Uncategorized Archives - Business Ethics Consultants

The Two Critical Levers of Effective Organisational Transformation

The theory goes that organisational change – culture change – can take up to 4 years, but few companies these days can wait that long to see results. Incremental change (tinkering around the edges) can be an indulgence you can invest in but real, radical, transformational change needs more urgency. 6-12 months is all you’ve got if you are lucky. So why does it fail? And what do we mean by cultural change?

Organisational culture is typically described as the reasons why people do what they do in organisations. It focuses on the relationships between people and the relationships between the organisational structure and systems (context) and how these shape how people behave.

What does culture look like?

Typically there are distinctive cultures in organisations – there is the formal culture, which is the organisational policies and systems; and then there is the informal culture, which emerges as  a consequence of how people respond to those policies and systems , for example, if they are adhering to them or if they find themselves, for various reasons, having to develop workarounds to enable them to get the results needed. What is often overlooked when trying to drive organisational transformation is how people are reacting to the changes being put upon them.

In an organisational transformation, the two levers of culture must be operated simultaneously. With the one hand, you are driving reforms through uplifts in the organisational systems and policies. With the other, you must also be pushing the lever on how people at the individual level must change – that’s in terms of both their mindsets and their behavioural patterns – how they make sense of what’s happening in the organisation and how they must personally change their behaviour.

Lever 1: Systems & Policies / Lever 2: Mindsets & Behaviours

To enable the first lever to be pulled effectively, a two-way feedback loop is essential. Employees need opportunities to make sense of the new policies and systems being placed upon them, but at the same time, leaders also need to understand how these policies are landing and what barriers are preventing people from understanding and embracing the changes required.

Without feedback, and without an action plan to remove employees’ perceived barriers to adopting change, new policies will not be effectively embedded into the organisation. If people aren’t responding as anticipated or experiencing change as intended, then it is necessary to recalibrate.  If leaders fail to grasp that their role and new systems are not shaping new thinking as a prelude to new behaviour then apathy, resistance or sabotage might result. If employees don’t understand the role they personally play in terms of the new direction and the new behaviours expected of them there is a high risk that workarounds will persist.

Changing mindsets is the key to successful culture change

Changing mindsets is the key to successful culture change. Lever one is about having the right systems and policies, and the important part of pulling the second lever is the change story communicated to staff. It is up to leaders to drive that story: Leaders are the loudest message in any organisation, what they do gets replicated and what they reward gets replicated by leaders at every level. It’s critical for the C-suite to role model the stated values of the organisation and realign reward and recognition systems to support stated values. Leaders must take their employees with them on the journey of change, giving them an understanding not only of the path ahead, but also the reasons why change is necessary -  the social context of culture.

Thrusting new ways of doing things, without calibrated and supporting change communications and a clear vision of a future state undermines employees’ trust in leaders and saps their engagement and cooperation with the changes being asked of them.  The consequences of not bringing the people with you is that the old ways will stay with you. This can have dire consequences in business performance, employee recruitment and retention and customer acquisition and loyalty. Change is driven by external factors. If you cannot adapt quickly to these factors the business will ultimately fail.

Most importantly, Map the Journey

Start with a clear vision of where you want to be at the end of the change journey; at the executive level draw up a change road map identifying the obstacles to change and the timeline; identify the ‘low hanging fruit’, the quick wins (this will help people to see that you are achieving improvements); have the Board on board; and appoint high level OD (organisational design) person to drive the change.

Please fill out the form below to get in touch regarding your organisation’s needs and we will get back to you as soon as possible. You can also call us on 0430 889 850 or email us directly at [email protected].

Ethical architecture is a matter of choice: takeaways from Regulating the Game 2024

Recently, Managing Values’ Principal Attracta Lagan was asked to present at the Regulating the Game conference in 2024. Specifically, Attracta was asked to address the topic of navigating ethical dimensions in the gaming industry and building sustainable organisational cultures in a post-COVID era. Below are the three key points from her presentation with some added context from our 20 years’ experience in the industry.

