Date: 04/06/19 | Duration: 00:20:47

Corporate scandal often leads to talk of how we can shift business cultures to be more ethical. But is only culture to blame? And, what can organisations do on a day to day level to enable employees to act in an ethical way?

In this episode, we explore the how job design and management practices can drive ethical- or unethical- behaviour. We hear from Mel Green, Research Adviser at the CIPD, who shares the latest evidence from a review conducted by CIPD, the Center for Evidence-Based Management, and Australian National University on the risk factors for unethical behaviour. Kate Griffiths-Lambeth shares her experience of creating a ‘speaking out culture’ at Charles Stanley and Philippa Foster-Back, CBE, (Institute of Business Ethics) highlights the role that reward plays in business ethics.

Philippa Lamb: We all like to think we behave ethically at work but what does that really mean and does getting your job done sometimes mean you have to push ethical considerations aside. With trust in organisations and employers being eroded by one scandal after another a lot of good work is being done to build better values into business behaviour and we’ve been tracking that work here on the podcast series for the past four years.

In 2015 we looked at how to weave ethics into organisational culture. Two years later we dug into the work the CIPD was doing on ethical behaviour in leaders. Now there's new work from the CIPD on the role that line managers and job design both play in making business more ethical. The findings are worrying. About a third of HRs say they’ve seen unethical behaviour in managers and around the same number admit they can feel torn between how they'd like to behave and what their employer wants from them. So when it comes to ethics HR is right on the front line.

Mel Green: Yeah they are and I think we hear this a lot that there's potentially sometimes a disconnect between what the organisation wants and employees want. It’s a difficult tension between the people and profit and I think HR are in the middle of that as the ethical conscience but also the link between management and employees too, so we know it can be a tricky balance to make.

PL: And that means they witness unethical behaviour.

Kate Griffiths-Lambeth: I think if you work in HR it would be untrue if you said you’d never seen any because there are times when individuals feel either under pressure, or that they can get away with something, or that that's what's expected of them.

PL: The first voice there was Mel Green, Research Adviser at the CIPD and author of the new report Rotten Apples, Bad Barrels and Sticky Situations. Next up was Kate Griffiths-Lambeth, a lawyer by training, her career has taken her from city trader to HR at a fintech startup to her current role as HRD at investment management firm Charles Stanley.

KGL: I've seen some instances of inappropriate behaviour. To give you a personal example when I was on a trading floor I was specifically told to make sure I wore a short skirt and preferably a low blouse because X was coming in on Friday and he was an important client and I was the only girl.

PL: And did you?

KGL: No I didn’t. I had a serious chat with whether they felt that that was appropriate but it was real Wolf of Wall Street time.

PL: Any instances of things which people might not perceive as being directly unethical like perhaps a little bit of misrepresentation to a client, perhaps a little bit of not telling them the bits in the report that aren’t bolstering your case but the fudging things around the edges and that's about culture isn’t it, that what’s deemed to be acceptable?

KGL: It is about culture and it needs to become ‘that's not the way we do things around here,’ and just because the competition do doesn’t mean we should because at the end of the day the good guys will win and the others will be exposed.

PL: The bad apples report acknowledges that senior managers are more aware than ever of the need to create an ethical culture. The problem can be in filtering that thinking and behaviour down through the rest of the organisation. Philippa Foster Back is director of the Institute of Business Ethics.

Philippa Foster Back: I think it is, it’s filtering down and it’s filtering up because of course the new people entering the workforce have got very different views from those of us who have been around for a longer time but I think it is filtering through but unfortunately a lot of people have said that the middle area, the middle management, the permafrost, is stopping it filtering through. I don't think that is necessarily the case, I think they’re not being helped to filter it through. So some of the work from the recent CIPD report does touch on this because it’s how you set up the culture, the organisation, the target-setting etc. for that middle layer in order to be able to do their jobs in the right way, that is what makes the difference and that's what brings you back to culture.

