Ethical Performance
inside intelligence for responsible business
accompanying image


The importance of creating a healthy business culture

November 2015

The unfolding scandals surrounding Volkswagen and FIFA reveal they have much in common, not only with each other but with many corporate scandals that have gone before. The fall-out follows a familiar pattern. Both saw immediate demands for the resignation of the institution’s head (although only one willingly obliged). Both are proving, as investigations progress, to involve far more than the isolated actions of a few ethically dubious individuals, writes Alexandra Stubbings, co-founder and director of Talik & Co,
the organisation development consultancy.

Often the first internal reaction in situations like this is to identify individuals to blame and then ‘excise’ them from the organisation. (Think Libor). All very well but what if the behaviour cannot be attributed to just one or two ‘bad apples’. What if the problem is deeper and more pervasive than that? What if the barrel itself is rotten?

The next level of response then is typically from the industry, with the intent to ‘close the loophole’ by tightening regulatory policies and enhancing compliance protocols. Unfortunately such a response is more likely to produce a compliance ‘arms race’ as innovative methods are found in turn to counter the new regulation. Witness the banking industry where more robust screening policies for customers have often been met with more ‘dynamic’ international workarounds. In all these instances as long as the underlying culture and values, the beliefs about what to prioritise and how to act, remain the same, nothing really changes.

In such circumstances how might Matthias Muller, new CEO of Volkswagen, go about changing the culture and values of the (currently) €50bn global company in any meaningful way?

He might start by not seeing the problem as a technical one. Sounds trite but too often we see engineers trying to apply a similar mechanical logic to leading their people as they do to producing widgets. From this mindset if a process can be reduced to a minimum (zero waste? zero defects?) standard the output will be the most efficient. The assumption is that behaviour change is the same. Hence the attraction of the ‘ethics’ workshop – often a one-day quick fix to remind staff how they should behave before sending them back to their desks.

Creating a healthy business culture with ethical values truly embedded is a multi-year and on-going process. It demands visible and immediate punishment of bad behaviour but more importantly it requires the continual reinforcement of positive pro-ethical behaviours through multiple parallel strands. These include leadership development, symbolic senior management actions and whole organisation engagement activities, surfacing and communicating stories of positive change.

The symbolic actions and stories illustrate to employees in the business and more widely to its stakeholders that positive behaviour is recognised and more critically rewarded. Conducting both the ‘soft and hard’ aspects of change in tandem serves to ensure the espoused values are supported by the company’s people systems and not experienced as inconsistent with them, a common cause of back-sliding.

Such change does not happen quickly. Consistency is key and the message has to be communicated many times at every level until it becomes part of the company identity. When it truly becomes ‘who we are’, and anything less than leads to being ostracized by your peers, you’ve probably made a good start.

UK & NI Ireland | Leadership


3BL Media News
Sign up for Free e-news
Report Alerts
Job Vacancies
Events Updates
Best Practice Newsletter