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Ethical dilemmas, ethical cultures

Lydia Hirst

a big question mark

What ethical dilemmas do we face at work? Lydia Hirst from The8group asks what we might face in the workplace and how it affects organisations

In a call centre, how does the operative respond to customers – do they deal with a complaint or do they pass the buck so they can meet their target? What about a banker selling a financial product? Do they have the customer’s needs at heart or their sales target? Or a nurse treating an elderly patient, do they give them the time needed to make them feel comfortable or do they rush on to the next job?

Do people make decisions according to their moral compass or are they influenced by the situation and the expectations of those around them and does this compromise their integrity and lead to poor behaviours?

Examples of strong and weak cultures

Kelly’s Ketchup is a company manufacturing ketchup for all the big supermarkets. The CEO works closely with his subordinates and communicates his ethos of excellent quality for customers at all times. He visits the manufacturing plant and speaks to operatives, where he communicates the same message. Some weeks later there is a malfunction on the plant and the quality of the product is affected. Operatives, knowing that excellent products are a must, stop the production line, find the source of the problem and get it fixed. They inform senior managers of what has been done and are quickly able to resume production. Higher costs are associated with a shutdown of production. Senior managers report the problem to the CEO, who praises staff for their quick response and ability to fix the problem.

Murray’s Mustard is a company with a different structure and ethos. The CEO also talks about high quality required for customers with his management team. He sits in an office, with a secretary who acts to screen unwanted callers and staff. He does not speak to staff directly but relies on his team to communicate the message. Sometime later, tests of final product show that the vinegar used in production was out of date and has badly affected the end product. Operatives noted the problem and sent a report to the Quality department, whilst continuing the production line. They felt they had done their duty by reporting the problem. A few days later, complaints started to come in from the supermarkets, as their customers reported problems. The CEO was angry and criticised staff for not reacting fast enough. People were afraid they would lose their jobs and a cover up ensued.

Staff responses and ethical dilemmas

  • Which company would have the more loyal customers?
  • Higher sales? and greater profitability?
  • Which company would have staff that are more engaged and accountable?
  • Able to respond rapidly and effectively to unexpected problems?
  • How directly do leaders influence organisational culture?
  • Do controls and compliance, such as health & safety, lead to appropriate staff behaviours?

What makes up the culture of an organisation?

The culture in organisations has been described and modelled by numerous academics. Johnson & Scholes’ model of the cultural web in an organisation shows that ‘the way we do things’, or the ‘paradigm’, is influenced by six different factors, of which control systems is one.

Johnson and Scoles cultural web

The culture of British retail banking - New City Agenda and Cass Nov 2014 report says that; “Poor Culture has cost customers and banks dearly: Scandals stemming from poor culture in retail banking have cost banks and building societies at least £38.5 billion in fines and redress. Banks have received 20.8 million complaints since the financial crisis, and Which?'s annual aggregated analysis of the results of customer satisfaction surveys - which ask consumers from the general public about their providers - sees Britain's biggest four banks outranked by smaller, mutual banking providers.”

More specifically, at Barclays Bank…

In a recent BBC interview Antony Jenkins, CEO of Barclays, explained that his organisation’s culture had changed for the better in the last 2-3 years but would take some time more to recover from the ‘bad behaviours’ which led to scandals such as Libor fixing. In his view, progress had been sufficient for him to feel justified in taking a bonus this year, although he had foregone it in the last two years.

However, he went on to say that culture change is not enough to improve performance and repair reputational damage.  He claimed that strong controls are necessary too. However, in Johnson & Scholes model of the cultural web, it is clear that control systems are just one element influencing staff behaviours. Can or should control systems be treated separately from culture?

It’s not just financial services, what about Tesco?

Management Today’s (MT) article (Feb 2015) “What next for the toxic grocer?” highlights a number of causes for the supermarket chain’s current problems.  Recent scandals (2013) have included the presence of horsemeat in their spaghetti Bolognese and an unpleasant reputation for bullying suppliers.

Sir Terry Leahy, former CEO, won MT’s Most Admired Leader award a record eight times in the noughties. In the LeadersIn interview with Sir Terry, he comes across as a mild mannered leader with apparently high integrity. By contrast, a former board member says 'It was an autocratic company, where no one was able to challenge Leahy, and where bad news started to be ignored… And that is always a signal that a company is going to run into trouble.'

The result was that board members, managers and staff were afraid to challenge decisions and report what was going on. Although enormous amounts of data were collected from their customers through the Clubcard, the head of research at Shore Capital says they stopped listening and acting on the information.  It begs the question, what were the ethical dilemmas being faced by managers and staff? How comfortable were people with the behaviours?  Would they have wanted to make changes?  Was there a culture of fear?

Join us in debating how the business case for building cohesive ethical cultures improves decision making and results in sustainable business by registering here for the8group's complimentary Webinar on March 26 at 12:30 GMT.

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