(Yet another blog on) banks, fines, ethics, culture, regulation and why ‘something must be done’

By:

November 27th, 2014

one comment

ethicsThe only thing that is missing from the title of this post is ‘Think of the children, oh why won’t you think of the children!!’, accompanied by suitable handwringing and wistful looks skywards to some Higher Power. Part of me thinks ‘why bother writing this’, and another believes this is too important to allow myself to be washed away in a tide of resignation and/or fury, like C4’s Paul Mason. And in polishing this piece today, I see in the news that RBS have come out and apologised for lying to MPs as part of their defence against accusations they had forced some viable companies to close.

And I am also musing on a challenge that was levelled at myself and a colleague recently, which goes along the lines of: what, exactly, is our stance on ethical leadership and organisations? Do we have one, and if so why is it ‘ethics’ is a term that is not exactly front and centre on our website?

Inside Roffey Park, we talk about ethics, culture, values and responsibility a great deal, relative to our own practice and what we see when working with clients. In the past two years, ‘ethical leadership’ moved to a central place in our own thinking as an area of focus. And in our programmes you may well hear us challenging participants explicitly and implicitly around their decision making, and whether there is an ethical dimension.

Jump for a moment to a recent edition of the Observer, and there are several pieces – an Editorial, a comment piece by Will Hutton, and several others that ask a variation of hand wringing and indignant questions. Nested in one of these articles is this remarkably revealing quote from Robert Talbut, chief investment officer at Royal London Asset Management:

“The fundamental question which is yet unanswered is: how compatible are the requirements of regulators for financial stability, the needs of banks to achieve an acceptable return on capital, and the provision of finance which can help deliver growing economies? It appears to me that until we calibrate this equation that we will continue to struggle with achieving the right behaviours and having them acceptably rewarded.”

Nested in that one statement is a veritable warren of ethical rodents, and a series of unchallenged/undefined assumptions, that reveal themselves if you look at them through the lens of ‘ethics’:

  • ‘Fundamental question’ – is it? ‘Fundamental’ means basic, rudimentary, elemental. The above is not fundamental if, for example, you take a position that the key question facing organisations today is one of wider social and environmental sustainability. This is a ‘purpose’ question, which raises questions for us as a society, and for governments to say “is that a legitimate purpose?” Be that about low pay, work stress, financial extortion, environmental irresponsibility etc.
  • The compatibility that is framed above is equally based on an assumption that regulatory requirements, financial stability, the needs of banks’ for ‘acceptable’ (in whose eyes, according to what criteria?) return on capital and growing economies are a desirable/achievable outcomes, all of this is based on a set of ethical and moral criteria that Mr Talbut implicitly assumes the reader shares. The answer to the question ‘whose needs am I satisfying here?’ is rarely explicit.
  • ‘Calibrating the equation’ – again, assumes the equation contains all valid elements.
  • ‘Right behaviours’ – who decides what is right or wrong, according to what criteria? Is it more ‘right’ to cut government spending, or to invest in public services, in these times of austerity? Complex questions require more than over-simplified answers.
  • ‘Acceptable rewards’ – watch, for example, Dan Pink’s talk on motivation and reward, or read Dan Ariely’s work, and the tell me whether Talbut has articulated what he thinks constitutes as acceptable, based on what criteria. Add to this research that through the use of MRI scans has social rewards motivate more than monetary rewards. As my colleague Alex Swarbrick (with whom I have delivered a talk on ethics) pointed out to me, in contexts such as the NHS, autonomy and mastery, two of Pink’s three pillars of motivation, are being eliminated in order to rationalise care to permissible packages that commissioners will pay for. Acceptable to commissioners – and Government – may not tally with what is acceptable for patients or staff.

So what we have above is a perfect example of the simplicity and complexity of the current conversation, whether in the media or within institutions such as our own and others that develop leaders and managers. Yes it is complex and interlinking series of ethical positions – more often than not assumed rather than thought through and articulated – and behaviours, again rarely defined. And even more in the shadow is what constitutes an ‘ethical outcome’. To speak from my own ethics, I challenge the notion that an economy predicated on never ending growth is sustainable or ethical, when criteria of impact on the environment, social cohesion and subsequent generations are introduced to the ‘equation’.

And yet there is a simplicity here too. The simple bit is: let’s shift the conversation from an assumed set of shared assumptions, and get into what we – collectively and individually, inside and outside our organisations – are and are not responsible for.

And to be clear, this is a conversation that is happening at Roffey Park, and evolving. Visible much? Maybe not. And it is happening. What about in your organisation, board room, HR department?…