It seems that every time you open a newspaper at the moment, there’s a new business scandal.
The fall-out from Barclays Libor-rigging fine continues to be an ongoing story.
The scandal has already claimed the scalps of the bank’s chairman and chief executive – and who knows how many more may follow? Barclay’s leadership is clearly in crisis mode which is, in turn, having a severe impact on both staff morale and the public’s faith in the bank as an organisation as well as the financial sector as a whole.
But unfortunately, this is a pattern that seems to be repeated within a number of companies. Several other banks are under investigation for their part in rate-rigging, but this kind of practice isn’t just a problem in the financial sector.
Look at News International, still in the limelight over management failures a year on from former chief executive Rebecca Brooks’ resignation. Or GlaxoSmithKline, which was recently fined $3 billion for admitting to bribing doctors.
To date, much of the media spotlight has focused on either ‘a few bad apples’ or the hunt for high-profile scapegoats. But an obsession with finger-pointing and finding a simple answer can result in a failure to consider the real issues, which are much more deep-seated and complex than simply clearing out a few figureheads.
While change at the top is required, the recent revelations are a demonstration of what happens when those managing businesses, both at senior and mid-level, fail to adhere to professional standards, follow a code of conduct or treat management as a true profession.
Ethical standards
Serious questions also need to be asked about the effectiveness of management structures and whether senior managers are investing in developing and guiding the next tier down.
If nothing else, the Barclays and News International scandals have brought to light a remarkable culture in which senior leaders appear to have little or no knowledge of the actions being taken by their staff and where line management and the ‘chain of command’ is weak.
In environments where both pressure and potential rewards are high, it’s inevitable that this lack of professional approach will create confusion about what is acceptable behavior and where the boundaries lie. And this is what we mean at the CMI when we talk about bad management damaging British business and UK plc.
Employees have no sense of what is right and wrong because managers and leaders don’t work to strong ethical standards themselves and, therefore, don’t impart them to their teams. But with the public simply not trusting big business any more, now is the time to start putting the ethics back into management.
Trying to raise professional standards is at the heart of what we do. Our members must work to a code of conduct and ethics that is reviewed annually and they also have to sign up to practice with integrity.
We know from feedback and research that doing so has a positive impact on business performance and reputation. Many organisations have their own code of conduct but, as recent events have shown, they’re ineffective if not enforced from the top down.
Qualifications are also important as a means of improving management standards, either by boosting individual skill levels or showing an entire organisation’s commitment to professional, ethical management.
Only one in five UK managers have professional qualifications today. But the problem is that, if such individuals are doing a role that they’ve not been trained for, especially if leadership at the top is lacking, they will inevitably make mistakes.
Individual responsibility
Line managers, in particular, have a vital role to play in ensuring that their reports have the training, mentoring and support that they require.
But diversity considerations can also be brought to bear to help change damaging management approaches. If too many people within a given organisation are too similar, the question is who will challenge the culture when it starts to go wrong?
How is it possible to understand the full range of customer needs? What fresh eyes will spot the errors that others have missed?
Great managers and leaders understand this. Therefore, they don’t just build teams in their own image but put together a group of people with complementary skillsets that are united around a shared set of values.
UK business in general, and the City in particular, has long been considered to have a ‘nice guys finish last’ culture. But it’s not necessarily true because the nice guys do the things that are right from an ethical point of view and that make the best business sense.
These are the leaders that we should look to as our ‘business beacons’ – those who have the most engaged employees, the most diverse teams, the most productive organisations and, ultimately, the highest performing bottom lines.
It isn’t about social responsibility. It’s about everyone taking individual responsibility for setting a managerial example and reaping the many business benefits that this approach brings.
UK business leadership has experienced some dark days in recent months. So it’s about time that we started putting some ethics back into business and earning the trust of the UK public once more.
Ann Francke is chief executive of the Chartered Management Institute.
2 Responses
Hear hear
I could not agree more with your analysis Ann. See a related blog post on what could unpolitely be called rigging:
http://www.hrzone.co.uk/blogs/peter-cook/musings-peter-cook-rock039n039roll-hr-blogger/moral-government-procurement-maze
Peter
Ethical Management
Thanks for an interesting article. Ethical managers seem harder to come by than they once were, and even long ago when ethics were taught at home and at school managers could be pretty dishonest in their dealings and relationships. What seems to have happened is that minor breaches are left unmentioned and winked at and major breaches are unpunished for fear of losing the employee concerned.
The foundation of ethical behaviour starts at the very top: it applies to every activity: small lies grow into bigger ones; small thefts likewise . Exaggeration of travel mileage claims is a highly infectious disease. There is the story of the consultant who had a fatal accident and found himself at the Pearly Gates. He asked St Peter why he was there and the saint replied ‘ Bound to happen with the mileage you do.’ The consultant replied’ I don’t do that much really’ but Peter answered ‘ I was working from your invoices.’
I have been lucky and have worked with a managing director who were absolutely ‘strait’. His people knew that and took great care not to do wrong and get a stern reproof. But it was not restricted to petty things. His reputation among his customers for straight dealing gave him an advantage in the times when his customers were in trouble.
It seems that in the financial world there have been examples oif ‘ cooking the books but only slightly ‘. It may take some time for confidence to be re-established. I do not believe that can come entirely from having tighter procedures and more rigorous inspections. It will need a permanent change of attitude to re-establish trust .