Ethical decisions are rarely easy nor dependent on common sense. They more typically require designing enabling frameworks such as a “can we/should we” test to guide decisions as well as hone decision making skills. Ethical decision making does not exist in a vacuum. Leaders must ‘set the table’ for their people by clearly articulating what ethical conduct looks like.

An organisation’s perception of ethics often supersedes an individual’s

While research shows that most people would consider themselves to be ethical, the prevalence of unethical behaviour in the workplace is evidence that group priorities often override the individual’s actions.

Specifically, when there is an organisational context which puts more emphasis on the company’s financial goals this can be seen as tolerating or tacitly encouraging compromise, which can undermine employee’s individual ethics and lead to unethical behaviour.

In order to build an ethical culture, an organisation needs systems and processes in place which support ethical decision-making. They need to allow managers and employees to recognise where a conflict between ethical action and business interest’ exists and empower people to make the right decision in the moment.

Actions speak louder than words; it’s not enough to have a nice corporate values statement

In our experience, it is often thought by senior leadership that setting ethical expectations in corporate values statements addresses the issue of unethical conduct and communicates this to employees. This is rarely the case. Organisations need to ensure they have the appropriate framework, processes and resources to manage the ethical dimension.

What is an Ethics framework?

A set of expectations, values and behaviours set at the organisational level. An ethics framework could include the corporate values statement, compliance documents or organisational purpose. These expectations need to be enshrined in induction processes, performance management, reward and recognition systems and management communications.

Training & Resources

Training in ethical expectations should be conducted in the onboarding of a new employee, and regularly communicated to existing employees through workshops, surveys and corporate leadership. In our experience, the most successful process for embedding ethics training is through a cascading model where leaders and managers are given the tools to conduct the training with their direct reports on an annual basis.

Measurement & Evaluation

Without active measurement of the ethical behaviour against the above resources, it is impossible to evaluate the success or suitability of the business’s ethical vision. As is often the case in corporate behaviour, what gets measured gets managed. Without review and iterative improvement of the corporate values and expectations, the desired employee behaviours will never develop.

Without having an ethics framework, ethical training & resources for employees, and continual evaluation and review of the organisation’s ethical commitments; ethics are often de-prioritised within an organisation. As in most business practices, ‘what gets measured gets managed’.

Nobody gets it right the first time, it is unrealistic and counter-productive to assume that you will

It is not enough to use generic ethical resources for a unique organisational context; ethical behaviour takes nurturing and refinement to succeed. Leaders need to do more than espouse the corporate values; they need to ensure their own actions & those of others are in line with the corporate framework and are highlighted and shared within the organisation often. We often say, “people listen with their eyes”. In other words, they take their lead from the behaviours modelled by their first up line manager rather than some well-intentioned values statement.

Very little consideration is given to the importance of designing business ethics training to speak to the inherent ethical challenges of each unique workplace context. And yet it is less complex than OH&S, SHE or governance and compliance all of which are seen as business essentials. In most cases we are called in to organisations to design and roll out ethical leadership training as a consequence of some ethical failure in the organisation or a perceived disconnect with stakeholders’ aspirations. Rarely are we contacted in order to prevent such events through building an appropriately ethical culture in the first place.

Such cultural training has become more urgent given the 2024’s Positive Duty reform requiring businesses to pivot from compliance priorities to proactive organisational culture design.

So where to from here?

The challenge for today’s leaders is to move beyond performative ethics—where values are often espoused but not enacted—to genuinely embedding ethical ambitions within their organisational fabric. It will require a new type of courage; the courage to build a culture that allows for the acknowledgment of missteps as a prerequisite to building organisational learning.

Rather than assuming ethical practices are already in operation and effective, a more realistic commitment might be to one of continuous progress. Business ethics training should no longer be seen as esoteric or discretionary but instead needs to be recognised as an essential component of building an ethical, and therefore successful, workplace culture.

