Measuring culture and radical transparency
The Ethics Centre is often asked whether it’s possible to “measure” or evaluate organisational culture. Executives and Directors are now alive to the considerable responsibility they bear for the workplaces they preside over – and this has led to a growing demand for robust and credible measurement tools.
Using a methodology developed over 25 years, The Ethics Centre’s Everest process is a forensic review into a company’s ethical culture. It’s based on a simple proposition: that good culture can be measured. Global research shows a healthy culture is essential to sustainable, long-term performance; it enables innovation and builds trust between staff, clients, and customers. Conversely, poor culture leads to bad decisions and an erosion of trust and credibility. The result, inevitably, is disengagement, cynicism, and loss of value.
In the face of challenging conditions, many leaders are tempted to focus their efforts on compliance to prevent ‘bad’ behaviour. But this over-reliance on regulation and surveillance can be counterproductive. Not only can it restrict growth of a positive ethical environment that enables people to innovate and act with a shared purpose and direction, it also doesn’t work. Failures persist. A strong ethical culture is critical to managing risk and building a foundation that will support long term value and performance.
We’ve employed Everest to evaluate the culture of numerous, very different, organisations. We’ve used it on one of Australia’s “big four” banks and a leading superannuation fund. We’ve measured the culture of universities, insurance companies, and leading sports organisations including the Australian Rugby Union, Cricket Australia, and the Australian Olympic Committee.
In carrying out the process both in Australia and abroad, we look at the misalliances between what a company says it stands for, and what occurs in practice. Using this premise, we check how organisations live up to the standards they set for themselves through an audit of systems, policies, procedures, and practices. We undertake extensive qualitative and quantitative research to determine how employees and key stakeholders view the organisation. Out of this process comes a set of powerful insights into the degree of alignment between purpose and practice. We identify the gaps.
Once we’ve made sense of the current state of an organisation, we’re in a position to ask our clients some tough questions about the kind of company they’d like to be. We present clients with a Future State Framework that maps the pathway from the present to the future – asking them to imagine the pinnacle of what’s possible for their organisation. In doing this, we examine five domains:
Culture: The operating system through which people create meaning, purpose, and belonging.
Ecosystem: Organisations are complex, interconnected, and interdependent. They sustain, and are sustained, through relationships, mutual dependencies, and the value they bring to the whole.
Leadership: Providing the guidance, direction, and consistency that allows an organisation to respond to the challenges of uncertainty and change.
Readiness: The ability of an organisation to anticipate and respond to uncertainty. The ability to pre-empt a possible future before it arrives fully formed.
Legacy: The future’s perspective on the present. The map we leave behind for others.
The nature of Everest, particularly when coupled with the independence of The Ethics Centre, is that we can confront leaders with issues that have not previously been articulated, recognised, or challenged. And we do this in a way that lessens defensiveness and focuses on building on the goodwill contained in the existing culture of the organisation.
We’re proud that our process has provided leaders across business and government with the expertise to shine a spotlight on current practices and make choices about the culture and style of organisation they wish to cultivate in the future.
One final note: our Everest reports are delivered to our clients on the understanding that everything contained therein is strictly confidential. What a company does with the report is entirely up to them. None had ever been made public until we worked for the Australian Olympic Committee in 2017.
Facing a media storm over their culture, the AOC took the brave step of releasing the report, in its entirety, to the public. Thanks to this act of radical transparency, we’re able to share it with you here.
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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.
A win for The Ethics Centre
The Ethics Centre was announced the 2017 winner of the Optus MyBusiness Awards Training Education Provider of the Year, for our innovative business ethics education program.
The prestigious annual event is Australia’s longest running awards program for SMEs. 150 finalists attended the award ceremony at Sydney’s Westin Hotel where the winners were announced across 28 award categories.
The Ethical Professional Program is our core professional education program, centred on applied ethics, quality decision making, professional practice and leadership. Exclusively devised for financial advisors, brokers, bankers and those who work alongside them, it has been rolled out across the financial service sector.
Participants who have completed the program tell us it helped them build stronger relationships with colleagues and clients, link everyday decisions back to their organisation’s strategy and purpose, and deal with complex issues as they arise.
The program consistently achieves high net promoter scores and positive feedback that indicates participants not only leave with new skills but enjoy the process too – not something you hear every day about ethics education!
We take our role as a leading provider of ethics education very seriously. As events in the world continue to shock, scare and surprise us, and our trust in core institutions appears to plummet, it can seem as if people care less and less about ethics. Our experience tells us otherwise. The people and organisations we work with across our ethics, leadership and learning programs are hungry to explore what they value, the principles they hold on to, and how to make their way through some of the most difficult ethical challenges we face today.
Our organisation has been involved in learning and education for over 25 years and are thrilled to be recognised for the transformative programs we deliver in ethics education.
As an independent non-profit specialising in ethics, we’ve been asked by many organisations, industries and governments, both locally and internationally, to provide a different kind of education and training experience.
Each of our education and training programs challenge participants to think differently – to critically examine other opinions, be consistent in their judgements, and make responsible and considered decisions. They provide the skills and tools to understand and resolve the multitude of difficult ethical challenges we all face as part of our personal and professional lives.
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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.
A radical act of transparency
The Australian Olympic Committee had been through a six month media firestorm by the time its new CEO, Matt Carroll, got his hands on a confronting review of the organisation’s culture.
