Rebuilding trust: the role for L&D

Written by Dr Nicole Dando and Katherine Bradshaw on 1 May 2013 in Features
Features

L&D has a unique part to play in making organisations ethical, say Nicole Dando and Katherine Bradshaw

Two thousand and twelve was a nadir for public trust in business. It seemed a new corporate scandal appeared every time a newspaper was opened - with reports of excessive executive pay, corporate tax avoidance, the phone hacking scandal and the LIBOR fixing all fuelling a growing public disillusionment with business conduct.

Unsurprisingly, the annual Institute of Business Ethics survey into attitudes of the British public to business ethics1 revealed a substantial decline in the proportion of the British public saying that business generally behaves 'very' or 'fairly' ethically - 48 per cent, a drop of 10 percentage points from 2011. The survey results make for sobering reading and restoring trust in business will require some concerted action on the part of companies.

Trust is key to the success of any organisation. A reputation for being trustworthy is a highly valuable branding advantage in relationships with customers, investors, suppliers and prospective employees. Not only is it essential to effective and efficient working relationships, it shapes employee behaviours and loyalty with a valuable impact on operational performance. A strong reputation for trustworthiness is also vital to organisational resilience, allowing organisations to bounce back from times of trouble. Such a reputation can provide sustainable competitive advantage - enabling an organisation to attract and retain top talent as well as a loyal customer base.

What are business ethics?

Trust and ethical standards complement each other. Indeed, for a business to be judged as ethical it must also be judged as trustworthy, and vice versa. Increased focus by the media, regulators and governments on how they undertake their business has made it critical that companies examine their culture and encourage ethical business practice.

The IBE defines business ethics as the application of ethical values (such as fairness, honesty, openness, integrity) to business behaviour. Those values play an essential role in setting the values system for the whole company and in how this plays out through its behaviour and culture at the individual and collective level.

Ethics is about how an organisation does its business, rather than focusing on what it does. Does it treat its employees with dignity and respect? Are its customers treated fairly? Does it pay its suppliers on time? Is it open to dialogue with its local communities? Does it acknowledge its responsibilities to wider society?

Reputations are based not only on a company's delivery of its products and services but also on how it values its relationships with its stakeholders.

Rebuilding trust - what role for L&D professionals?

Now, part way through 2013, it is easy to feel despondent about a return to public trust in business. Already this year has seen major brands tarnished by the 'horsemeat scandal' and money laundering. However, brands that work quickly and strategically will be more able to limit the damage and repair their organisational trust.

Following a major crisis in integrity, employees' trust in their own organisations needs special attention. IBE research into building and restoring organisational trust2 shows that, without previously-established high levels of internal trust, the process of rebuilding reputations with external stakeholders will be difficult to initiate and sustain. L&D professionals can have a central role in achieving this: by delivering the messages that the organisation wishes to convey on all topics, they have the opportunity to encourage employees to consider the ethical dimensions of their own behaviours and of the activities of the business. Through them, ethical commitments can be given credibility and aligned with how businesses run.

Supporting staff

Many companies have a code of ethics, or similar guidance, which sets out their commitment to doing business ethically, guiding staff in the 'right' conduct and helping them avoid crossing an ethical line. Staff are expected to abide by the company's stated values or face disciplinary procedures.

The recent IBE Ethics at Work survey has found that the majority of British employees are aware that their organisation has some elements of an ethics programme in place:

  • 73 per cent say their organisation has written standards of ethical business conduct, ie a code
  • 62 per cent say their organisation provides training on standards of ethical conduct3.

British employees working for organisations providing ethics training are significantly less likely to say they have felt pressured to compromise ethical standards and are also significantly more likely to report misconduct of which they have been aware4. The message is clear - it is up to organisations to make sure their staff have the tools to do their jobs in an ethical way.

Given high-profile misconduct cases involving companies that, in spite of having ethics policies or codes, experienced near-disastrous reputation hits, it is clear that having a code of ethics and crossing your fingers that employees read it, understand it, and apply it throughout their day-to-day working lives is not sufficient!

Embedding values

According to research from the Chartered Institute of Personnel and Development, the communication of ethical values remains a problem. Less than a third (29 per cent) of employees say they are aware of the values of the organisation they work for to a great extent5. So how can ethical values be more effectively communicated so that they are understood and actually have an impact on decisions and behaviours?

Staff receive different forms of corporate communications every day - from their manager, from the CEO, from HQ, from different departments. Ensuring that messages about ethical commitments reach and engage them amongst all this corporate chatter is a particular challenge. The goal of a corporate ethics programme is to embed ethical values into company culture so that they are reflected in the way that business is actually done. This requires more than just imparting knowledge - the challenge is to communicate the relevance and importance of high ethical standards at all levels and locations.

Ethical issues elicit an emotional response and it is never difficult to evoke an opinion about right or wrong ways of doing things. Whether down the pub after work, in the staff canteen or at the photocopier, you can hear debates about fairness and unfairness; phone hacking, MPs' expenses, bankers' bonuses, horse burgers - these are just some of the business ethics scandals that have ignited public interest.

So, if ethics can be so engaging and relevant, it should be possible for business ethics messages to get through in the workplace.

Business ethics training can include material that seems distant to how staff do their day-to-day job. A set of compliance diktats from on high, eg thou shalt not commit fraud, communicated by PowerPoint slides animated with clip art is not going to engage anyone. But, whether it's an after-dinner speech or a day-long training session, L&D professionals understand that most situations in which we seek to make a connection with an audience are improved by the telling of a good story. This is why the use of scenarios is considered good practice in business conduct training.

