leaves the world in a better place than they found it,
And they want to work in a place that develops not only their skills, but sharpens their character.”
Dunn said that when she left her corporate job, she would not have believed that the financial services industry could build a better society and a sustainable future.
However, she changed her mind when she learned about Grameen Bank, microfinance and social business.
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 Cris
Following a year of scandals, what's the future for boards?
As guardians of moral behaviour, company boards continue to be challenged. After a year of wall-to-wall scandals, especially within the Banking and Finance sector, many are asking whether there are better ways to oversee what is going on in a business.
A series of damning inquiries, including the recent Royal Commission into Financial Services, has spurred much discussion about holding boards to account – but far less about the structure of boards and whose interests they serve.
Ethicist Lesley Cannold expressed her frustration at this state of affairs in a speech to the finance industry, saying the Royal Commission was a lost opportunity to look at “root and branch” reform.
“We need to think of changes that will propel different kinds of leaders into place and rate their performance according to different criteria – criteria that relate to the wellbeing of a range of stakeholders, not just shareholders,” she said at the Crossroads: The 2019 Banking and Finance Oath Conference in Sydney in August.
This issue is close to the heart of Andrew Linden, PhD researcher on German corporate governance and a sessional Lecturer in RMIT’s School of Management. Linden favours the German system of having an upper supervisory board, with 50 per cent of directors elected by employees, and a lower management board to handle the day-to-day operations.
This system was imposed on the Germans after World War II to ensure companies were more socially responsible but, despite its advantages, has not spread to the English-speaking world, says Linden.
“For 40 years, corporate Australia has been allowed to get away with the idea that all they had to do was to serve shareholders and to maximise the value returned to shareholders.
“Now, that’s never been a feature of the Corporate Law. And directors have had very specific duties, publicly imposed duties, that they ought to have been fulfilling – but they haven’t.”
It is the responsibility of directors of public companies to govern in the corporation’s best interests and also ensure that corporations do not impose costs on the wider community, he says.
“All these piecemeal responses to the Banking Royal Commission are just Band-Aids on bullet wounds. They are not actually going to fix the problem. All through these corporate governance debates, there has not been too much of a focus on board design.”
The German solution – a two-tier model
This board structure, proposed by Linden, would have non-executive directors on an upper (supervisory) board, which would be legally tasked with monitoring and control, approving strategy and appointing auditors.
A lower management board would have executive directors responsible for implementing the approved strategy and day-to-day management.
This structure would separate non-executive from executive directors and create clear, legally separate roles for both groups, he says.
“Research into European banks suggests having employee and union representation on supervisory boards, combined with introduction of employee elected works councils to deal with management over day-to-day issues, reduces systemic risk and holds executives accountable,” according to Linden, who wrote about the subject with Warren Staples (senior lecturer in Management, RMIT University) in The Conversation last year.
Denmark, Norway and Sweden also have employee directors on corporate boards and the model is being proposed in the US by Democratic presidential hopefuls, including Senators Elizabeth Warren and Bernie Sanders.
As Linden said, “All the solutions that people in the English-speaking world typically think about are ownership-based solutions. So, you either go for co-operative ownership as an alternative to shareholder ownership, or, alternatively, it’s public ownership. All of these debates over decades have been about ‘who are the best owners’, not necessarily about the design of their governing bodies.”
Linden says research shows the riskiest banks are those that are English-speaking, for-profit, shareholder-dominated, overseen by an independent-director-dominated board.
“And they have been the ones that have imposed the most cost on communities,” he says.
Outsourcing the board
Allowing consultant-like companies to oversee governance is a solution proposed by two law academics in the US, who say they are “trying to encourage people to innovate in governance in ways that are fundamentally different than just little tweaks at the edges”.
Law professors Stephen Bainbridge (UCLA) and Todd Henderson (University of Chicago) say organisations are familiar with the idea of outsourcing responsibilities to lawyers, accountants, financial service providers.
“We envision a corporation, say Microsoft or ExxonMobil, hiring another company, say Boards-R-Us, to provide it with director services, instead of hiring 10 or so separate ‘companies’ to do so,” Henderson explained in an article.
“Just as other service firms, like Kirkland and Ellis, McKinsey and Company, or KPMG, are staffed by professionals with large support networks, so too would BSPs [board service providers] bring the various aspects of director services under a single roof. We expect the gains to efficiency from such a move to be quite large.
“We argue that hiring a BSP to provide board services instead of a loose group of sole proprietorships [non-executive directors] will increase board accountability, both from markets and judicial supervision.”
Outsourcing to specialists is a familiar concept, said Bainbridge in a video interview with The Conference Board.
“Would you rather deal with you know twelve part-timers who get hired in off the street, or would you rather deal with a professional with a team of professionals?”
Your director is a robot
A Hong Kong venture capital firm, Deep Knowledge Ventures, appointed the first-ever robot director to its board in 2014, giving it the power to veto investment decisions deemed as too risky by its artificial intelligence.
Australia’s Chief Scientist, Dr Alan Finkel, told company directors that he had initially thought the robo-director, named Vital, was a mere publicity stunt.
However, five years on “… the company is still in business. Vital is still on the Board. And waiting in the wings is her successor: Vital 2.0,” Finkel said at a governance summit held by the Australian Institute of Company Directors in March.
“The experiment was so successful that the CEO predicts we’ll see fully autonomous companies – able to operate without any human involvement – in the coming decade.
Stop and think about it: fully autonomous companies able to operate without any human involvement. There’d be no-one to come along to AICD summits!”
Dr Finkel reassured his audience that their jobs were safe … for now.
“… those director-bots would still lack something vital – something truly vital – and that’s what we call artificial general intelligence: the digital equivalent of the package deal of human abilities, human insights and human experiences,” he said.
“The experts tell us that the world of artificial general intelligence is unlikely to be with us until 2050, perhaps longer. Thus, shareholders, customers and governments who want that package deal will have to look to you for quite some time,” he told the audience.
