Guest blogger Dr Jeff Overall, PhD graduate marketing ethics from Bradford University School of Management
Anthony Jenkins arrived at Barclays to a great fanfare in January, saying he would make the bank ‘ethical’ after its torrid year of financial scandals.
Harriet Dennys at the Telegraph reported: “… the bank has installed five enormous placards in its Canary Wharf HQ with its leader’s ethical commandments writ very large indeed.”
As if this will change anything.
My doctoral research over the last three years shows that we all have Machiavellian streaks and that no matter how principled we are, we can find ways to defend and rationalise unethical – or even illegal – behaviour, when our backs are against the wall.
This research is due to be published later this year, so for now this blog just looks at some of the headline findings that came out rather than the detailed research.
How do people react when faced with ethical decisions?
Here is how people explain away their unethical behaviour
– They deny there was any victim – no-one was harmed-
– They defend their behaviour because it was ‘necessary’ – there were no other options
– They promote their behaviour as being the best thing to have done and convince themselves of this
Does personality type make a difference to ethical behaviour?
This research showed that personality is irrelevant to the decision-making process – when one’s back is against the wall, individuals can be ‘unethical’.
What does ‘back against the wall’ look like – this will vary for people and it is perhaps the biggest part in how you manage ethical culture and behaviour.
For some it could be losing their bonus this year, for others losing their job, the threat of prison or loss of face.
So it is not that you can train people to be ‘ethical’ but that you need to create an environment in business which will support ethical behaviour.
And here, I have to disagree to some extent with my PhD supervisor, Jon Reast! In his blog which looked at the role of business schools in the banking crash, he wants to see ethics taught as a fundamental part of all business school courses. But I am not convinced this will change much.
Short term rewards encourage unethical behaviour
Businesses need to rethink their reward systems – short term incentives put pressure on employees to be competitive and behave unethically.
This is extremely difficult to achieve because the whole Western economic world is built around short term measures and influences – largely due to the short cyclical nature of governments. Four or five years is very little time for a government to achieve measurable differences and get re-elected on the back of obvious performance.
And governments are past masters at using tax incentives to manipulate human behaviour – from smoking and beer to philanthropy to support the poor.
So short term incentives filter through all our planning and thinking.
This short-termism is part of what drove the financial crash. Interestingly, a paper on the Bank of England’s website cites the causes of the world’s banking crises as: macroeconomic instability; deficient supervision; poor strategies; weak management; inadequate control systems; operational failures; fraud. But no reference to short term economic goals and the short-termism of the financial sector in general, all leading to short term incentives and behaviours.
I came across this video on business ethics. Speaker David Batstone is doling out advice about how to deal with colleagues if you suspect them of unethical behaviour at work. It’s all perfectly reasonable – go and talk to them if you feel uncomfortable and whistle blowing should be seen as the last resort. But it really is too simplistic to tackle the bigger problems of how you change an unethical culture in business.
David Batstone: Unethical behaviour at work?
Changing workplace ethics
We clearly are not going to change government policies and habits of centuries overnight. So those in business management are going to have to find new tools to change cultures.
What this research highlights is that you want your incentives to be as long term as possible; you need to have a supportive culture – particularly to address how you treat people if they are not hitting their targets; and be very clear what you want your incentives to achieve. Are you rewarding the right behaviours?
At Bradford University School of Management, we have Professor Peter Hopkinson who is working with the Ellen MacArthur Foundation to look at new business models of the future, particularly around rethinking the use of resources. This has led to the new Innovation, Enterprise and Circular Economy MBA. To what extent should future business models be looking at ethics and culture?
Are these sort of changes achievable or are they just ambitious thinking? How long will it take banks to turn around their unethical cultures – can it even be done?