The AOC had been battered by a succession of negative events. Its former CEO, Fiona de Jong, had resigned in a blaze of headlines while their longstanding president John Coates had fought off a bruising challenge to his leadership in a publicised election campaign.
Some of its most senior executives received allegations of bullying and poor behaviour. Part of its 36 staff complained the AOC was the most dysfunctional place they’d ever worked. There was even an ugly rift between the AOC and the Australian Sports Commission, which funds high performance sports.
What’s more, the medal tally from athletes in the most recent summer Olympic Games in Rio had been disappointing – our worst in 15 years.
Even with Carroll in place as the new “cleanskin” CEO, the damaging headlines were showing no sign of abating. With the results of the 64-page cultural review in his hands, Carroll knew the bad news would keep leaking out.
So he and Coates decided to publish the review’s findings and its 17 recommendations on its website and release them to the media – effectively putting the organisation’s “dirty laundry” on the table for all to see.
“Why? We knew we were going to get criticised, and we did. We knew we were going to get held up and ridiculed, and we did”, says Carroll today.
“We copped a bit of a battering in the media for a week, but I know that the national sporting federations had a great deal of respect for us doing it.”
“But there was one question I couldn’t have answered if we hadn’t done it and it was: ‘What are you hiding?’ And that would have dragged us backwards.”
They concluded the only way to move on and put their troubles behind them was to engage in an act of radical transparency.
A ‘brave’ decision
The independent review, conducted over two months by The Ethics Centre, was not initially intended to be a public document. But when the report finally landed in the AOC boardroom – a frank appraisal of all that was wrong with the organisation, and what they needed to do to fix it – the decision was quickly made to go public.
“The transparency involved in publishing the report is very good for my purposes in changing the organisation because it is out there”, Carroll says.
“There can be no pushback … It sets a standard that this is the way we are going to operate.”
The business community was agog; a corporate leader made a wary comment telling Carroll the move was “brave”.
But while staff and the sporting federations were generally appreciative of the review and the courageous decision to go public with the findings, it was not a painless process.
“It did have an effect on some of the senior managers because there was this inherent criticism of the leadership team – some of whom are new – but they have shouldered that”, says Carroll.
“For the leadership team, there was this feeling they had all been tarred with the same brush and some of them took that quite hard. We have all been tarred a bit, but we have recognised the issues, recognised the problems, we have agreed that we need to make change.”
Coates, however, was accused of sidestepping responsibility for the poor organisational culture when he told a news conference, “The only criticism of me, personally, has been my acrimonious relationship with some stakeholders, particularly [Australian Sports Commission chair] John Wylie, and that has been put in context.”
Extending transparency
One of the findings of the AOC culture review was a lack of transparency around key decisions – like how individual sports are funded, how staff members are selected to work on site at each Olympic Games. This lack of transparency had led to an atmosphere of suspicion and allegations of favouritism.
Carroll intends to usher in a new era of transparency to dispel any suggestion of favouritism.
“Equally, performance is expected. Yes, we can structure everything and will make sure everyone knows their roles and responsibilities. There is a process, and it is transparent, but that doesn’t mean everybody is a winner.
“We are in the business of high performance sport and our athletes expect the same [level of performance] from our organisation. If you don’t perform in your role, yes, you probably won’t get to go to the Games – but you will know why.
“I am always of the view that you tell the truth, otherwise it comes around to bite you anyway.”
Carroll says this level of openness does not mean that everyone gets a say. “Transparent decision making doesn’t mean you are standing out there asking everyone’s opinion.
“But there is a process where everyone knows how it works and they know what the expectations are and, therefore, they can measure themselves.”
A culture of stress
“One reason that it was always so frantic was that people made it frantic.”
Having come into his role with a 20 year career in sports management, Carroll says he did not think there were any serious ethical problems at the AOC. He saw it was more of a matter of applying appropriate ethical standards to behaviours – especially at times when the organisation is operating under “emergency mode”, such as Games times.
“I am sympathetic to the stress the organisation is sometimes under. I don’t think there was a massive problem, as big as the media was dressing it up, at all. It was more about settling the organisation down and having those restructured roles and responsibilities”, he says.
“There was a culture of stress. One reason that it was always so frantic was that people made it frantic, rather than taking a deep breath. We are not changing the world, we don’t save lives every day of the week, we leave that to more important organisations. You have got to get people to take a step back and take a deep breath.”
Sometimes, the solution is to be nicer to each other, Carroll says. “You can have a disagreement with people … but, for Heaven’s sake don’t behave like [you are in] a schoolyard. Have respect for people.
“If you have no respect for people then they won’t have respect for you.”
Carroll says sport’s important role in Australian culture is reflected in the community’s high expectations of behaviour.
“That is why sport needs to retain its absolute credibility. If it loses that credibility, those role models – no matter how hard they try – won’t be able to show that influence and leadership.
“We can change lives, we don’t save lives. Sport has got to have its own perspective: it isn’t the be all and end all of the country. There are other far more important aspects of society in Australia than sport.
“We can play that leadership role, we can play that role of setting some standards, but we also must accept, at the end of the day, it is about sport.”
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In the court of public opinion, consistency matters most
If you’re like us, you spend a lot of time reading the business news. And you’re be familiar with a strange paradox: while some highly respected business leaders can be brought to their knees by one poor decision or ethical stumble, there are others that seem to get away with it time after time. In the language of the CBD, they’re Teflon-coated.