“They will rely on the value that you, and only you, can bring, as a highly capable human being, to your role.”
Linden agrees that robo-directors have limitations and that, before people get too excited about the prospect of technology providing the solution to governance, they need to get back to basics.
“All these issues to do with governance failures get down to questions of ethics and morality and lawfulness – on making judgments about what is appropriate conduct,” he says, adding that it was “hopelessly naïve” to expect machines to be able to make moral judgements.
“These systems depend on who designs them, what kind of data goes into them. That old analogy ‘garbage in, garbage out’ is just as applicable to artificial intelligence as it is to human systems.”
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
How BlueRock uses culture to attract top talent
Glossy highrises form a wall of corporate Australia along the Yarra River. The size of those companies and the magnetism of their brand names easily attract talented people and the attractions of big businesses are obvious.
These giants offer world-leading working conditions and benefits, career advancement, important work for powerful clients and the chance to work overseas.
Even still, people leave these big businesses for smaller ones all the time. And the reasons they quit can provide useful ammunition for those pointy-elbowed entrepreneurs who would love to get them on board.
A few blocks back from the river in Melbourne is the office of professional services firm, BlueRock, which started as an accounting business 11 years ago by five “escapees” from corporate Australia.
Today, the firm has around 170 employees and has diversified into areas such as law, private wealth, finance and insurance. Last year, they made it to fourth place on the Great Place To Work list for companies with between 100 and 999 employees.
It was also a finalist in the employer of choice category of the Lawyers Weekly 2019 Law Awards.
COO of the BlueRock, Dean Godfrey, says the biggest challenge in competing with the big firms is to attract graduates or to recruit people who are in the first half of their careers.
“There is still some prestige in going to some of the other more structured, high profile organisations,” he says. “When people are starting out, they don’t always know what they want.”
However, he says people who have had experience working for the big firms find they enjoy life more at BlueRock. “It is about having fun while you do it, working with like-minded people and understanding that the grass isn’t greener on the other side.”
Reasonable hours
Godfrey says people who make the move to BlueRock from big “churn-and-burn” firms often talk about wanting more purpose in their lives and getting away from the long hours culture.
“It is more about getting the job done than having prescriptive rules around having to be there,” he says.
Godfrey says BlueRock tries to ensure its clients – who are mostly business owners – share its vision for a healthy workplace.
The legal division distinguished itself by having less reliance on hourly-billing, which is the traditional way that lawyers’ time is charged out, but also a contributor to high stress levels in the practice of law.
Variety
One of the benefits of being in a smaller company is that employees are often given a broader range of experiences. “People in those larger firms almost cut their teeth on monotony, doing something really, really, really well,” says Godfrey.
Social purpose
BlueRock aspires to become a social enterprise and achieved B-Corp certification in 2017. This means it is legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment.
The challenge of B-Corp is that companies have to continue to improve to maintain their accreditation.
Godfrey says people who want to leave large firms often say they want to find more meaning in their work.
“You see people who have been in those businesses looking for something different. They may like the accounting stream or law stream or finance stream, but they want to be part of something that looks after its community,” he says.
BlueRock is working on becoming carbon-neutral and is phasing out its printers, is composting waste and considering more environmental lighting solutions. The firm is also reassessing its supply chain and the B-Corp status of its suppliers.
“We want to make sure they are putting their money where their mouth is,” he says.
BlueRock has partnered with B1G1 (Business For Good), a global giving initiative whereby every transaction made in a business “earns” a donation.
Employee ownership
Any employee of BlueRock is eligible to invest in the company and about one-third of staff have participated.
Unlike larger firms, where is it only the partners or those at senior levels who can become owners, the BlueRock founders determined that the people who work in the business should also be able to have a stake in the wealth and direction of the firm.
“It really does give you a feeling like you are a part of what we’re building,” says Godfrey.
As a firm that is focused on its entrepreneur clients, employees at BlueRock are also encouraged to have their own businesses.
Fun
The funky office space, which includes a giant chessboard and a unicorn sculpture, signals the company does not want to be seen as your usual professional services firm. The website promises fun activities and healthy food options and a range of flexible work options.
Managing director of BlueRock, Peter Lalor, has said people are left to decide how they do their work:
“Our philosophy is quite different: if we just let people get on with the job of working stuff out in a really smart, efficient way, they’ll get the right answer,” he said in a podcast.
“And I think that there’s a little bit of combativeness in people when they’re told they have to do something … They rebel against it. So, by having little to no structure in terms of how we do what we do, and no rules per se, people feel very empowered to get on with the job.”
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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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
The truth isn't in the numbers
If you want to work out what the people are thinking, one thing is for sure, you can’t just go out and ask them.
The failures of political polling over recent elections have taught us that opinion surveys can no longer be trusted. If you were betting on the winner, you would have been better off putting your money on the predicted losers.
This was a $5.2 million lesson for betting company Sportsbet when it pre-emptively paid out Bill Shorten backers – two days early – based on the fact that seven out of every ten wagers supported a Labor win in May. Labor lost, the gamblers got it wrong.
And it is not just the polling and betting companies that have lost credibility as truth-telling tools. Science is having its own crisis over the quality of peer-reviewed research.
Just one sleuth, John Carlisle (an anaesthetist in the UK with time on his hands) has discovered problems in clinical research, leading to the retraction and correction of hundreds of papers because of misconduct and mistakes.
The world of commerce is no better at ensuring that decisions are backed by valid, scientific research. Too often, companies employ consultants who design feedback surveys to tell clients what they want to hear, or employers hire people based on personality questionnaires of dubious provenance.
Things are further complicated by poor survey questions, untruthful answers, failures of memory and survey fatigue (36 per cent of employees report receiving surveys regularly, three or more times per year).
Why bother?