Using targeted ethical scenarios offers an effective training mechanism because scenarios link learning to real life and the experiences of the participants. Trainees can identify with the characters, situations and relationships portrayed even if they have not directly experienced the ethical issue being communicated.

The term 'scenario' encompasses case studies, vignettes and dilemmas, both real and fictionalised. Scenarios may be delivered in a number of ways - electronically or face-to-face; formally and informally - for targeted training on specific issues or as part of a programme for embedding an ethics policy. Scenarios can be journalistic accounts of real events in an organisation or industry that have involved ethical matters or, at the other end of the spectrum, be fictional stories that nonetheless reflect typical problems.

Scenarios used in training typically represent a business/ethical dilemma and encourage trainees to look at ethical issues from a personal perspective. Some present ethical problems that encourage trainees to understand policies, codes and rules, and procedures and systems from an objective standpoint.

But what makes a good scenario? The secret of communication is engagement; for scenarios to engage they must be relevant to life at the organisation. Working with ethics and compliance departments, L&D professionals can identify relevant ethical issues using the code of ethics, identified risks, staff surveys and data from speak-up lines. Media reports on ethical problems of peer companies within the sector may also be a good source of material6.

Often organisations will start by using fictional scenarios developed to illustrate a particular issue. But stories beget stories - using scenarios in ethics training can elicit feedback from participants about their own ethical dilemmas, which can then be worked into subsequent training material.

Ethics in decision-making

Encouraging staff to consider the ethical dimensions of their business decisions is essential for minimising ethical risk and will also maximise the benefits of an effective ethical culture. Individuals can feel that they are doing the right thing (eg saving money for a client or the company; meeting a deadline; hitting a target; falling in line with the way something has always been done) and only when removed from the situation are they able to see a very different interpretation. This is because personal and organisational contexts, consciously and unconsciously, have an impact on judgment and reasoning and, more importantly, the propensity to act. These include common workplace factors limiting rational decision-taking, such as time pressure, complexity and authority7.

 The results of the IBE's 2012 Ethics at Work Survey underlines this8. While the majority (84 per cent) of British employees surveyed feel that honesty is practised in their organisation, they report being significantly more likely to experience certain types of pressure to behave unethically than in previous years, the most common of which include meeting unrealistic business objectives or targets (19 per cent) and being asked to take short cuts (14 per cent).

Explicitly recognising that we are all susceptible to such influences and pressures certainly challenges the way that some compliance-based training is designed. Ethical failures are not always because of 'bad apples' or 'lone gunmen'. It can equally be the result of good people making poor choices or the pressures put upon them from other sources. Integrity crises are usually the result of a gradual erosion in behaviour over time, developing into an unethical culture, rather than one person acting on his own while everyone else stands by, powerless.

Integrating ethical considerations into all aspects of business decision-making needs to be addressed as a long-term skills and systems issue. It is clearly another important role for L&D professionals. Beyond the use of materials such as decision-making trees9, embedding ethics into the decision-making process can be encouraged throughout all strands of learning and development, from induction through to board and senior leadership coaching.

Setting the tone

The importance of leadership cannot be underestimated in influencing behaviour. The culture of an organisation is set by the 'tone at the top', whether that is senior management or team leaders. Leaders who actively talk about ethical issues, support staff and behave in an open and transparent way send the message to all employees, and the wider world, that ethics is taken seriously. Leaders lead by example. Fine words are all very well, but they need to be properly broadcast and visibly backed up by actions.

Globally, less than a fifth of the general population trust business leaders to tell the truth or say they trust them to make ethical and moral decisions10. Given the number of examples reported in the media in recent months of unethical behaviours and corrosive cultures overseen by senior leaders, this is perhaps unsurprising. Negligent management can be a strong contributing factor to organisational trust failures as they can, for example, help create a corrupt or deviant culture or facilitate unethical behaviour by individuals.

Though few senior leaders will query the need for strong ethics and compliance across their business, the need remains to find both rigorous ways to engage them in debate or training around their own ethical processes, and mechanisms to openly share examples with the rest of the business about how the senior teams grapple with, and work to effect, ethics in their own decision-making. Senior management must lead by example, by stating openly that the ends do not justify the means, and backing this up with support for ethical behaviour; celebrating 'good' conduct and vilifying 'poor' behaviour.

Senior management, and rising stars, need then to be trained to develop 'ethical sensitivity and acumen' - an understanding of the relevance of fairness, openness, transparency, integrity, responsibility to others, the ability to recognise conflicts of interest, and so forth, as they appear, plus the ability to know what to do about it11.

Senior teams who are truly willing to 'walk the talk' with regard to their ethical tone will not only enhance their own decisions but will be able to expand this effect exponentially across the thousands of other decisions happening in the organisation every day. One challenge for L&D professionals is to find ways to help senior leaders draw out the elements of existing practice that will help reinforce ethics across the business.

Conclusion

L&D professionals are uniquely placed to help develop an ethical culture for their organisations and to ensure that the benefits are recognised and realised. They can be a point of contact for staff, from induction training to nurturing leaders. Because they cross departments, functions and sometimes even businesses, they can be key in communicating a unified workplace culture; one in which doing business ethically is just 'the way we do things around here' .

A fully-referenced version of this article is available on request.

About the author

Dr Nicole Dando and Katherine Bradshaw are head of projects and communications manager respectively at the Institute of Business Ethics. They can be contacted via www.ibe.org.uk

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