Dr. Attracta Lagan is Principal of leading ethics and cultural consultancy Managing Values. She is currently a member of the team monitoring Star Casino Group, focusing on culture and transformational change. For more information about her work explore our website or email her directly at [email protected].

Reinventing Organisational Post-Covid Codes of Conduct

The seismic shift in workplace culture and the nature of work caused by the pandemic is resetting how we think about the role of work in our lives and how we collectively organise. A recent research study found that while working virtually collaboration within groups increased however organisational silos have gotten deeper and further apart. This might suggest that the human side of enterprise has strengthened while the efficiency of the whole has deteriorated. Also, the concept of work also as the best avenue for human flourishing has come under review. The lockdown has provided many professionals and employees with an opportunity to reassess the social price in terms of family relationships and leisure pursuits that the 24/7 pace of modern workplaces demand. For some, the price is now seen as too high and not worth the sacrifices required. The most talented are rethinking how they too can redesign their post-Covid careers.

On many fronts, organisational leaders’ are being challenged to build back better by recognising employees’ social needs and the interdependence of business prosperity and societal progress. The widespread public backlash and anger at corporations taking taxpayer’s money in the form of job keeper payments while declaring increased profits has heightened public angst that businesses who profit at the expense of society impoverish the next generation.

For those who want to be part of a new story of thriving businesses and thriving communities, there’s no better place to start than by reimagining your company’s Code of Conduct and recasting it to recognise human needs, desires and ambitions with their interdependence with human flourishing. Cultural visions built on values of inclusivity, diversity, flexibility, resilience, and purpose are the basis of healthy workplace cultures.

You won’t read about it in economic textbooks, but we humans struggle with isolation; we are social animals. Working together in an office, a factory, a worksite, a school, even parliaments provide a needed opportunity for relationship building and social contact. Many of us took the benefits of the social dimension of workplaces for granted until they disappeared. While millions of Australians have become comfortable with remote working they are also keen to get back to workplaces to regain that social dimension but in a a new way that no longer segregates personal and professional lives. Remote working has also dealt a blow to managerial micro-management, and it’s not likely to return. Hopefully, what we have finally put behind us is the “Monday to Friday sort of dying” as historian Studs Terkel described the modern workplace experience.

Like building a solid house, a code of conduct lays the foundation for leaders to design and build the type of workplace culture that enables their people to perform at their best. Such a build entails erecting a complex social infrastructure designed by appropriately skilled people in human social-psycho dynamics. A supportive social infrastructure enables its members to understand the rules of engagement; how they should behave as individuals and as a community in pursuit of a shared purpose and vision for success. It represents each organisation’s unique success formula. By making the rules clear, organisational members gain self-control from knowing what is expected and where boundaries of acceptable and unacceptable behaviour lie. It builds the “why” behind organisational values, enabling members to achieve more than any individual or group could have achieved alone.

Many organisations fail to recognise that the primary purpose of a Code of Conduct is to protect employees from unsafe work practices, exploitation by third parties, bullying and harassment by co-workers, changing regulatory requirements, and potential adverse technology impacts. Codes need to be reframed to meet the new psychological workplace contracts that have been forged during lockdowns. Code of Conduct engagement should be the mortar that binds the structure and its people together. It is a living document reflecting the dynamic internal and external environments where organisational members operate. It resonates with how people see themselves and how they behave, perform and excel. Its stories, scenarios and examples, reflect their lived experiences.

Everyone wants to work for an organisation that cares; one that listens to enable its members to achieve and flourish from their workplace experiences. Shared Purpose is the glue that holds employees together. Let’s take our lead from the example recently set by Canva’s young co-founders.