All of this may give rise to the notion that asking people for their opinion is an utter waste of time. However, that is not the conclusion drawn by Adrian Barnett, president of the Statistical Society of Australia and professor at the Queensland University of Technology.
Barnett, who studies the value of health and medical research, says people should view all surveys with a healthy skepticism, but there is no substitute for a survey with a good representative sample.
“I do think there is a problem, yes, but it is potentially overblown, or overstated” he says.
“We know that, in theory, we can find out what the whole population is feeling by taking just a small sample and extrapolating up. We know it works and it’s a brilliant, cheap way of finding out all sorts of things about the country and about your customers,” he says.
However, it is getting harder to get that representative sample. As people have replaced their landlines with mobile phones, researchers can no longer rely on the telephone book to source an adequate spread of interviewees. And, even if they make contact via a mobile phone, people are now reluctant to answer calls from unknown numbers in case they are scammers, charities … or market researchers.
“(Also) on controversial topics, it can be extremely challenging to get people to talk to you,” Barnett says.
You need the right people
Reluctance to participate is one of the problems identified in political polling. In a post-election blog, private pollster Raphaella Crosby described the issue: “You can have a great, balanced, geographically distributed panel such as ours or YouGov’s – but it was very difficult to get conservatives to respond in the last three weeks.
“I presume phone pollsters had the same issue – the Coalition voters just hang up the phone, in the same way they ignored our emails. All surveys and polls are opt-in; you simply can’t make people who think their party is going to lose do a survey to say they’re voting for a loser.”
The Pew Research Centre reports that response rates to telephone surveys in the US are down to 6 per cent.
The polling industry is conducting an inquiry into election polling methods, which include a combination of calling landlines, mobile phones, robo-dialling and internet surveys. Each of these channels can introduce biases and, then, there can be errors of analysis and a tendency to “groupthink”.
However, Barnett says the same problems do not necessarily hamper market research.
Market research does not usually require the large pool of participants (up to 1,600 is common in pre-election polls) which are needed to narrow the margin of error. Business can question a small number of customers and get a clear indication of preferences, he says.
Identifying a representative sample of customers is also much easier than a random selection of voters who must represent an entire population.
Putting employees to the test
When it comes to business, the use of engagement surveys presents an interesting case. Billions of dollars are spent by business every year to try to increase employee engagement – yet little benefit can be seen in the engagement survey statistics.
According to polling company Gallup, a mere 14 per cent of Australians are engaged in their work, “showing up every day with enthusiasm and the motivation to be highly productive”. This is down from 24 per cent, six years earlier.
Jon Williams has 30 years of experience to back up a jaundiced view of the way employee surveys are used. Co-founder of management consultancy Fifth Frame, Williams was previously PWC’s global leader of its people and organisation practice, managing principal at Gallup in Australia, and managing director of Hewett Associates (Aon Hewett).
“Clearly, engaged places are better places to be and, if we are going to work on that stuff, we are going to create better workplaces. But can it actually be linked to success? Does it really drive more successful companies? I think you would struggle to really prove that.”
Williams says people fail to understand that correlation is not causation. A company may put a lot of effort into its high engagement and also be very successful, but that success may, in fact, stem from other factors such as its place in the market, timing, dynamic leadership or the economy.
“It is a false attribution because we love the idea of certainty and predictability,” he says.
This same desire to codify success also drives the use of personality testing in recruitment – which appears to have done little to rid the workplaces of bullies, psychopaths and frauds.
“Business just wants something that looks like a shiny tool with a brand name on it that they can assume, or pretend, is efficient,” he says.
“People like [the tests] because they give the appearance of rigour. Very few of those tools have any predictive reliability at all.”
Williams says the only two personality measures that have any correlation with job success are intelligence and conscientiousness.
Meanwhile, many organisations still ask their employees to undertake an assessment with Myers-Briggs Type Indicator – a personality test that divides people into 16 different personality types and based on the work of a mother-daughter team, who had no training in psychology or testing, but a devotion to the theories of Swiss psychiatrist Carl Jung.
“Myers Briggs has the same predictive validity as horoscopes. Horoscopes are great for starting a conversation about who you are as a person. Pretending it is scientific, or noble, is obviously stupid,” says Williams.
What can we do better?
Williams is not advocating that organisations stop asking employees what they think. He says, instead, that they should reassess how they regard that information.
“Don’t religiously follow one tool and think that is the source of all knowledge. Use different tools at different times. Then, don’t keep measuring the same thing for the next five years, because you’ve done it [already]. Go to a different tool, use multiple inputs. Just use all of them intelligently as interesting pieces of data.”
Barnett has his own suggestions to increase the reliability of surveys. Postal surveys may seem rather “old school” these days, but can allow researchers to engage a bit more, allowing them to establish their bona fides with people who are (justifiably) suspicious of attempts to “pick their brains”.
Acknowledging that the interviewees’ time is valuable can help elicit honest, thoughtful responses. Something as simple as including a voucher for free coffee or a chocolate can show value.
Adding a personal touch, using a real stamp on the return envelope, will also encourage participation. ‘”It shows you spent time reaching out to them,’” Barnett says.
Citizens’ juries can also help make big decisions, using a panel of people to represent customers or a population.
Infrastructure Victoria used this technique in February when it set up a 38-member community panel to consider changing the way Victorians pay for the transport network.
“We know there are problems with [citizens’ juries], but the reason we have them is that you are being judged by your peers. If you can get a representative bunch of your customers, then I think that is an interesting idea,” he says.
“You really might not like what they say, or you may be surprised by what they say – but those surprising results can sometimes be the best in a way, because it may be something you have been missing for a long time.”
Questions you should ask
The American writer Mark Twain was well aware that numbers can be contrived to back any argument.
“Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, damned lies, and statistics’,” he wrote.
The observation could be made of many of the survey results found online. Many have been produced as a marketing exercise by companies and reproduced by others who want numbers to add some weight to their arguments.
