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May 2, 2013

What is good enough? Business ethics in the cathedral

Imagine you are being pressured by a manager to allow a batch of goods to go into the market even if there are some quality concerns. With an emphasis on hitting revenue targets, and a lack of appetite to write off bad product, the pressure is on and your manager is making it clear they want the product to go to market. This is despite the chief executive’s clear statements to act with the highest integrity and standards. What would you do?

This was a scenario that was role-played at a joint Chartered Institute of Management Accountants (CIMA) and Chartered Institute of Personnel and Development (CIPD) event at St Paul’s Cathedral during April as part of an ongoing series looking at the City and the Common Good. The "Good people" seminar aimed to discuss the value of good people, professionalism and culture within business, as well as the very real challenges to ethical obligations that employees face.

Threats to integrity are very real and are played out daily in newspaper headlines. So how can an organisation stay true to their stated values? And indeed, can they?

CIPD chief executive Peter Cheese noted that "the HR profession should have a huge amount to say on [corporate culture] – understanding corporate behaviours, corporate training, leadership, reward and performance measures" and he acknowledged that "There is an absolute joined-up agenda with the finance profession to figure out some of these measures."

St Paul’s Institute has been exploring issues of values and culture in relation to the City for some years now. Physically based in the heart of the financial district it was never more prominent than during the Occupy protests. That public distrust, and the perceived slow change in corporate practices (note the scandals which still spill out of the square mile month on month), means business behaviour will increasingly be under the spotlight.

Ongoing attention on the LIBOR scandal means top UK banks remain under scrutiny so no wonder UK Business Secretary Vince Cable called last year for a police investigation into the bank interest-rate fixing. Those responsible cannot be allowed to simply walk away and in the press Cable urged shareholders to purge companies of out-of-control executives who create a dangerous culture.

This reflects the ambitious position of Barclays’ chief executive Anthony Jenkins – his staff having recently been told to sign up to an ethical code of conduct or quit. I guess the bank, in order to help the "clean up" really needs to clean out. As part of St Paul’s The City and The Common Good series, Jenkins will join Archbishop Welby on the Cathedral floor on June 12th to discuss Good Banks. I for one would be interested to know how many people he has changed, or indeed, changed.

As CIMA vice president Keith Luck said: "When you do exercises involving role play even if 70% take the decision that reflects integrity it is the decision of the 30% who don’t that you need to consider carefully – and act on."

The opening scenario was based on a situation in a top global brand, recognised for its strong values. But something went wrong in one division. The substandard goods went to market. Eventually the truth came out. Ultimate costs, which included the plant being impounded, a US Senate Committee hearing and fines in hundreds of millions, as well as rock bottom morale and reputation seem to me a little higher than destroying a faulty batch and abiding by quality processes. Just as price fixing costs more in the long term, when the short term bonuses have already been spent.

Do you know who may be undermining integrity in your team? And have you calculated the costs?

Tanya’s previous blog postPsychopaths and Criminals

Related linkSt Paul’s Institute

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