It hardly seems fair that those who have spent their career doing the right thing attract more criticism when they fail. But it seems there is nothing the public hates more than a hypocrite.
Psychologist Dr. Melissa Wheeler says hypocrisy is often considered a bigger sin than the transgression itself.
“The thing that really gets people’s attention is someone’s moral hypocrisy – when you say something, but do something very differently. Or you condemn something, but then have been found to be doing it as well”, says Wheeler, who has a PhD in moral and social psychology and is a Research Fellow in the Department of Management and Marketing at the University of Melbourne.
Cyclist Lance Armstrong is therefore judged more harshly because he was a healthy-life champion who was doping himself throughout a career, which included winning seven Tour de France events.
“The thing that really gets people’s attention is someone’s moral hypocrisy – when you say something, but do something very differently.”
Conversely, we shrug off US President Donald Trump’s Twitter diatribes and troublesome behaviour because they’re generally consistent with his career and private life over the decades.
“With Trump, I keep wondering why people aren’t more outraged and shocked at all the things that are coming out, scandal after scandal, and why are people not even batting an eye anymore”, says Wheeler.
“And I think it is because we have come to expect that from him, because it conforms with what you are expecting and it conforms with your stereotype of what he, as a politician, is.”
Surprise makes a scandal ‘stick’
Mud seems to “stick” if someone does the unexpected or flouts their own stereotype, she says.
In the corporate world, Volkswagen’s falsification of its vehicle emissions data became one of the biggest scandals of 2015. It was trading on its “green” credentials, but was lying about its performance.
Organisations cannot even expect that their good record will help insulate them from future mistakes.
“If you do anything to fall from that grace, it is going to be worse”, says Wheeler.
In fact, not only can “good-practise champions” attract more criticism when they fail, they can also draw more scrutiny in the first place, according to the managing director of the Australian Centre for Corporate Social Responsibility, Dr Leeora Black.
“Paradoxically, sometimes companies with stated good intentions are targeted [by activists] more frequently than companies without, simply because they are more likely to respond.”
Black, an advisor with a PhD in Corporate Social Responsibility, says change campaigners will target companies that already have expressed a commitment to be socially responsible. “They know they will get more traction from those companies than companies that don’t care.”
“Paradoxically, sometimes companies with stated good intentions are targeted more frequently than companies without, simply because they are more likely to respond.”
Activists target companies they can change
Public opinion and media coverage often follow the activists, which goes some way towards explaining why socially responsible companies get more flak for their ethical breaches, she says.
“Normally, without that targeting by activists, if a company is doing well and it stumbles, stakeholders are more likely to give it the benefit of the doubt.”
“Many people have spoken to me about this [phenomenon] in their companies, particularly in the early days, when they get started. Normally, companies that are further advanced in their corporate responsibility journey become more resilient and they also develop stronger relationships with stakeholders and so they are much less likely to suffer that kind of backlash when they do slip”, says Black.
“It is the companies that are newer to CSR that are more likely to get targeted and may be more concerned about it.”
However, fears of harsh judgement should not be a disincentive to hold and display high ethical standards. The business case of corporate social responsibility (CSR) is that the “benefits outweigh the troubles”, she says.
“And the troubles are short term and the benefits are long term.”
Black says the benefits of CSR are better employee attraction and retention, higher employee productivity and organisational commitment.
“For companies listed on the stock exchange, over time, their better performance will be rewarded by shareholders. There is also the opportunity for enhanced risk identification and management, enhanced innovation and improved reputation”, she says.
“But it does take consistency and persistency. You don’t just do one good thing and expect everybody to fall all over the place, gobsmacked about how wonderful your company is. That doesn’t cut it. That is the kind of thing that is more likely to be viewed as hypocrisy.
“Where there are systemic, fundamental, deep-seated commitments being made by the company that are being expressed in its culture and its strategy, then, over time, the persistence and the consistency will be rewarded and the company will become much more resilient to shocks that may happen from an occasional stumble.”
Scandal recovery depends on response
Wheeler says once a scandal has broken, an organisation’s ability to recover will depend on how it handles the aftermath and whether it uses it as an opportunity to grow.
Effective responses include taking responsibility, working around the facts of the transgression, not sweeping it under the rug and providing appropriate explanations for the wrongdoing.
“I think there is a real sincerity in that. So, it is not just like trying to weasel out of the blame.
“And then people like to see that the companies are willing to accept and serve what might be considered an equitable punishment. They want to see there is some punishment for the action and some consistent internal changes – what sort of rehabilitation are they doing?”
University of Pittsburgh researchers studied 100,000 social media tweets to see how the tenor of the public discussion changed in the weeks following Volkswagen’s emissions data scandal.
A sentiment analysis over four separate weeks showed how criticism of the company abated once Volkswagen and the regulators took action.
“Ultimately, if the company’s efforts at recovery are successful, the sentiment returns to a neutral state”
Sentiment about the brand was extremely negative immediately after the news broke, but shifted once the company started recovery efforts (such as an apology and recall) and regulatory agencies placed responsibility with the company.
“Ultimately, if the company’s efforts at recovery are successful, the sentiment returns to a neutral state”, says the study’s lead author, Vanitha Swaminathan, Thomas Marshall Professor of Marketing at the Katz Graduate School of Business at the University of Pittsburgh.
