The recent rise in reports of harassment, bullying and discrimination across the financial sector paints a stark picture. According to the Financial Conduct Authority’s (FCA) latest data, incidents surged by 67% in the last three years. Lauren Branston, CEO at the Institute of Business Ethics, writes
Poor workplace culture, as evidenced by high-profile corporate scandals from the Post Office to FTX, demonstrates the urgent need for finance leaders to embed ethics deeply into their organisations and to reflect on their own leadership approach.
Poor culture does not just allow bad behaviour, it erodes trust, stifles transparency and compromises long-term success.
These scandals should act as a call to action for finance leaders: organisational culture and ethical leadership cannot be overlooked. We must all do what it takes to understand how to lead in a way that inspires trust, integrity and resilience.
The role of ethical leadership
An organisation’s culture operates like an ecosystem; it can nurture positive behaviours or allow damaging conduct to take root and grow. The FCA has identified gaps in key policies like whistleblowing and disciplinary measures.
Leadership defines the conditions for that growth. Without clear guidance and oversight, workplaces risk becoming environments where misconduct persists. However, these policies and programmes are only effective if backed by strong leadership with a commitment to speaking up, listening, acting and learning.
Practical steps for leaders: moving beyond the rulebook
Leaders must proactively build environments where employees not only understand and follow the rules but choose to act ethically and are supported to grow leadership skills to do so. Here is how:
- Leadership consistency
Leaders have the power to set the tone. If they treat cultivating ethical behaviour and culture as a box-ticking exercise, employees will follow suit. Instead, leaders must integrate ethics into the fabric of the business – turning principles into practical behaviours and embedding ethics into decision-making. People are more likely to embody values they see consistently modelled by others. - Foster a speak-up culture and be prepared to take appropriate action
Fear of retaliation or a sense of futility in raising concerns can silence employees who would otherwise help identify and address issues early. The FCA’s findings show that follow-through remains inconsistent. Leaders must: - Guarantee confidentiality for those raising concerns;
- Share outcomes where appropriate, demonstrating that reports lead to meaningful action, and
- Review and remove barriers that discourage reporting, such as ambiguous processes or cultural stigma.
- Balance performance with integrity
Excessive pressure to meet targets often pushes even well-intentioned employees to take shortcuts. Leaders must balance ambitious goals with a commitment to fairness, rewarding outcomes achieved ethically rather than expediently. - Turn benchmarking data into action
With the FCA’s first annual survey offering benchmarks for non-financial misconduct, organisations have an opportunity to examine their own cultures. The IBE has also worked with leading businesses to benchmark: it is not difficult to get data that can inform effective action plans. Leaders should analyse trends in reporting, investigate patterns of behaviour, and measure employee confidence in speaking up.
By treating this data as actionable insights – not mere statistics – leaders can identify areas for improvement and track progress over time.
Aligning culture with direction
Culture is not just about policies; it is rooted in an organisation’s purpose and an understanding of impacts. A clear, well-articulated purpose and an understanding of your impacts provides direction and clarity. Values such as integrity, fairness and professionalism are more than words on a page – they should be embedded in day-to-day actions and decisions.
Leading the way forward
For finance leaders, the opportunity lies in building cultures where trust thrives and integrity guides decision-making. Leaders can drive meaningful, lasting change by:
- Leading by example and embedding ethics into decision-making;
- Creating environments where employees feel safe to speak up and take action where necessary to address concerns;
- Balancing pressure with fairness, and
- Aligning purpose and values with cultural priorities.
Ethical leadership is not just about avoiding failure; it is about creating workplaces where integrity, collaboration and innovation deliver sustainable success.