PL: The CIPD report looks specifically at the flashpoints in our working lives that can lead to unethical decisions and behaviours.

MG: So we talk a lot about how culture and reform can impact ethics but what we really wanted to look at was at a more granular level how can organisations actually shift things in their business on a more day to day level?

PL: And what’s the scale of that problem now, do you have a sense of it across the board?

MG: I think we know that it is an issue for business despite continued focus on it. So I think we know that trust is eroded in business, we know that, for example, people seem to give less to charities now, after the scandal in the charity sector there's been some research on that. But equally it’s not the case that there's rotten apples everywhere, it’s more about shifting businesses to be able to become more ethical and supporting their employees to do so I’d say rather than a large-scale disaster.

PL: So looking at your new report you talk about rotten apples, bad barrels and sticky situations, do you want to just give us a bit of explanation on those?

MG: Yes so we looked at a huge amount of research for this report because we wanted to give a really evidence-based look at the practices that organisations can engage with to enable their employees to be more ethical. And we identified three levels of that. So the rotten apples talked about the individual level risk factors, let’s say, for unethical behaviour, so that's anything from personality to mood, all of those things play a role. Then the sticky situations are very much the day to day tasks and situations and decisions that employees have to make. Sometimes they can be sticky, something it can be difficult to act ethically because of the way jobs are designed, the way reward is designed for example. And lastly we can't forget the bad barrels, so the climate and the leadership in an organisation of course have a huge impact on how people behave and social norms are really powerful, we know that, so what the norm is can often guide behaviour.

PL: It’s clear that ethical codes and policies alone just don’t bridge those chasms between values and actions. Ethical issues arise even in systems where good checks and balances are in place.

MG: Codes of ethics and codes of conduct are a really good signpost and I think we know that they’re effective but they’re effective when they’re actually used – they can't be an empty shell policy where there's a code of conduct but let’s say a high performer does something slightly unethical and they get away with it. So it’s really about fairly applying those policies and embedding them into everything that the organisation does for them to really have teeth.

PL: And training isn’t the whole answer either. Here’s Kate Griffiths-Lambeth again.

KGL: When the Weinstein case was coming out I pointed out that in California it’s compulsory to have sexual harassment and discrimination training. It didn’t seem to make a blind bit of difference to be quite honest. It isn’t the training that makes the difference, it’s the culture. It’s having an environment where people feel trusted; feel that it’s safe to speak out, where from the top downwards it is exemplified by the leadership and therefore people, that's what they will emulate, it’s what they will copy. There are things that you can do to help, for example you can draft aspects into people’s job description so it’s spelt out in black and white.

PL: And there's a real danger too in writing the ethical policy and thinking, job done.

PFB: You tick all the boxes and you think once you've done it, oh good that's done and put it away in the bottom drawer. That’s a very dangerous way to react because if you think about it every time you hire a new person into the organisation their journey with the organisation starts, they need to know how they should be behaving in this organisation not how perhaps they were doing it before and bringing it, so they need help. They need guidance. It needs induction. So more effort perhaps needs to be made continuously, a sort of drip feed for people just to not lose sight that this is the right way to behave, or behave sounds you’re on the naughty step, but the right way to undertake business in order to demonstrate to your customers that you are a trustworthy business to deal with.

PL: So in terms of line managers and promoting ethical behaviour in just day to day tasks, the day to day jobs that we all do when we go to work, where are the flashpoints where unethical behaviour tends to creep in, in your experience?

PFB: I would suggest that most people don’t wish to do any unethical behaviour, they get drawn into it and sometimes just by cutting a corner and not realising that they have, and once you cut a corner it’s very difficult to make it a right angle again. So I think that's one of the aspects. I think it’s where they context of their role comes. If they are set unattainable targets which they know are unattainable, probably their boss knows is unattainable but hasn’t got the courage to push back from what they’ve been told to do, you get this well of feeling and almost immediate stress, being given something you know you can't achieve yet you know you have to if you want to keep your job, that is extremely stressful and I'm sure a lot of mental health issues are being caused by this. People just need to be more realistic and more honest actually.