However, rather than accepting, on face value, survey claims that 30 per cent of the population thinks this or that, some basic checks can help determine whether the research is valid.
A good place to start is the Australian Press Council’s guide for editors, dealing with previously unpublished opinion poll results:
- The name of the organisation that carried out the poll
- The identity of any sponsor or funder
- The exact wording of the questions asked
- A definition of the population from which the sample was drawn
- The sample size and method of sampling
- The dates when the interviews were carried out
- How the interviews were carried out (in person, by telephone, by mail, online, or robocall)
- The margin of error
Other questions may be to ask where the participants were found and are they typical of the whole population of interest?
If only a small proportion of people responded, then you may deduce that the survey is biased towards the people who have strong feelings about the subject.
If the subjects were paid, this might affect their answers.
In the UK, there is a public information campaign Ask For Evidence, to encourage people to request for themselves the evidence behind news stories, marketing claims and policies.
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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Fiona Smith is a freelance journalist who writes about people, workplaces and social equity. Follow her on Twitter @fionaatwork
BY Cris
Why purpose, values, principles matter
In advising organisations about ethics and culture, our Ethics Centre consultants often start by asking a simple question: “Do you have an ethical framework?” What we’re trying to understand is whether the company has a well-defined purpose, supported by values and principles. It’s the bedrock upon which every successful and well-run company is built.
Over the last twenty years we have witnessed a veritable roll call of organisations who have faced an ethics crisis. And for some, this crisis has threatened their very existence. And while the individual factors will vary, there is often one underlying root cause of this failing – a drift from the organisation’s ethics framework.
An ethics framework is a critical foundation for any organisation. It expresses their purpose, values and principles – quite literally, what they believe in and what standards they’ll uphold. In making these visible, as well as living across everything they do, it allows the organisation to be the best possible version of itself, now and into the future.
If an ethics framework is practically useful, it will provide a way to diagnose ethics failure, apportion responsibility and offer a means to provide justice for victims. However, this is merely the minimum standard. It also provides the ideal that should be strived for.
An ethics framework demands something more than mere compliance. It asks employees to exercise judgement and accept personal responsibility for the decisions they make. In order to be effective, it must be consistently embraced by every member of the organisation.
- Values tell us what’s good – they’re the things we strive for, desire and seek to protect.
- Principles tell us what’s right – outlining how we may or may not achieve our values.
- Purpose is our reason for being – it gives life to our values and principles.
The power of a good ethics framework
A strong ethics framework will unite an organisation’s workforce under a common goal, creating a far better workplace culture in the process. It will help leaders make decisions that are consistent with purpose, and improve decision-making capacity across the organisation. It supports a company to be more adaptable to change and clearly demonstrates to clients, customers and other stakeholders what they stand for and where they’re headed.
A company will struggle to develop consistent workplace policies or a corporate strategy without an ethics framework. But the reverse is also true: with an ethics framework all of these processes become far easier to navigate.
Purpose
In designing an ethics framework, much is made of purpose statements – primarily because they tend to be the most visible, public-facing feature of the framework. Creating a great purpose statement is something of an art form, it needs to achieve a great deal in a few words. It should be inspiring, have an aspirational quality, and capture the essence of your company’s ‘why?’.
Ideally, purpose statements should describe how your company is satisfying a need in society or in the market. Examples include Disney’s “To make people happy” or technology powerhouse Atlassian “To unleash the power in every team”. We’re quite proud of The Ethics Centre’s purpose statement which is “To bring ethics to the centre of everyday life.”
Values and principles
Values and principles enable employees to distinguish between what is regarded as important and the means by which they should be pursued. They help to frame business activity to ensure it stays true to its purpose and contract with society. A good framework will be;
- Stable – will not change significantly (in its essence) over the long term
- Understandable – by all of those required to apply it in practice
- Practical – able to be applied in practice and with consistency
- Authentic – it will ‘ring true’.
Good for business
Having an ethics framework isn’t designed to maximise profits – it’s designed to protect and improve the relationship between business and society. But it does often benefit business as a commercial enterprise as well. By motivating employees and demonstrating the value and purpose of the business to them, they serve as ambassadors for the organisation.
Although purpose statements, corporate values and organisational principles aren’t a guarantee of perfect ethical conduct, they are a crucial ingredient in building a culture in which bad behaviour is discouraged and dis-incentivised. They’re also a flag of goodwill to stakeholders that an organisation is looking to serve humanity and not simply turn a quick buck.
Ethics frameworks are not magic bullets to solve an organisation’s problems – they won’t guarantee that all employees will do the right thing every time. But approached with the proper degree of care and sophistication, the very process of developing these codes can have a profoundly positive effect on the culture of an enterprise. In establishing the things you believe in and identifying the behaviours you wish to encourage, you establish a framework for a great corporate culture – one based on respect, trust, collaboration and accountability. And who wouldn’t want that?
Creating an ethics framework
It may surprise you to learn that many companies have no ethics framework at all. And of those that do, many are working with largely meaningless statements that offer little in the way of guidance. Some were written decades ago. Some were cooked up by marketing strategists as part of a corporate branding exercise. Whatever their provenance, there’s a sense that the framework has ceased to have any meaning for the people who work at the company.
Developing an ethics framework is only the starting point. Ensuring the framework is fully embedded and understood throughout an organisation and lived by its people is the harder challenge. Over three decades of consulting work, we’ve helped countless organisations to develop and embed their ethics frameworks. We’ve worked across multiple sectors and with companies of many shapes and sizes.
If you’d like to talk to The Ethics Centre about creating an ethical framework for your organisation, we’d love to hear from you.
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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 spot an ototoxic leader
We all know about toxic leaders. There are plenty of them around. Some are especially skilled with the ability to use their words to grind down anyone they perceive as a threat.
