Keeping the heat on ethics and misconduct

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July 4th, 2014

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As memory of England’s performance in the world cup begins to fade, and the knock out stage heats up in Brazil, it’s the whistleblowing off the pitch and the corruption allegations surrounding the decision to award the 2022 event to Qatar that’s keeping the heat on FIFA.

From football to banking to care homes, it’s no surprise that ethical leadership and misconduct continue grab the headlines.

Yet the meaning of ‘ethics’ and ‘misconduct’ can seem hard to pin down and even harder for HR to get to grips with.

Earlier this year, in association with HR Grapevine, Roffey Park hosted a roundtable on ethics in leadership. To the question ‘why does it matter?’ the common view was that ‘great leaders make great companies’, and that leadership ethics have an impact on reputation, brand, talent attraction and retention, and ultimately share value. But according to the Institute of Business Ethics 2013 survey, only one in five of the general public trust business leaders to tell the truth and make ethical and moral decisions, and only one in four trust them to correct issues that need putting right.

In our Management Agenda survey 2013, the majority of respondents regarded their organisation as behaving ethically, although there was evidence that this was more about compliance to regulations than a commitment to ‘doing the right thing’.

Findings from The Management Agenda 2014

Findings from The Management Agenda 2014

In contrast this year, misconduct was reported as widespread. More concerning is that although 49% of managers said that they had observed misconduct in their organisation, nearly a third of them said they chose not to report it, and one in five board directors didn’t report misconduct either.

Digging deeper into why, half of managers said they didn’t believe any action would be taken, and one in four feared reprisals. In fact, rather than report it, managers are more likely to walk. We found that, of managers who reported having observed misconduct, 54% said they plan to leave the organisation, whereas among those who’d not observed misconduct, only 41% aim to leave.

So in addition to other commercial impacts, we now also know that misconduct carries a talent retention cost.

Misconduct is costly. So, for HR to get to grips with it:

  • First make the business case clear
  • Be and do ‘HR with an OD mindset’; not just policy solutions but culture change an dleadership development.
  • Don’t focus only on the individual without also understanding the ethical landscape
  • Be rigorous about both the hard stuff and the soft stuff –compliance and behavioural change.