PL: And of course reward is often linked to those short-term targets isn’t it, so it’s a really tangible problem.

PFB: It is particularly if you’re paid on a commission basis.

PL: Yeah, which so many people are, particularly in financial services, but even at a lower level, not just Wall Street traders but ordinary people.

PFB: Absolutely the pressure to be salesperson of the month.

PL: Yeah because that's how success is defined in the organisation.

PFB: Yes and that is where the organisation needs to reflect is this the best way to reflect success? Should this be the only way?

PL: At Charles Stanley they’re already trying to measure performance and behaviours differently.

KGL: Well we split it into three, so you've got individuals who need to improve; we’ve got individuals who are perfectly good and acceptable and then we have the exceptional role models. We’ve made it very clear in training that not everybody is a role model and you have to be able to evidence what it is that puts you into that bracket and there is a premium as far as discretionary bonuses are concerned for individuals who are role models and achieve their objectives. So there's a financial driver in there; there's a slight kudos driver in there because people know that you've got the badge and others haven’t; but it also has meant that we can show to people what good ethical conduct looks like. And people are talking about it.

PL: Are they, I was going to say. So what are you seeing as a consequence of introducing this?

KGL: Sometimes people are using it as a way of calling out saying well nobody will think you’re role model if you behave like that.

PL: Interesting.

KGL: Other individuals actually have brought people to attention saying, look what this person’s done, they’ve gone the extra mile for a client who’s blind and because of that they are a role model to us, we want them on your radar.’

PL: So ethics and behaviours are becoming more part of the day to day conversation?

KGL: Yes.

PL: And then there's job design, here’s Mel Green.

MG: The way that work is organised is quite important so as I've mentioned earlier there are few people who are inherently rotten apples but there are things in the way that we work that can make it difficult to behave ethically. So one interesting finding was that when jobs are quite monotonous more unethical behaviour can occur. And that might seem slightly counterintuitive because you might think you have more time to think about your decisions but actually what the research suggests is that when you’re doing quite a monotonous role sometimes you go on autopilot. So you’re not engaging with the potential ethical outcomes of your behaviour. So that's something that organisations can think about, and managers can too, when you’re thinking about things like work pressure, how much variety people have, it’s all part of having a good job really but there's particularly ethical lenses through which we can think about those things.

PL: The CIPD research suggests that monotony leads to autopilot and high pressure leads to short cuts and they both end up as unethical flashpoints.

PFB: I think that is a concern. I remember years ago when I was a student working in a factory, doing a very monotonous job and I know my brain switched off at one point and then of course everything went wrong, which was a rude awakening.

PL: No future in that line of work.

PFB: No future in that line of work, but it was one of the few times in my life to actually stand and do a really monotonous job and you realise that there are an awful lot of pitfalls that can happen around it. What I didn’t have, because it was only going to be for two or three weeks, was I hadn’t developed a pride in the job. So I think even if you’re doing a monotonous job as some of us would see it but you actually have pride in your work and what you turn out that changes the nature of the job. And I think where employers can help people in those sorts of jobs is actually develop some semblance of how they can have pride in it by what they achieve and so they can see where they are with the cog in the wheel.

PL: So it’s back to culture.

PFB: It’s back to culture.

PL: Now earlier we mentioned that ethical flashpoint that can happen when people are too distant from the consequences of their actions.

MG: So there's some really interesting findings around if an employee is far removed from the end-user, or they won't see the outcome of their actions, thinking about the longer-term impact of their decision isn’t going to be forefront of their mind. So that gives a really nice practical way for organisations to think about bringing ethics to the forefront.

PL: Or if they feel they might get away with it.

MG: Yes exactly, accountability is important.

PL: Philippa Foster Back agrees. So job design needs to take that into account?