Canva’s leaders recently pledged to give a 30 per cent stake – valued at $US12 billion ($16.4billion) – to a charitable foundation seeking to eliminate extreme poverty. In this one visionary initiative, they created Australia’s largest charitable foundation. Explaining their decision to tackle existing world wealth inequity they justified their actions because of their vision that we already have enough wealth to reduce world poverty; what’s missing is the will and the vision. They recognised too that a social purpose transcends any commercial goal in terms of employee satisfaction. That Canva employees’ motivation is driven by being part of an organisation with a purpose beyond making profits and this vision attracts talented people.

So, when we come to build back better, let’s start from the perspective that ethical leadership begins with purposeful culture design. Most people want to do their best at work; they want leaders to invite them to contribute to a workplace culture that enables them to do this, and in return, both the enterprise and the individual can shine.

The Human Dimension of Conduct Risk

What would you do if you found a colleague’s behaviour unacceptable, even unethical? Most of us believe we will speak up; however, research shows we often fail to act on our ethical intent. The result is moral muteness, the gap between our ethical ambitions and behaviour. Such a personal values gap emerges when organisational members experience their workplaces as unsafe places to raise concerns. It is often the root cause of employees’ cynicism around leaders’ authenticity in upholding espoused organisational values.

Ethics research shows that when employees hear their leaders discuss ethical challenges and role model ethical behaviour, they too are predisposed to ethical accountability. Where indifference is perceived, employees, in turn, assume they can ignore ethical accountability.

The social phenomenon of ‘moral muteness’ emerges at work when leaders fail to speak to the ethical challenges and values tensions that often accompany the pursuit of results. Culture translates in language, and choice of language signals what is important. An organisation’s language that amplifies economic or political imperatives and fails to mention the accompanying ethical challenges or tensions with espoused values effectively silences consideration of the day to day ethical dimension of workplace decisions. Moral muteness flourishes where leaders fail to make ethical considerations part of everyday conversations. To safeguard against it, leaders need to take purposeful action to manage cultural pressures. Organisational culture is dynamic, requiring leaders to regularly measure and adjust systems and processes to ensure a speak up culture emerges that can protect employees from harm and organisations from reputational damage.

Moral muteness flourishes from the Boardroom to the post room, with its practitioners oblivious to the inherent risks this creates. Leaders’ personal reputations have never been more vulnerable to workplace pressures than in today’s low trust hyper-connected world. The backlash against leaders found wanting is swift and fatal, as recently seen in the departures of AMP’s chairman David Murray; Westpac’s ex CEO Brian Hartzer, Rio Tinto’s departing executive team, and previous CEOs of QBE.

Recognising the sources of our moral muteness

Protecting organisational cultures and personal reputations from ethical outages means forewarning ourselves of the risks and ethical challenges to be addressed. We now have extensive “known risks” that need to be offset with appropriate organisational systems. A well-documented root cause of risk and unethical behaviour is the pressure of unrealistic goals, timetables, and targets on employees; another is our predisposition to loyalty influencing us to make emotional rather than rational decisions. Research shows that loyalty to managers’ or company survival can push organisational members into unethical practices. These actions are then justified because there was no personal gain. Employees need to be forewarned about the dangers of such rationalisations and how these can lead them into unethical and even illegal practices. All organisational members need learning opportunities designed to raise personal awareness of the ethical risks generated by their workplace dynamics. Promoting a richer understanding of the individual cognitive biases, rationalisations, and contextual pressures characterising modern workplaces enables organisational leaders to design systems that better anticipate and remove these hidden barriers to ethical behaviour. Authentic workplace ethics skills training involves helping organisational members better understand themselves and their biases and how organisational culture can shape their decision-making frameworks. The old maxim ‘If you don’t know what you stand for, chances are you will fall for anything’ is ringing loudly in today’s cancel culture.