Learning from the experience
The damage to Volkswagen included a plunge in their stock price, government investigations in North America, Europe and Asia, the CEO’s resignation, the suspension of other executives, the company’s 2015 record loss, and a tab estimated at more than $US19 billion to rectify the issues, according to American economist, Boris Groysberg, in the Harvard Business Review.
There are also expected to be long term impacts on the careers of Volkswagen employees. “Our research shows that executives with scandal-tainted companies on their résumés pay a penalty on the job market, even if they clearly had nothing to do with the trouble”, says Groysberg.
“Overall, these executives are paid nearly 4 per cent less than their peers. Given that initial compensation in a job strongly affects future compensation, the difference can become truly significant over a career.
Good news for those who have slipped up is that surviving a scandal can result in a stronger operating performance in the long term – if the organisation has learned from the experience, ejected the wrongdoers and put into place measures to avoid a recurrence.
Researchers at the University of Sussex studied 80 corporate scandals and discovered that although share prices plummeted by between 6.5 and 9.5 per cent in the month after the bad headlines started, the experience could lead to improved performance in the long term. The scandals included breach of contract, bribery, conflicts of interest, fraud, price fixing and other white-collar crimes, as well as personal scandals such as a CEO having an affair, lies on CVs and harassment cases.
Dr Surendranath Jory, who led the study, said safeguards put into place to protect against further abuses seemed to allay investor fears and avoid further drops in a company’s stock price, ensuring they rebound to the levels of their rivals. “Three years on from scandals, the share price performance of firms matched those that had not been affected by scandals.
“Clearly, investors value ethics and they place a premium on it.”
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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 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 pivot: Mopping up after a boss from hell
How would you feel if you had been harassed on an internet dating site and blocked the person, only to turn up for a new job and find out that they’re your boss?
It gets worse. The harassment continued outside of work and then the new boss started “performance managing” the employee out of the business, making complaints about the quality of their work.
This actually happened and I found out about it when the mother of the victim phoned me (as a HR executive) to say, “This is what happened to my son in your business”.
The young man, who we shall call Darren, had been an ambitious high performer. But, after a 12-week period with his new boss, he resigned – blowing up his career to escape the situation.
Now, he was seriously depressed, could not get out of bed and his mother was very concerned about his mental wellbeing.
There was some conjecture it may not have been a coincidence that the harasser had turned up as his boss. He may have deliberately sought to connect with his new team outside work before starting in the job.
The path forward was not totally clear. Darren had not made a complaint himself. It was his mother who made the call and supplied me with screenshots of text messages, without Darren’s consent.
He had also already left the company, but was obviously in a very bad space. Also, if he had resigned because of the harassment, it could potentially be regarded as “constructive dismissal” (an unlawful termination of employment).
And I now had someone working in the business who had apparently been a harasser on social media and had forced his victim out of his job. You don’t want a leader who performance manages people who won’t date them, or even someone who allows that perception to take hold.
It had to be investigated because, if it was true, I couldn’t just leave it as a time bomb waiting for the next person to attract his interest.
My legal and moral obligations were not necessarily the same. I had to respond to the situation as both a HR person and a leader, because I had executive responsibility for the part of the business they both worked in.
From a moral perspective, I had to consider whether my response was an almost parental reaction. Had I wanted to protect an employee who I discovered had been harassed out of his job because a complaint came from his mother?
It was a tricky situation, but we went through a quiet investigative process. I contacted Darren and he didn’t want to come back to the company.
The really important lesson in dealing with cases such as these is to discuss the human impact at the same time that you are discussing the legalities. They need to come together, they can’t be separated.
I arranged for better support and counselling for him. That was a risk because, in a court case, it could have been construed as an admission of responsibility and it could have gone on to become a Workers’ Compensation or Human Rights Discrimination issue.
But there must be a degree of humanity – you can’t just leave someone broken and walk on by.
When I called his former boss into an interview, he became very angry. He said his activity on the dating site was his private life and none of our business.
A mature leader would have disclosed the conflict in their relationship as soon as they started at the company, so that it could be managed ethically. Instead, he went for Darren, hammer and tongs with the performance issue.
We disciplined him and he ended up resigning shortly afterwards of his own free will.
The really important lesson in dealing with cases such as these is to discuss the human impact at the same time that you are discussing the legalities. They need to come together, they can’t be separated.
It is also important to deal quickly with these things because nothing gets better if it festers away. If I look at the really bad cases I have mopped up, there have been a lack of investigative outcomes, a lack of definitive decisions and/or lack of clarity about what will be done.
Some of these cases drag on for years and someone leaves the workforce, broken. They progressively end up in really bad financial shape as well. Time stands still for them because they are either coming into a workplace where someone is continuing to harass them or they are isolated at home. While you’re deciding what to do, the issue is overwhelming their every day.
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 Rhonda Brighton Hall
Rhonda Brighton-Hall is a non-executive director of the Australian Human Resources Institute and founder of MWAH (Make Work Absolutely Human), Chair of FlexCareers, Former Telstra Business Woman of the Year and HR Leader of the Year.
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 6 ways corporate values fail
The Ethics Centre works with companies and organisations of all shapes and sizes. We know how different a bank with 40,000 employees is to a small non-profit or a university, or even to a division of the military. Despite that, the same issues arise in business time and again. A failure to live up to corporate values.