PFB: It does need to take that into account and it needs to take into account how the organisation wants decisions to be made. So one of the things we have seen, and we promote ourselves, is for organisations to have decision-making models which are used in the boardroom down to the front desk. So that people understand that the first question is how would this decision fit with our values, is actually a very important one to consider and then various other questions. And then the final question is, is it legal? Because we have seen models where it starts with is it legal? And people think oh well of course it is, I'm sure it is, no perfectly all right! And they never get to the second question.

PL: And all that brings us to whistle blowers. Now it goes without saying that ethical organisations need clear channels for their people to report issues or concerns but that is not enough.

PFB: Whistleblowing is a very negative term and if you go back to the original antecedents if you like, in the days of mining when people were down the pits if something went wrong, what did they do? They blew the whistle to bring people to the mine head and usually it was an accident sadly. The referee blows the whistle after the event, doesn’t blow it in anticipation of an event. So we’re talking about something having happened. Now actually what organisations want is to know in advance of something that could happen, something that might be wrong, somebody’s seen something, something doesn’t look right, somebody’s behaviour, some process.

PL: And how do you make that safe for people to come forward with that sort of information?

PFB: Well you start off by talking about speaking up, feeling free to raise a concern. You then have a very well thought-through process to help people. Instead of having a lawyer drafting your policy you have a speak out policy and you write it from the point of view of somebody who’s going to want to use it.

PL: And first and foremost how you brand it, you don’t call it whistleblowing, you call it speaking up or speaking out or your views, or whatever it is, so you take the anxiety out of it?

PFB: That's right you take that term away. And even now, there used to be and it is changing when somebody did speak up they were called the whistle blower, now they tend to be called the reporter.

PL: Right.

PFB: So again trying to take away that frightening language of being a snitch.

PL: So you're doing a constructive thing rather than criticising the organisation.

PFB: Exactly yeah it’s a positive.

PL: At Charles Stanley they’ve already taken this on board. Here’s Kate Griffiths-Lambeth.

KGL: So we refer to it as a speaking out culture.

PL: You do?

KGL: Actually I've been involved in a culture sprint with the FCA, which is our regulator, and they gave us six different scenarios and one of the ones that we had was linked to people being comfortable speaking out but also the fact that frequently in an environment where you've got people of different levels, a junior person may not want to speak out in front of somebody senior in case it sheds them in a bad light. So we’ve actually got little tents that we put on meeting tables now to remind the senior people to let the junior people speak up first rather than speaking over them and putting all their ideas on the table and people then feeling frightened to raise something in case it’s seen as conflict or contradicting.

PL: Interesting and is that working well?

KGL: We are still in the testing the concept phase because I promised the FCA so we’ve got trial runs in which we do it at meetings and trial meetings in which we don’t. But actually the outcome is very positive so far and people are reporting a change in behaviour just by having the subliminal reminder there. So there's lots of things that you can do to help communicate and get messages across.

PL: And it sounds like you’re on a journey, you’re doing a lot.

KGL: We’re trying. I'm sure there's an awful lot more we can do and I'm always open to ideas from other people. I think the CIPD’s got a pretty good network that does tap into each other and talk. So suggestions please bring them my way and if I can give ideas to others I'm more than happy to do so.

PL: Yeah because HR is right on the front line isn’t it?

KGL: Yes it is. I think there is not a more exciting time to be in HR because we are absolutely there and helping drive the agenda and helping influence thinking and making the workplace the kind of workplace people want to be in and where they can thrive and hence their organisations thrive.

PL: And here’s the last word from Mel Green.

MG: There's not a silver bullet to eradicate unethical behaviour but there are tools and things that businesses can do in their day to day operations that can actually make a shift and that's really important. So if you want to hear more about the research and our findings you can go to the CIPD website where you can find the report.

PL: As Mel says the report is on the website and to share your ideas about creating and sustaining ethical behaviour at work with Kate and indeed everyone else, join the Twitter conversation using the hashtag CIPD podcasts.

Next month it’s workforce planning, why it’s vital and why it’s not as difficult as you might be thinking. Thanks for listening.