Awareness-raising is essential to behaviour change, as much of our human behaviour is driven by contextual cues out of our conscious awareness. Ethical leadership now involves drawing on behaviour science insights to design systems and processes that make it easier for employees to act ethically and offsets moral muteness. Initiatives such as inviting employees at every level to review and challenge prevailing organisational mindsets and assumptions lays the groundwork for meaningful behaviour change. Raising awareness of the more than 100 biases and short cuts that can waylay our best intentions will also better prepare individuals for the ethical challenges they face. Designing organisational policies and processes that are fit for purpose for specific areas of the organisation rather than issuing one-size-fits-all protocols makes compliance more manageable.

Risks are known and can be eliminated using behaviour science insights

Behaviour science is showcasing evidence-based research into what people do – or don’t do – when confronted with ethical issues as well as why they do what they do. One of the significant insights from behaviour science is that we can be different in different contexts. While ethical in some contexts, we can behave unethically- and remain oblivious to our inappropriate behaviour – in other contexts. Our self-servicing bias helps us evade personal responsibility while blaming others when things go wrong and it enables us to take credit for others’ work when it is to our advantage.

A “conformity bias” predisposes us to change our opinions to conform to our group and our ‘affinity bias reinforces this.’ Affinity bias operates where individuals strongly identify with a group. Both biases add to the pressure of group loyalty, and all three influences create a context where moral muteness and group think prevails.

The science tells us that organisational members behave ethically when:

Respected leaders talk about the value of ethical behaviour
When employees find themselves in organisations that value ethical behaviour
When organisational members are made aware of the benefits to others of their ethical behaviour.

Responding to higher ethical accountabilities requires Boards to purposely choose CEOs capable of designing organisational cultures that enable their members to have agency and are supported by organisational systems that promote organisational learning around ongoing systems and policy failures.

We can all expect to be challenged to find our voice, either to avoid harm or to protect our integrity. Therefore, it is within everyone’s interest to recognise the origins of moral muteness in organisations and work together to break this silence.

How to Act Ethically at Work

Every workplace action has an ethical dimension because no single action can exist in a vacuum. Everything we do affects others around us. Acting ethically means anticipating our impacts on others and avoiding or seeking to minimise potential negative consequences. To forewarn yourself about workplace ethical challenges, pay attention to:

Context: The context you are in will significantly impact how you act more than your character does. Be on the alert as social pressures encourage us to turn a blind eye to others’ misdoings. We may even take our lead from the actions of others.

Beware of Goals: You may find yourself justifying your behaviour choices as necessary to achieve your goals. If this is the case, you are on a slippery slope to more unethical behaviour. Stop and review your values and use these to guide your actions.

Beware of Loyalty: Many people consider unethical behaviour as only those actions that result in personal gain. This belief causes us to fail to see that our choices are corrupt. Lying to protect others or fudging figures to assist with team targets is unethical, even if there is no personal gain.

Inner thoughts: People behave unethically up to the point that they can make excuses for their behaviour. These excuses are the stories we tell ourselves. The story may be that everyone’s doing it, no one gets hurt, or someone depends on me doing this. Or we may think that it is time pressure that makes us act this way. Tune into your internal dialogue and stay alert to ethical slippage.

Well-being: We are more prone to act in ways we shouldn’t when tired or stressed or being unfairly treated. In these situations, it pays to check with a trusted colleague whether your action is an ethical one.

Framing: How we ‘frame’ a decision can cause us to ignore its ethical dimension. Framing is the context we give a situation or action. If you hear yourself saying ‘it’s only a business decision’, chances are that you are ignoring its ethical aspects. Avoid making decisions based on a narrow range of information.

Friends and family: Be on alert when friends or family ask you to do something. Your loyalty to them may override your duty to your organisation and leave you slipping into questionable actions.

Competing values: Ethical challenges arise from competing values. A typical example is admitting the organisation has made a mistake versus incurring negative media attention. We often pursue short term wins at the expense of harmful consequences. For instance, micromanaging employees at the cost of their social needs. Anticipate, confront and discuss tensions that may arise to enable you to manage them better.