One of the first things we do when we start working with an organisation is helping them to define, refine, or re-build their purpose, values, and principles – what we would call an ethical framework. A strong ethical framework is a North Star for all people and all decisions within an organisation.
We frequently encounter companies that have values in place – but they’re not being “lived.” They’re either entirely unknown, or else they are not being used as a reference point. Rarely are they being used to their full potential.
In the course of our work, we’ve uncovered six main ways that corporate values fail to stick.
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Values without purpose or principles
We often encounter a lack of understanding of the way that values, principles and purpose inter-relate. They are fundamentally different and they work best together. Purpose is your “why” (Why does your organisation exist?). Values describe what is good. Principles describe what is right. When making a decision we must ask:
- Does this decision help us achieve our purpose?
- Are we upholding our values in this decision? Is this what we consider to be good?
- Is this decision aligned with what we consider to be right? Is it the right thing to do?
The point about all of this is that we are required to think before we act. Without an ethical framework of purpose, values, and principles, we are left with nothing but a list of rules and behavioural directives. And when we are simply following rules or habits, the critical thinking needed for ethical decision making is removed.
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Leaders failing to lead on values
Ethical frameworks don’t have to start with the CEO or board. It’s been our experience that the best frameworks arise out of consultation with all levels of the organisation. But it is certainly true that it’s the job of all leaders to talk about the values, create a narrative that demonstrates true commitment, and exemplify them in their own behaviour.
This is partly a communication challenge: leaders have to explain the values and tell the story of how they are lived within the organisation. They need to explain how their decisions reflect the values.
But it’s also important the organisation and its stakeholders can see the values being applied constantly and consistently. When leaders fail to do this, the hypocrisy will be noticed and called out – often with disastrous and costly consequences. Hypocrisy over values can destroy the credibility an organisation.
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Designing for a marketing purpose
No offence to marketers, but they definitely shouldn’t be the sole drivers of your ethical framework. In this scenario, the marketing team have identified the need to communicate a particular set of “brand values” to their customers, so they craft uplifting slogans that give the appearance of an ethical framework. Sadly, these values are a facade. They are window dressing designed to sell a product. Managers and staff either don’t know them, can’t relate to them, or don’t know how to use them in decisions.
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Confusing values with behaviours
The danger of HR being the sole architects of your ethical framework is that they will probably build something based on behaviours. Behaviour-based statements tend to describe the desired “good” behaviours and call out the undesirable “bad” ones. They are displayed in posters on the kitchen wall – and the only time they are really discussed is in performance reviews, where they become a stage-gate for a bonus. The employees may find the behaviours helpful in interacting with colleagues within and across teams, but they won’t be very helpful when applied to the big day to day decisions.
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Values not embedded within your systems and processes
The beauty of an ethical framework is that it can help guide every decision that your managers make. This includes major corporate manoeuvres and daily interactions with customers and other stakeholders. But this will only work if your values and principles are embedded in your policies, systems, and processes.
It’s easy for these frameworks to become misaligned. If you uphold corporate values like trust, integrity, and customer service whilst imposing ambitious KPIs that prioritise profit growth above all else, then you will have a confused workforce with no idea what to do. When systems are in conflict with values, bad decisions can be made by well-meaning people.
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People failing to talk about corporate values
You can tell a purpose-led organisation from any other because their values and principles are on display, every day. They’re not just a page on the website, but the subject of daily conversation. They come up time and again in company presentations, in meetings and in micro-interactions. In times of change or disruption, they’re the only way to navigate successfully.
Your people need not only to know what the values are and what they mean; they also need to understand how to communicate with them and apply them to everyday decisions. And perhaps most importantly, you need to foster a culture in which a failure to live the values is explicitly called out. You know a company truly has a strong ethical framework when even the most powerful executive is held to account for not living the values.
Corporate values are much more than mere slogans or behaviours. They are an important and fundamental element in decision making. Organisations are shaped by the choices their individual employees and directors make. And this in itself shapes the world around us.
A famous Australian corporate leader once said that companies are successful when they “make more good choices than bad choices.” If values represent what is good then we know where to look to shape good choices.
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Office flings and firings
If you heard the phrase “cheaters never prosper” talked about at AFL headquarters, you’d assume they were talking about performance enhancing drugs, salary cap breaches or breaking the rules to win a game.
This week, as AFL CEO Gillon McLachlan announced the resignations of two senior officials, Richard Simkiss and Simon Lethlean, after they admitted to adulterous affairs with junior staff, the phrase took on a whole new meaning.
The reaction to McLachlan’s decision has been mixed. Some have applauded the move as a strong defence of the AFL’s culture and values. Others have suggested the AFL has gone too far. Writing in The Australian Financial Review, Josh Bornstein suggested office affairs that don’t involve “harassment or stalking or bullying” should “not be grounds for loss of employment”.
Particulars of the AFL case aside, this view is misguided. It conflates ethics and the law and demonstrates a lack of appreciation for the important role values and principles play in corporate governance. Just because something is legal doesn’t mean it’s ethical.
Yes, the law should play a role in guiding an organisation when developing an ethical framework. But it is far from sufficient. Arguably, the best test of an organisation’s ethics will arise when they’re operating in areas not covered by the law.
When a power imbalance could potentially cause harm to the more vulnerable party, then we have good reason to question that conduct.
