Wednesday, 18 November 2009

Who needs to behave ethically?

Do competency frameworks adequately spell out the requirement for managers to behave ethically? Some people look at the state of the banking sector, business in general, and the UK economy, and conclude not. But, while moral failure is occasionally individual (e.g. Bernie Madoff, Robert Maxwell), it is usually more widespread and a feature of the way the organisation chooses to do business. The banking failure was systemic. The TV premium rate phone racket was systemic. The MP's expenses scandal was systemic. Pensions misselling was systemic and probably the most egregious: the induction process and message for this high-turnover workforce was blatant. Once the companies were found out, they blamed their salespeople and either fired them or sent them for pointless retraining. Then the companies reassured the public that the culprits had been discovered and dealt with. You can’t get more unethical than that.

Most of the individuals who get caught up in these scandals are not bad people, but the organisation's purpose, business model, market pressures, design, culture, processes, pay and recognition, targets, incentives and dynamics leads these people collectively to behave in a way that most outsiders consider unethical. You cannot get such a system to behave more ethically by adding items in competency frameworks or by training individuals. To bring about improvement you need to directly work on what is going on between and around individuals (the quality of the water in their 'fishtank' that is poisoning them). And there will usually need to be some external pressure on the organisation to make changes (e.g. the FSA putting the squeeze on bankers' bonuses).