Learning to think ethically is a skill that needs to be continually honed and updated. To improve this skill, companies should use emerging social research on the key motivators and shapers of workplace conduct as shared by EthicalSystems.org.

Simple rule of Business – No d*ckheads allowed!

This might seem a bit harsh, but it speaks to a growing world -wide organisational mantra. Stanford professor, Robert Sutton’s book “The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t” unearthed an increasing trend for major corporations to sign up to a “no asshole” rule. Companies like Warren Buffett’s Berkshire Hathaway, Barclay’s Capital, IDEO and SPM Communications, although the last two prefer to call it “the ‘no jerks’ rule.”

SPM founder, Suzanne Miller, won a national contest for women-owned business, in part because her company applies the no-jerk rule to both employees and customers. “It struck a chord with the judges and audience.” Ms. Miller said. “Everyone has worked somewhere crappy.”

Behaviour Science shows that our evolution has wired us to put up with just about anything to “fit in” but is tolerating workplace incivility too high a price to pay in our new era of conduct risk?

Is it OK, or even possible to call out incivility, especially when perpetrators are usually in positions of power? Traditionally, poor interpersonal behaviour has been overlooked or silently tolerated in pursuit of short-term results, while long-term costs go uncanvassed. Shattering entrenched cultures might well need something as confronting as a “No d*ckheads” policy. Poor attitudes and behaviour poison relationships and undermine cultural integrity.

In Australia, just about everyone will understand the message underpinning ‘d*ckhead’ status. Webster’s dictionary defines the term as vulgar slang: a stupid, obnoxious, or annoying man. But if we focus on the behaviours, the term can just as easily apply to females.

Is it ethical to speak in such derogatory terms? The short answer is ‘no’, but the principle behind such a philosophy is to be upfront about what you expect from a relationship and to expose behaviour that undermines stated organisational values.

I belong to a sports team for veterans. It’s a group of guys who get together for a social game of football: a sort of ‘men’s shed’ with rigorous exercise. From the outset we have had a ‘no jerks’ rule. We go for coffee afterwards and the same rules apply. We don’t want petty whinging, criticism of self or others, cliques or perpetuated bad blood. We are united by a sense of common purpose: to play the game we love in the right spirit.

Workplaces should be the same.

Start-ups are mostly characterised as inclusive places to work. Most eschew the norms of policy, working hours, productivity, and bureaucracy favouring flexibility, outcomes and contribution to the whole working experience – for everyone. There isn’t a formal ‘no jerks’ rule and instead, new starts are courted in an informal way – over coffee – where principals check out if they are ‘just like us’. Inclusivity characterises their building blocks.

Is there a difference between a habitual jerk and occasional jerky behaviour? Well clearly yes. Everyone has a bad day or an adverse emotional reaction to an incident. The one offs don’t make you a jerk but, in a jerk-free workplace, such behaviour is called out by a colleague at the time it happens, even by a junior colleague. In good cultures, leaders create safe places for people to raise issues of concern; they skill their people in calling out inappropriate behaviour.

Robert Care, CEO of the Arup’s Australian and Asian operations, described their approach in this way:

“Three years ago, I became the CEO of our Australasian operation. It occurred to me that there was an issue (not just in the Australasian part of our operations) that needed to be dealt with. I then heard something in September 2005 that started me thinking, and then talking to my close colleagues. They encouraged me to speak more widely in my organisation and eventually, we evolved a ‘no d*ckhead policy. ”

Engineering cultures have an expression for appropriate and inappropriate conversations. They call it “above the line” and “below the line”. Following the principle of “praise the worker, blame the work” they encourage all employees to focus on how something impacts the project – positive or negative – rather than what someone may have done wrong. “Let’s keep it above the line” is a remark you’ll often hear as people call out inappropriate behaviour.

So, what’s it to be? Allow d*ckheads to spoil your culture or begin tomorrow by asking people to call them out. There’s an old saying, “you judge a company by the company it keeps.” The choice is deliberate, not random.