With that said, what should we make of the AFL’s decision? When announcing the resignation of the two senior officials, McLachlan spoke to his organisation’s values. He stated that he would like to lead “a professional organisation based on integrity, respect, care for each other, and responsibility”.
An organisation’s values are affirmed by the actions, choices, and decisions that are made and condoned by its people, especially its most senior leaders. This also was not lost on McLachlan. “I expect that executives are role models and set a standard of behaviour for the rest of the organisation,” he said. “They are judged, as they should be, to a higher standard”.
The response by the Seven West Media board to revelations that their CEO Tim Worner had an adulterous affair with executive assistant Amber Harrison was a little more benign. They engaged a private law firm to undertake an independent investigation into a variety of allegations made by Harrison, including the inappropriate use of company funds and illicit drug use by Worner.
Although the findings of the investigation were not made public, the board concluded there was no evidence supporting the claims of wrongdoing by Worner. Furthermore, they stated he had been disciplined over his “personal and consensual” relationship with Harrison, which it also said was “inappropriate due to his senior position”.
So what are we to make of these seemingly contrasting responses? Should we cast judgement and declare that one organisation is more virtuous than the other?
We must be careful not to instantly assume that an individual who has become involved in an extra-marital affair is less committed to the organisation or its values. Infidelity is not a simple question of character deficiency.
It should be acknowledged that although the two organisations handled the incidents differently, neither condoned the conduct of the leaders involved. When judging the individuals and the organisation’s responses, commentators and the public appear to point to two factors.
The first is the power asymmetry between the people in each of the affairs. This is not unique. Power asymmetries in organisations are inescapable and almost all leaders have at some stage used their power to gain advantage, even if they did so unwittingly. However, when a power imbalance could potentially cause harm to the more vulnerable party then we have good reason to question that conduct.
The second factor inviting people’s judgement is the fact the affairs were adulterous. Understandably, infidelity arouses a range of moral responses. But we must be careful not to instantly assume that an individual who has become involved in an extra-marital affair is less committed to the organisation or its values. Infidelity is not a simple question of character deficiency.
Stories are powerful. After notable incidents like these, they become folklore within organisations.
Whenever a senior executive becomes involved in a regrettable or unsavoury incident similar to these, an employer has no choice but to respond. How they do so is a defining moment for the organisation. Their response (or lack thereof) reveals to us what the organisation really values and how committed it is to those values.
However, judging the appropriateness of the response is difficult. Perhaps the best measure is one we don’t yet have access. Namely, the stories that these events inspire within the organisation.
Stories are powerful. After notable incidents like these, they become folklore within organisations. If they affirm and are aligned to stated values and principles, they can strengthen the organisation’s ethical foundations. If not, people can quickly become cynical, compromising the organisation’s character.
When we look past the salacious gossip surrounding office romances, this is arguably the most important thing to take from these unfortunate incidents. For the sake of the boards at the AFL and Seven West Media, I hope that the stories being told within their organisations are reflective of the values they extol.
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BY Dennis Gentilin
Dennis Gentilin is an Adjunct Fellow at Macquarie University and currently works in Deloitte’s Risk Advisory practice.
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.
Ethics Explainer: Ownership
Where lying is the abuse of truth and harm the abuse of dignity, philosophers associate theft with the abuse of ownership.
We tend to take property for granted. People own things, share things or have access to things that don’t belong to them. We rarely stop to think how we come to own things, whether there are some things we shouldn’t be allowed to own or whether our ideas of property and ownership are adequate for everybody.
This is where English philosopher John Locke comes in.
Locke believed that in a state of nature – before a government, human made laws or an established economic system – natural resources were shared by everyone. Similar to a shared cattle-grazing ground called the Commons, these were not privately owned and so accessible to all.
But this didn’t last forever. He believed common property naturally transformed into private property through ownership. Locke had some ideas as to how this should be done, and came up with three conditions:
- First, limit what you take from the Commons so everyone else can enjoy the shared resource.
- Second, take only what you can use.
- Third, that you can only own something if you’ve worked and exerted labour on it. (This is his labour theory of property).
Though his ideas form the bedrock of modern private property ownership, they come with their fair share of critics.
Ancient Greek philosopher Plato thought collective property was a more appropriate way to unite people behind shared goals. He thought it was better for everyone to celebrate or grieve together than have some people happy and others sad at the way events differently affect their privately-owned resources.
Others wonder if it is complex enough for the modern world, where the resource gap between rich companies and poor communities widens. Does this satisfy Locke’s criteria of leaving the Commons “enough and as good”? He might have a criticism of his own about our current property laws – that they’ve gone beyond what our natural rights allow.
Some critics also say his theory denies the cultivation techniques and land ownership of groups like the Native Americans or the Aboriginal Australians. While Locke’s work serves as a useful explanation of Western conceptions of property ownership, we should wonder if it is as natural as he thought it was.
On the other hand, it’s likely Locke simply had no idea of the way in which Indigenous people have managed the landscape over millennia. Had he understood this, then he may have recognised the way Indigenous groups use and relate to land as an example of property ownership.
Karl Marx, and the closely associated philosophies of socialism and communism, prioritise common or collective property over private forms of property. He thought humanity should – and does – move toward co-operative work and shared ownership of resources.
However, Marx’s work on alienation may be a common ground. This is when people’s work becomes meaningless because they can’t afford to buy the things they’re working to make. They can never see or enjoy the fruits of their labour – nor can they own them. Considering the importance Locke places on labour and ownership, he may have had a couple of things to say about that.