I call these leaders ototoxic – named after the medical description of drugs that cause adverse reactions to the ears’ cochlea or auditory nerves.
Ototoxicity is a distinctive quality of a poor leader, who can leave a trail of damage.
Ototoxic leaders betray themselves by a number of logical fallacies – hallmarks of their communication style. US President Donald Trump has given us plenty of examples during his presidency.
They play the person not the argument
The ototoxic leader will go after a person’s character or pick on a personal trait. They take aim at anything personal, but will avoid addressing the logical merits of the argument. This is known as an ad hominem fallacy.
Donald Trump critiqued fellow Republicans – “Lyin’ Ted” (Cruz), “Lil’ Marco” (Rubio), “Low Energy Jeb” (Bush). There were also repeated references to “Crooked Hillary”. He repeatedly accused opponents of being “too aggressive”, (usually a woman) or “not forceful enough” (usually a man), or in the case of “Lil’ Bob” Corker, of not being “tall” enough to be taken seriously.
They use straw-man arguments
An ototoxic leader will also exaggerate, or blatantly fabricate, an opposing point of view. This allows them to position their perspective as more reasonable and practical. In the third presidential debate before his election, Trump accused Hillary Clinton of advocating an open border policy, misquoting comments she made in relation to free trade. In a climate of widespread national hostility towards immigration, the border wall seemed to many as the more reasonable option.
In the workplace, an ototoxic leader will use overblown rhetoric to belittle someone else’s initiative, exaggerating potential cost overruns or overstating other risks in order to then position their proposal as the more reasonable one.
They appeal to hypocrisy
This defensive strategy turns an initial criticism back on the accuser. Trump used this rhetorical flourish during his presidency after refusing to face criticisms that he didn’t take a position on the violence following the Charlottesville rally. Rebutting the criticisms of neo-Nazis and the Ku Klux Klan, Trump maintained that ‘many others’ had also done bad things, implying they were equally culpable.
In the workplace, an ototoxic leader can often be heard defending their actions using the appeal to hypocrisy. “You think I’m aggressive? What about that meeting last week when you didn’t agree with me? You were just as bad, if not worse!”
They use the firefighter arsonist tactic
Named after the rare syndrome where firefighters light fires intentionally only to later arrive as a hero to put it out, the ototoxic leader will overly dramatise a potential problem, at the same time pointing the finger of blame at others for causing it. Once the situation reaches a critical mass, the ototoxic leader will then step in with a last-minute solution, ‘saving the day’.
Trump is well versed in this tactic. Stoking anti-Muslim sentiment as early as March 2011 with his calls for then President Obama to show his birth certificate and trading on unfounded ‘birther’ claims, Trump proceeded to inflame fears throughout the election campaign. He threatened the mass deportation of Syrian asylum seekers while promising to create a database of all Muslims in the US, along with making false claims of seeing ‘thousands and thousands’ of people in New Jersey celebrating the collapse of the World Trade Centre Towers in 2001. Trump stepped in to solve the ‘problem’ by signing his two travel bans within the first 100 days of his tenure.
More recently, Trump repeatedly covered himself in glory after meeting Kim Jong-un at their historic first summit in June 2018. Mere months after painting Kim as “Little Rocket Man” who, according to Trump posed the greatest threat to Western civilisation and was enabled by his predecessors who “should have been handled a long time ago”, following the summit Trump celebrated the “success” of the meeting. He waxed lyrical about the leaders “tremendous” relationship, including the beautiful “love letters” he received from the North Korean dictator in the lead up to the summit, while going on to extol the virtues of Kim, including his “great personality”, his sense of humour, intelligence and his negotiation abilities. Following the script of the hero who rides in to save the day, Trump tweeted that “everybody can now feel much safer than the day I took office…there is no longer a nuclear threat from North Korea.”
In the workplace, the ototoxic leader will spark a flame of disquiet around a project or strategy then proceed to escalate concerns – often through back channel politics – before presenting a grand ‘solution’ that saves the day.
Passive and aggressive
Ototoxic leaders can be aggressive or passive. The actively toxic communicator, who uses aggressive and intimidating language to subordinate others, can be bombastic, opinionated and openly dismissive of those who have different views. Their default mode of questioning almost exclusively involves closed questions (yes or no). Their inability to be open and listen to other’s views is usually a symptom of their lack of empathy.
The passive ototoxic leader is no less poisonous. In one-on-one settings, they are an impatient listener and will quickly interrupt their interlocutor in order to express their own view, often cutting the other person off in mid-sentence.
This ototoxic leader will tend to become frustrated in meetings if the consensus view is running contrary to theirs, to the point they will actively disengage from what’s going on in the room. They will resist all attempts to re-engage them by looking to shut down the conversation wherever possible.
Energy suckers
The net effect of the ototoxic leader’s tactics and communication style is to de-energise those they come into contact with.
Research shows that these de-energising ties have a disproportionate impact on an organisation’s culture. They are a ‘toxicity multiplier’, reducing the levels of individual performance, employee engagement and general well-being.
A disproportionate level of conflict between teams is generated and trust decreases. Rather than investing the energy to achieve their goals, those who work under an ototoxic leader spend a disproportionate amount of time analysing the relationship and devising strategies to palliate the person.
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BY John Neil
John leads the Centre’s major consulting projects, leadership and culture programs and product development. Drawing on 20 years of experience, John has worked with Australia’s largest organisations in developing and delivering solutions to bring ethics to the centre of business design, culture development, and organisational decision making. Before joining us, John worked in the business school at the University of Technology Sydney. During his time there, he inspired students and colleagues alike through his research and teaching, and chaired the Ethics Working Group to develop an approach to embed ethics in the Bachelor of Business curriculum.
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.
Drawing a line on corruption: Operation eclipse submission
The Ethics Centre (TEC) has made a submission to the NSW Independent Commission Against Corruption (ICAC) regarding its discussion paper, The Regulation of Lobbying, Access and Influence in NSW: A Chance To Have Your Say.
