The Australian Financial Services Sector, like the finance sectors of the United States, United Kingdom and Europe, continues to be the focus of adverse media with ongoing revelations of unethical behaviour. This has included rate fixing, insider trading, insider fraud, insider conflicts of interests, poor governance, abuse of customer trust and failure to protect customers’ interests. Clearly, self-interest has flourished at the expense of client interest and the greater notion of promoting the common good and societal well being.
Boards and leadership teams with an interest in redeeming their reputations and rebuilding public trust need to radically rethink their usual approaches to reputation and brand management.
The choice is between either a sustainable or an unsustainable way forward. The unsustainable way is the traditional one of blaming a few bad apples and assuming that once these are ejected things can return to normal.
But what if it is the “normal” that is the systemic source of unethical behaviour and not a few bad apples? What if it is the barrel that is rotten, and the barrel is contaminating the apples?
There is little doubt that there is something peculiar either in banking cultures or the wider finance context that gives rise to the sort of widespread systemic unethical behaviour rarely seen in any other industry.
Field research has amply demonstrated that the key to enabling people to be as ethical as possible lies in designing an organisational context that makes such behaviour easy, automatic, and habitual. For change to happen, in the finance sector, it is the context then that must be fixed rather than individuals.
This means drawing on the new science of behaviour ethics rather than relying on moral philosophy to build a new type of organisational culture that recognises the contextual pressures, mindsets and temptations that corrupt individuals. This science calls on leaders to build into their organisational systems the necessary checks and balances to offset these known risks.
The science of behaviour ethics demonstrates how psychological factors, organizational and societal pressures, and various situational factors make it difficult for even well-intentioned people to attain their ethical aspirations. It helps to explain why people do unethical things. Why, for example, leaders from every sector continue to be exposed for their practice of espousing public virtue while engaging in a private vice and why people, in general, find it difficult to be as ethical as they aspire.
This science builds a strong business case for attending to the underbelly of organisational culture, which shapes behaviour and overrides employees’ moral codes. Even more alarming, it demonstrates how any of us can be blindsided to our ethical slippages and how we can collude with others to keep our organisations blindsided to ongoing risks.
So where do leaders who want to create the ideal context start? They begin with an accurate map of where the ethical risks and gaps already exist. This is the output of an ethical audit that focuses on the informal culture, the shadow side where people go along to get along and do what’s necessary to survive or thrive in the context where they find themselves.
Armed with an in-depth knowledge of ’the shadow side’ culture builders can then devise relevant codes of conduct and codes of ethics that speak to existing contexts and behaviours. Such informed codes can then be experienced as relevant and helpful in directing employees in their workplace decision making. This authenticity is in sharp contrast to many of today’s codes that have been formulated on some idealistic and ill-informed opinions about what is ’normal behaviour.’ They typically gloss over the reality of the contextual pressures that employees face daily.
An ethical audit identifies leading indicators of risk behaviour such as the “unspoken messages” transmitted by reward and recognition systems; leaders’ behaviours and informal management communications. It is these that signal what’s really valued and the behaviour you can get away with so long as the numbers are achieved.
Armed with the right information, a healthy workplace culture can be designed to enable quick detection of inappropriate behaviour and enable appropriate action to be taken before a full-blown crisis develops.
Simply changing personnel without changing the systems that allowed unethical behaviour to flourish is unsustainable. Leaders can learn from the past, harness the knowledge gained from the sciences and consciously build organisational systems and workplace cultures that support ethical behaviour. The finance industry can lift its professional standards to match other leading industries or continue to turn a blind eye to its lack of professionalism. Its simply a matter of choice.

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