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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.
The anti-diversity brigade is ruled by fear
To some men, the presence of a woman at work seems like an unexploded grenade, ticking away, just waiting to blow up their careers.
The Deputy US President, Mike Pence, famously refuses to eat alone with a woman who is not his wife for fear he may be “compromised”. His inspiration in this, the recently “departed” evangelist Billy Graham, even reportedly refused to be alone in a lift with one.
Since the tidal wave of #MeToo sexual harassment claims surged around the world’s workplaces over the past few months, there has been a backlash of complaints on mainstream and social media that men are now afraid that an act – that once seemed innocuous to them – would now return to destroy them.
Outside a function to raise support for Movember – a men’s health foundation – former INXS guitarist Kirk Pengilly vocalised the angst with this reply to a question about the sexual harassment allegations that fell movie producer Harvey Weinstein and gardening TV star Don Burke:
“I really loved the ’60s and ’70s when life was so simple and you could slap a woman on the butt and it was taken as a compliment, not as sexual harassment.”
Diversity initiatives have also attracted their share of pushback. Google recently fired an engineer who wrote a 10 page memo against the company’s affirmative action programs. The engineer has now filed a lawsuit alleging discrimination against white people, men and political conservatives.
The engineer claimed women are underrepresented in the tech industry “largely because of their innate biological differences from men – their ‘stronger interest in people rather than things’, their propensity for ‘neuroticism’, their higher levels of anxiety”.
How nervous are they?
Does this backlash indicate that men are becoming afraid of women, as some media reports claim? That women now have too much power and an inclination to take men’s jobs? Just how nervous are they?
One of Australia’s foremost experts on men and masculinity, Dr Michael Flood, says speculation about men’s growing trepidation around women has been overstated.
“For many men, the primary reaction has been one of disinterest. They don’t see the these as issues of direct concern to them”, says Flood, a sociologist and associate professor at the Queensland University of Technology School of Justice.
Flood’s research shows that men are widely supportive of gender equality initiatives, however, they are also less likely than women to recognise discrimination when it occurs.
Fewer than one third of women in Australia think men and women are treated equally at work, compared with 50 percent of men who said the same, according to the Australian Women’s Working Futures 2017 report from the University of Sydney.
Belief of false accusations
Despite the overwhelming support for the idea of equality, some men find the new workplace gender politics threatening.
“I think [#MeToo] is going to push some men’s buttons. I think there is a widespread perception, a false perception, that women make up allegations of sexual harassment and that draws on a very old stereotype of the lying, vindictive woman – a very long standing sexist stereotype”, Flood says.
“And so that belief that false accusations of domestic violence and sexual assault are common, then plays itself out in fears about men being falsely accused of sexual harassment.”
False reporting of rape and sexual assault are between two percent and six percent in the UK, Europe, and the US.
US sociologist and masculinity researcher Dr Michael Kimmel, says Mike Pence’s solution makes him the “American equivalent of the Taliban”.
The logic is that women are so tempting and that men are so incapable of control, they cannot be trusted to interact in the workplace, says Kimmel, Distinguished Professor of Sociology at the Stony Brook University in New York and author of Angry White Men: American Masculinity at the End of an Era.
“This is a way of punishing women for men’s predatory behaviour. It is just evangelical Talibanism.”
Punishing women for men’s behaviour
Kimmel says he has heard men in companies claim that the situation is so perilous they will not hire a woman, go to a meeting with a woman, have a meal or a drink with a woman in case they are accused of sexual harassment.
“My analogy to this is the crazy straight guys who are afraid that every gay guy is going to hit on them. It is not going to happen. You are just not that interesting”, he says.
Kimmel says he also hears from men that they do not know what to do, are worried about saying the wrong thing or feel like they are “walking on eggshells” in their interactions with women.
“I regard this as relatively good news because what most men are saying is, ‘I don’t want to be a jerk. I don’t know what the right thing to do is anymore, but I don’t want to do the wrong one’.”
“That is a good start.”
Flood agrees, saying he welcomes the fact that many men are asking themselves some difficult questions about how they treat women.
“I think that is probably, in some, leading to more respectful, more equitable and more enjoyable relations among women and men in workplaces.”
Kimmel takes some comfort from research that shows younger men are savvier about what is acceptable behaviour around women in the workplace.
“The rules have changed. The old Don Draper [1950s Mad Men] rules no longer apply and many of us, who are aged 60 and above, were raised on those Don Draper rules and so we kind of don’t know what to do now.
“Age is a missing variable in the conversation and it needs to be discussed.”
However, this is not to say that older men cannot adapt. “I think we don’t give men enough credit sometimes. Most of us have adapted [to the new rules] just fine. Why? Because we actually like it. It is better.”
Flood cautions that it is important not to dismiss the trepidation of those who do feel threatened.
“We need to listen to men’s fear and work with it, but that doesn’t mean we give it a space or legitimacy that it doesn’t deserve”, he says.
If those fears are not dealt with, those men tend to “dig themselves in to resistance and defensiveness”.
Kimmel says we are now in a transitional period where neither men or women are comfortable in the workplace.
“The reason I am so sanguine about this is because I know young people. Young people are coming into the workplace and they already know the rules have changed.