Released in April 2019 as part of Operation Eclipse, it’s public review into how lobbying activities in NSW should be regulated.
As a result of the submission TEC Executive Director, Dr Simon Longstaff has been invited to bear witness at the inquiry, which will also consider the need to rebuild public trust in government institutions and parliamentarians.
Our submission acknowledged the decline in trust in government as part of a broader crisis experienced across our institutional landscape – including the private sector, the media and the NGO sector. It is TEC’s view that the time has come to take deliberate and comprehensive action to restore the ethical infrastructure of society.
We support the principles being applied to the regulation of lobbying: transparency, integrity, fairness and freedom.
Key points within The Ethics Centres submission include:
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- There is a difference between making representations to government on one’s own behalf and the practice of paying another person or party with informal government connections to advocate to government. TEC views the latter to be ‘lobbying’
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- Lobbying has the potential to allow the government to be influenced more by wealthier parties, and interfere with the duty of officials and parliamentarians to act in the public interest
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- No amount of compliance requirements can compensate for a poor decision making culture or an inability of officials, at any level, to make ethical decisions. While an awareness and understanding of an official’s obligations is necessary, it is not sufficient. There is a need to build their capacity to make ethical decisions and support an ethical decision making culture.
You can read the full submission here.
Update
Dr Simon Longstaff, Executive Director at The Ethics Centre, presented as a witness to the Commission on Monday 5 August. You can read the public transcript on the ICAC website here.
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.
The role of the ethical leader in an accelerating world
Dr Simon Longstaff, Executive Director of The Ethics Centre, opened the recent AGSM Professional Forum: Ethical Leadership in an Accelerating World by acknowledging today’s leaders are confronted with a pace of change that is increasingly rapid, complex and deep in its implications.
They are grappling with multiple dynamic forces as they make strategic business decisions, uncover new market opportunities, and maintain their sense of purpose.
And, as we move into the Age of Purpose, they must measure up to the moral expectations of their employees, stakeholders and the public – while building trust in an increasingly sceptical environment.
As one of Australia’s leading ethicists and philosophers, Dr Longstaff said he believes ethics need to be intrinsic within leaders, especially in a time where civilisation is going through enormous change. And this starts with leaders in the boardroom. “I’d like to reframe leadership itself as an ethical practice. You can’t just add ethics into leadership. If that’s what you’re doing, you’ve misunderstood what leadership is,” he said.
Strengthening the decision-making muscle
Historically, decision-making in organisations has been heavily regulated – and Dr Longstaff says that makes it due for an overhaul. Only then can more robust ethical practices flourish throughout organisations.
“For 30 years or more, leaders have been trying to manage the rate, complexity and depth of change through the exercise of control,” said Dr Longstaff. “In this country the most prolific regulators are not in parliaments or at APRA. They’re in the boardrooms of Australia.”
He says the system has been so finely meshed that no one can choose to do anything wrong. And as a result we’ve begun to create new forms of systemic risk.
“Inside corporations, there are measures designed to make it safe. But if you create a world in which no one can choose to do anything wrong, it also means no one can choose to do anything right,” said Dr Longstaff. “If you don’t choose – you comply. And like any skill, if this muscle isn’t used and flexed, it withers away.”
This systemic impact was most clearly demonstrated in the findings of the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The findings uncovered the implications of inaction and the way leadership behaviour can detrimentally impact stakeholder sentiment and damage trust in an organisation.
“In many cases of a compliant culture, when asked why a certain decision has been made, the answer is ‘that’s the way things have always been done’,” said Dr Longstaff. “But the fact we can do something doesn’t mean we should do it. To do so is a sign of a cultural failure, where ethical restraint should have been exercised.”
This is what Dr Longstaff calls ‘unintended negative strategic effect’: Something that can only be rectified by progressive and collaborative leaders.
“People are inherently good,” he said. “Leaders don’t wake up thinking ‘today I’m going to see how much hypocrisy I can engage in’. They are susceptible to the greater threat of unthinking custom and practice. And this must change,” he said.
Leading with moral courage and strategic vision
To create more ethical practices, Dr Longstaff suggests leaders guide their organisations through a process of ‘constructive subversion’ – to break the cycle of ‘going with the flow’ and embedding reflective practice within its culture.
“To subvert unthinking custom and practice, decision-making processes need to come back to the notion of purpose, values and principles,” says Dr Longstaff.
An organisation must have the right intent if it is to achieve its goals. To manage this, Dr Longstaff says leaders need these three key qualities:
- Moral courage – “Leaders need to have courage at the right time in the right way to offer the practice and skills to subvert unthinking.”
- Imagination – “Great leaders can imagine what it’s like to be somebody else, whether friend or foe, and understand how they see the world.”
- Strategic vision – “Leaders need the capacity to invent or discover inflection points – knowing when it’s time to action significant change.”
If leaders can set an organisation’s intention to realise its purpose-led potential, then their people can exercise their own discretion once they adopt this belief. This breaks the cycle of unthinking practice that leads to distrust from stakeholders and shareholders.
“Trust is not hard to build or sustain – there’s no real mystery about it. It’s created when individuals or organisations can declare publicly ‘this is who we are and this is what we stand for’ and act in a manner that is consistent with that’,” said Dr Longstaff.
In his keynote’s conclusion, Dr Longstaff came back to purpose and the existing structures that are in need of an overhaul.
“What is the purpose of a bank? A corporation? A market? Limited liability? All of them have purposes – and almost all of these have been forgotten,” said Dr Longstaff.
“As a society of citizens and colleagues, when we think about ethical leadership, we have to ask ourselves what we want and what will we settle for? A world of control, compliance and surveillance? Even if that was to work, would it diminish who we are as human beings?”
This article was originally published by UNSW, republished with permission.
