Business leaders are wrestling with ever more ethical issues, around culture, corporate governance, board effectiveness, social purpose, AI and more. But knowing what constitutes ethical behaviour is just one aspect of the challenge. Embedding ethical decision-making in a way that supports high performance is much trickier. How companies can achieve this was the subject of discussion at a recent meeting of senior HR leaders of leading global companies* organised by FT | IE Corporate Learning Alliance.
While much of our family and social lives are defined by effective ethical decision-making, we are often transported into a dehumanising culture of feudal-style power at work. A fear culture exists in every sector, including even in the UK’s National Health Service. Decision making should be balanced, using the ethical lenses of outcomes, principles and rules. Instead, workplace ethics are dominated by a ‘rule compliance’ mind-set, which stifles creativity and entrepreneurship, and supresses our ethic of care and concern for others.
Fortunately, there are signs of change. Corporate leaders instinctively grasp what underpins long-term sustainability. Most agree that effective ethical decisions imply strong business performance with integrity, while the least-desirable alternative involves strong, short-term performance without integrity. This is because we can train skill, but it is more difficult to train character.
Specifically, participants at the meeting suggested that:
- Mandatory ‘code of conduct’ training has been ineffective in changing behaviour.
- Real-time feedback is superior to the annual appraisal cycle.
- Financial incentives to encourage better performance are often counterproductive, especially if they exclude ethical behaviour.
- Role-modelling, and the positive story-telling that supports it, is now recognised as valuable best practice.
- Long-term investors are increasingly viewing the ‘purpose-led organisation’ (i.e. with social goals beyond economic value) as an attractive proposition.
- The big challenge of artificial intelligence is to code morality in the absence of consciousness, love, fear, guilt or shame.
Indeed, there are practical steps that HR and other business leaders can take to help create a high-integrity, high-performance culture at work:
- Provide space for honest views. Create psychological safety in every meeting, call or conversation so employees are unafraid to ‘speak truth to power.’ Leaders need to be open, vulnerable and encourage different points of view.
- Reaffirm values. Use every meeting to remind employees of the organisation’s purpose, values and moral framework for decisions until this becomes second nature. This will be vital in the rush to meet quarterly earnings targets when executives are more prone to unethical behaviour.
- Challenge assumptions. Let team members take turns at being a devil’s advocate to challenge accepted views and ensure that alternative arguments are heard. Perhaps appoint an ‘ethical challenger.’
- Get everyone’s feedback. Let team members take turns at giving feedback on what the team did well and where more work is needed.
- Humanise your organisation. At the most senior level meetings, discuss ways to humanise the workplace, reduce hierarchy and complexity, and develop an effective performance management ethos.
*On 10 October 2017, Michael Skapinker, Professor Roger Steare and members of FT | IE Business School Corporate Learning Alliance discussed ethical decision-making with 15 senior HR leaders representing Accenture, Aviva, Bank of England, BP, British Airways, CFA Institute, Diageo, Freshfields Bruckhaus Deringer , M&S, Norton Rose Fulbright, Post Office, Rolls Royce, White & Case and Woodford Investment Management.