“The Millennials are far more equal when they come in, they are far more capable of working in teams, they have far more cross-sex friendships. Yes, it is going to be discomforting – we all understand that – but I also think it is going to be fine.”
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 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.
United Airlines shows it’s time to reframe the conversation about ethics
Have you ever felt like the kind of person who people always go to for advice but never invite out for drinks?
It’s not a lot of fun being the friend they turn to in bad times and the one they forget to call when the going’s good.
Imagine how ethicists feel.
Most people think of ethics when something goes awry, when people don’t know what to do or when someone’s done the wrong thing. Just like the advice-giving friend, ethicists are useful when stuff’s gone wrong but they’re also worth chatting to when things are going well.
It’s true, ethics – and ethicists – helps in those kinds of situations. But the association between ethics and negative circumstances is restrictive. It prevents people from looking for ethical issues before circumstances force them to do so.
This isn’t a campaign for an ‘International Hug an Ethicist Day’ (although it’d be nice). We just want to show how ethics can create meaning and value in the world.
Take the case of United Airlines. Dr David Dao was dragged off an overbooked flight after refusing to give up his seat. United offered hotel rooms and cash to encourage people to volunteer their spot but nobody took the bait. Dao and three other passengers were then randomly chosen and reassigned to another flight.
You don’t need to wait for something to go wrong to check whether you’ve got your ethical house in order.
Dao claimed he had patients to see the next day and refused to move. Video footage emerged of officers dragging him off the plane with a bloodied face. As it turns out, the reason United had to remove passengers was to create space for their own employees.
The reaction was huge. #BoycottUnitedAirlines trended on Twitter and United lost $1.4 billion dollars in share value.
After initially standing firm, United CEO Oscar Munoz apologised on behalf of the airline. The two parties reached a legal settlement. Policies were changed to ensure this wouldn’t happen again. Not long afterward, Munoz sent an email to customers, explaining how it had happened:
It happened because our corporate policies were placed ahead of our shared values. Our procedures got in the way of our employees doing what they know is right.
This isn’t uncommon. Indeed, it’s a danger many organisations and people risk falling into. That United have reached this conclusion and acknowledged it publicly is a step in the right direction.
What is unfortunate is that it took such an unpleasant and commercially damaging incident – not to mention Dao’s suffering – for them to get here. You don’t need to wait for something to go wrong to check whether you’ve got your ethical house in order.
Those who think proactively about ethics are more able to anticipate and overcome challenges. They create a culture where employees regularly flex their ‘ethical muscles’ and are given the freedom to do so.
Engaging in ethics is a proactive process. It’s about identifying what you stand for, what you want to achieve and the right way to do it. At least, it can be.
Instead, it’s often invoked reactively, trying to identify what went wrong and how it can be avoided in the future.
Prevention is better than a cure. Those who think proactively about ethics are better able to anticipate and overcome challenges. They create a culture where employees regularly flex their ‘ethical muscles’ and are given the freedom to do so. Instead of deferring to abstract policies, they’re able to use their judgement to do what’s right according to what the organisation stands for.
This is important considering United’s response. Munoz emphasises the steps United have taken to change their policies to prevent anyone from being thrown off a flight again. But he said the heavy role of company rules was the problem to begin with, saying “our corporate policies were placed ahead of our shared values”.
It’s tempting to think the solution to ethical failure is more rules and stricter codes of conduct. While it’s true sometimes bad policy will be responsible for unethical behaviour, oftentimes more rules can make the problem worse.
Rulebooks are external tools for regulating behaviour. Even though people might be doing the right thing, their capacity to reflect on how they should live can diminish because their ‘ethical muscles’ aren’t strong. Rules and policies can relieve you from thinking about what to do because you can just follow orders and do it.
Our executive director Simon Longstaff explains this with an analogy. If you put someone in a full plaster cast, they’ll stand up straight. However, inside the cast their body will become weaker and weaker until they can’t stand up on their own. Eventually, when the cast comes off or is damaged, they’ll crumple in a heap.
All of this reveals the need to reframe the way we think about ethics. Instead of being about stopping what’s bad, think of it as creating something good.
Relying only on policies to govern behaviour has a similar unintentional weakening effect. Longstaff explains such a system increases risk to itself by reducing the capacity of any single actor to make good decisions when the things are working exactly as they should.
All of this reveals the need to reframe the way we think about ethics. Instead of being about stopping what’s bad, think of it as creating something good.
Encouragingly, there is some evidence United are moving in this direction. As well as acknowledging the need to prevent similar failures in future, Munoz takes the time to imagine a more proactive, ethical role for United:
I believe we must go further in redefining what United’s corporate citizenship looks like in our society. If our chief good as a company is only getting you to and from your destination, that would show a lack of moral imagination on our part. You can and ought to expect more from us, and we intend to live up to those higher expectations in the way we embody social responsibility and civic leadership everywhere we operate.
Of course, as with any commitment to ethical change, words must be followed with action. Yet these sentiments signify a possible shift in the way United thinks about ethics itself. Not only as a way of avoiding bad decisions but as a way of imagining and creating a better organisation and contributing to a better world.
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BY Matthew Beard
Matt is a moral philosopher with a background in applied and military ethics. In 2016, Matt won the Australasian Association of Philosophy prize for media engagement. Formerly a fellow at The Ethics Centre, Matt is currently host on ABC’s Short & Curly podcast and the Vincent Fairfax Fellowship Program Director.