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BY Simon Longstaff
After studying law in Sydney and teaching in Tasmania, Simon pursued postgraduate studies in philosophy 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.”
Shadow values: What really lies beneath?
Respect, integrity, communication, and excellence. They’re admirable and worthy corporate values – ones you’d proudly make official and put on the wall.
Unfortunately, those same values belonged to Enron. Only 12 months before declaring bankruptcy in 2001, the largest in US history at the time, Enron received plaudits for its 64 page Code of Ethics. It was named “America’s Most Innovative Company” by Fortune magazine and received numerous awards for corporate citizenship and environmental policies.
Enron’s failings have been well documented as the prototypical case study of what can happen when an organisation decouples its official values, principles and purpose – what we call an Ethics Framework – from its everyday behaviours.
It’s a perennial challenge for all organisations. Ensuring behaviour, policies, systems and processes are aligned with that ethical framework is no easy feat. If the managers of an organisation say one thing but consistently do something else entirely, it breeds cynicism and disconnection that permeates the entire workforce. Customers and other stakeholders eventually figure it out as well.
Hidden from view
Many organisations have a second set of values lurking beneath the surface. These unofficial values – no less powerful than the official ones – are called ‘shadow values’.
Uncovering shadow values can reveal deeper facets of an organisation’s actual operating culture. By proactively identifying and monitoring its shadow values, an organisation is better placed to see any early drift in the alignment of its culture from its values and principles.
Consider the fraudulent behaviour of Volkswagen engineers who deliberately programmed 500,000 diesel-powered vehicles to provide false readings during emissions testing. Despite the company’s explicit corporate values of excellence, professionalism and a commitment to integrity, it became clear through the accounts of investigators and employees, that a number of unofficial shadow values were dominating the organisation’s culture.
Volkswagen’s official and shadow values
In psychology, the dark side of human nature is often described as the alter ego. While Freud referred to the Id, Jung identified it as the shadow, referring to the sum total of all those unpleasant qualities we prefer to hide. The shadow gains its power through being habitually repressed. And it manifests in a multitude of symptoms and psychological disturbances.
Similarly, an organisation’s shadow values gain their power from being kept below the surface. At their worst, they are destructive mutations of the official values which pose an existential threat to the integrity of an organisation’s ethical culture.
Despite the official values of ‘teamwork’ and ‘respect for individuals’, Volkswagen’s implicit leadership model was widely recognised as one that valued ‘autocracy’ and delivering ‘success’ at any cost.
A focus on fear
A culture of ‘fear’ was common, with intimidation used as a primary motivator for achieving sales targets. Fear provided a bulwark against any dissenting voice being raised to challenge decisions. These voices were kept silent by a culture that fostered ‘internal competition’ and ‘secrecy’.
Shadow values can also throw into relief sanctioned organisational values, revealing subtle nuances in the way they are understood and practiced day to day. For Volkswagen, its stated value of ‘excellence’ was subsequently revealed to be a very specific type of value – ‘technical excellence’.
The value of technical excellence has been evident throughout the company’s history. Volkswagon turned to it in that 2015 scandal, just as it did in the 1970s when it was found guilty of similar manipulative practices to avoid emissions regulations.
These shadow values had their genesis in the shift in VW’s purpose. Following the appointment of Martin Winterkorn as CEO in 2007, Volkswagen set itself a goal: “To become the world’s largest automaker by 2018”. Winterkorn’s strategy was premised on developing a competitive advantage in ‘clean’ diesel rather than hybrids and other alternatives.
A shift in purpose
With tighter regulatory controls in the US, intense pressure was focussed on engineers to develop a technical solution, which they duly delivered, under the authority of the shadow values. In secretly modifying existing software capabilities that overrode pollution controls, Volkswagen went on to sell over 12 million illegal vehicles and met the target of becoming the “world’s largest automaker”, three years ahead of schedule.
This shift in purpose was not recognised formally in the company’s ethical framework. Allowing shadow values to proliferate unmoored the company from its purpose, values and principles. Indeed many of those shadow values were officially discouraged by VW’s ethical framework.
After his appointment in June 2017, new CEO Matthias Müller noted, “Our management culture needs to improve… openness, the courage to make innovations and speak one’s mind, as well as true willingness to cooperate are all essential elements… We need a solid system of values as a compass for our daily work.”
One hopes this “solid system of values” will be more attuned to the ones that might be still operating in the shadows.
At their worst, shadow values are in complete opposition to official values. At their best, they provide a nuanced expression of what an organisation really cares about. Either way, they are very revealing of an organisation’s true, operating culture.
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 John Neil
John leads the Centre’s major consulting projects, leadership and culture programs and product development. Drawing on 20 years of experience, John has worked with Australia’s largest organisations in developing and delivering solutions to bring ethics to the centre of business design, culture development, and organisational decision making. Before joining us, John worked in the business school at the University of Technology Sydney. During his time there, he inspired students and colleagues alike through his research and teaching, and chaired the Ethics Working Group to develop an approach to embed ethics in the Bachelor of Business curriculum.
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.
The dark side of the Australian workplace
The founder of a law firm recently explained long working days under high pressure at his firm, saying: “People come here with the knowledge and expectation that they’re going to have to work hard”.
He could have been speaking for any number of employers in high-stress industries.
As young graduates leave university to work in top-tier law firms, in hospitals, merchant banks and professional services, they are already well acquainted with hard work and competition. They have strived to become the best and brightest through many years of education, often polishing their resumes with extra-curricular achievements in sport, music and volunteer work – all the while supporting themselves with part-time jobs.
These young people know what it is like to “burn the candle at both ends”, to run themselves ragged getting ahead of the competition so they can get one of the prized entry-level jobs that may lead to continued success.
They expect to be worked hard. They probably don’t expect to be worked to death.
Two leading law firms have recently been investigated over complaints about “extreme working conditions”, where one solicitor warned that it had reached a “point someone will die or have some other physical or mental health episode’’.
An unprecedented move by WorkSafe
In one well-publicised example, WorkSafe Victoria had launched an investigation into King & Wood Mallesons in Melbourne after a similar complaint regarding overwork and exhaustion, particularly during the Banking and Finance Royal Commission.
King & Wood Mallesons chief executive partner, Berkeley Cox, says the legal industry is paying much closer attention to the issue of work stress.
“We have learnt so much over the past year and recognise that there is a lot more that law firms can and should be doing to improve the everyday work experience for individuals and the systematic issues at an organisational and industry-wide level,” he says.
“While we have much more to do on our journey, we want our workplace to be one where every individual has the opportunity to flourish.”
WorkSafe’s action is regarded as unprecedented in the legal industry and some pundits have nominated it as a “death knell” for the concept of the “billable hour” – whereby firms charge clients for each hour their lawyers work.
The billable hours system means that workers are incentivised to work longer, rather than smarter.
Certainly, the statistics around mental health in the legal profession are alarming.
Around 50 per cent of law students, 33 per cent of solicitors and 20 per cent of barristers report they have experienced depression. Further, 11 per cent of lawyers contemplate suicide each month, according to research published on the website of legal mental health charity, Minds Count (formerly the Tristan Jepson Memorial Foundation).
A punishing rite of passage
Investigating the causes of this crisis and exploring possible solutions usually leads back to an industry culture of being always-available to clients, unreasonable demands for fast turnarounds and the “billable hour”. There is also a long-held belief in the professions that young people will work punishing hours as a “rite of passage” that will pay off in the long run.
In the legal industry, Royal Commissions tend to amp up the pressure, with work going on in 24-hour cycles in 15-hour shifts, seven days per week, in an environment that is intolerant of mistakes or human frailties.
As it is, lawyers work longer overtime than professionals in any other field in Australia, according to a position paper by The Legal Forecast, a not-for-profit group that provides support for students and early-career lawyers.
Under discussion at a recent event, hosted by The Legal Forecast, was the exacting timetabling of the Hayne Royal Commission and the impact it had on lawyers, particularly junior staff.
DLA Piper Australia co-managing partner and Minds Count board member, Melinda Upton, asked: “Was it worth the sacrifice when you look at statistics on people committing suicide and entering depression? Did it have to be done that quickly?”.
This point was picked up by Scarlet Reid, a partner at McCullough Robertson Lawyers, who said she worked on the Hayne Royal Commission and is now working on this year’s Aged Care Royal Commission.
Reid said the Aged Care commission was proceeding at a “much slower pace” and questioned whether the banking Royal Commission really had to be completed in one year.
“Politics drives that as well,” she said. “We could slow down.”
She said many of the organisations involved in giving evidence to the Aged Care Royal Commission were not-for-profits that did not have the funds to pay for large legal teams – a factor that puts a brake on the pace.
Need to slow down
Partner at legal recruitment firm ECP Legal, Justin Whealing, said a senior banking corporate counsel told him he wished the law firms and their clients had teamed up to ask the commissioner for more time.
“I think the legal profession could do that better, in terms of presenting a united front to speak in one voice about how meaningful changes can be made for the betterment of the profession. Clients would get better advice as well and it would be more sustainable for the people in it,” Whealing said. He also advocated having an industry-wide standard, setting out conditions such as maximum work hours and mandatory breaks and using targets.
Reid acknowledged the bind that law firms find themselves in: “It’s very difficult when you’ve got clients needing to meet deadlines, getting into witness boxes. And, you know, it’s a balance”.
Some firms are using contract lawyers to help manage workload over peak times, says the head of Innovation and Project Delivery at Pinsent Masons, Alison Laird. Even without being involved in a Royal Commission, there are huge deadlines that must be met. “So we ramp up the team, and then we ramp them down again,” she says.
Getting rid of ‘billable hours’
Laird said things will not improve until law firms change the way they remunerate their people and get rid of the “billable hour” system, which drives lawyers to bill a certain number of hours per year to the detriment of their mental wellbeing. “It is the one thing that impacts innovation more than anything else,” she says.
At least one top tier firm, Corrs Chambers Westgarth, is dumping the billable hour concept (while adding an extra week of annual leave) and replacing them with annual billing targets, which allow for peaks and troughs of client-billed activity.
However, Melinda Upton warned that replacing the billable hours system cannot happen without the support of clients, who are likely to push back on any change. Member of The Legal Forecast NSW, Edwin Montoya Zorrilla, supports a move away from billable hours and offers more remedies: the automation of various legal tasks and integrating long-term thinking into practice management and recruitment.
“This discussion also includes more specific strategies such as optimising systems of delegation and work sharing, better communication with clients, and using technology-assisted project management tools,” he writes in an article for Westlaw.
“Yet, none of these strategies, however innovative, take effect overnight, and there remains a tendency to return to traditional means of meeting the bottom line.”
Encourage safe work
Upton said it is a responsibility of law firm partners and management to educate the partners about staff wellbeing and “to call it out when they don’t come to the table on it”.
They can also highlight examples where enforcing or encouraging safe work practices has worked well.
“Usually it means your attrition rates have improved, you’ve got a much happier team, you’ve got succession and talent mapping and progression going on, you get good client feedback. And clients really don’t care where you work.”
Reid says working shorter hours may mean that law partners have to accept they will make less money.
When partners discuss remuneration structures at a firm-wide level, they need to be talking about encouraging the sharing of work between teams, the use of contract lawyers and other ways to create a sustainable work environment.
“There is an element of almost a corporate greed associated with the driving of long hours … unless you’re going to change the remuneration structure, then it’s going to be hard to drive behaviour,” she says.
This article was originally written for The Ethics Alliance. The Alliance is a community of organisations sharing insights and learning together, to find a better way of doing business.
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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