The International Forum on Business Ethical Conduct (IFBEC) was created to exchange information on best practices in the area of ethical business practices and global trends among industry participants.
ETHICAL BUSINESS PRACTICE AND ETHICAL BUSINESS REGULATION
A Behavioral and Values-based Approach to building trust in business
• Culture eats compliance for breakfast!
• It’s not the “bad apples” you need to be concerned about
• All for one, and one for all – in literature and in industry sectors
Behaviour and Culture in the Irish Retail Banks issued by the Central Bank of Ireland and written in collaboration with the DNB (De Nederlandsche Bank). The report focuses on culture at the senior levels of the 5 largest Irish banks, particularly in regard to consumer focus and shares crucial insights and clear recommendations on how culture influences behaviour, sometimes with disastrous results.
ICARUS Ascesa e Caduta di Raul Gardini (Icarus, the rise and fall of Raul Gardini) by Matteo Cavezzali. I lived in Italy when the Montedison/Enimont/Ferruzzi events were taking place, although I had left before Raul Gardini, who was for a while one of the most powerful businessmen in Italy, “killed himself”. He died during the massive bribery scandal called Tangentopoli that swept through the Italian business and political landscape. People may have heard of Antonio di Pietro, the judge whose investigations resulted in Tangentopoli, and in many business people spending time in San Vittore prison in Milan. The book looks at Gardini’s death and the events that surrounded it from the perspective of a Ravennese (inhabitant of Ravenna, where the Ferruzzi family was based). It is unusual in that it alternates fact with imagined fiction in trying to determine whether he committed suicide or was murdered, and if so by whom. In Italian.
Got a reading or listening recommendation? Do share.
The Water Services Regulation Authority, or Ofwat, is the body responsible for economic regulation of the privatised water and sewerage industry in England and Wales.
Here’s a brief excerpt from our response:
Q4. Do you agree with our proposed principle for purpose, values and culture?
We applaud Ofwat for highlighting the importance of purpose, culture and values and the alignment of these to the needs of those served by a company. For a long time the evidence of the importance of these concepts not only to the success of the company, but to the interests of its stakeholders has been growing. We believe it is now overwhelming. Therefore it is right that Ofwat should encourage water companies to develop and articulate their social purpose, identify the core values that will serve this purpose, and align their culture, via these values, to the important function they serve in society.
We note that Ofwat considered the FRC’s December 2017 consultation on revisions to the Corporate Governance Code, particularly in relation to the purpose, values and culture of boards, and will consider the conclusions prior to finalising their Principles on Board Leadership, Transparency and Governance (the “Principles”). We strongly encourage them to do so, particularly as they are embodied in the FRC’s Guidance on Board Effectiveness, (the “Guidance”) issued a few days after Ofwat’s consultation.
Companies should be able to provide evidence of serious, consistent, holistic and genuine steps to create and maintain a healthy ethical culture. They should also be able to provide evidence of such a culture based upon “evidence and information drawn from a range of sources. Drawing insight from multiple quantitative and qualitative sources helps guard against forming views based on incomplete or limited information.” (Guidance, Principle 23) We have written extensively on this in Ethical Business Practice and Regulation: A Behavioural and Values-based Approach to Compliance and Enforcement, Hart Publishing, December 2017.
We agree with this, and it is for this reason that we recommend the use of the Barrett Values Centre’s Cultural Values Assessment (“CVA”) in Ethical Business Practice and Regulation. This is a well-established method of canvassing all employees (and other stakeholders), no matter how large or small the company, to establish the values and behaviours that characterise the culture, as well as the sources and causes of dysfunction and therefore culture risk in the organisation. The use of a CVA creates a common language with which to discuss culture and also a picture of the values that the participants believe would improve the culture and therefore the results of the company. It is a powerful tool that would enable a board to carry out the responsibilities outlined above, including the need to identify areas of good practice, and obtain evidence of alignment (or lack thereof) of purpose, values and culture.
We recognise the need to collect evidence from a variety of sources, and encourage a company to do this; and we find a CVA to be the best way we have seen to tie it all together and understand the forces at work in a culture that may be driving culture risk. As employees become disenchanted, upset, feel they have been treated unfairly, or are otherwise disengaged, they are better able to rationalise misconduct and still feel they are fundamentally good human beings. The way to reduce misconduct is to to reduce their ability to rationalise it by creating a healthy ethical culture that makes people proud to work for the company. A strong social purpose, such as the supply of clean water and effective sewerage, necessary for all life, aligned with an effective strategy, are the remaining elements that create the conditions for long-term sustainability.
Compliance with external rules will never be as effective to motivate the majority of the employee population and indeed an excessive focus on it will have the opposite effect. Other regulators must take note of this and ensure that their regulatory framework does not incentivise companies to engage in tick the box compliance. To do otherwise is to be complicit in lowering, rather than raising standards.
Disclosure: Ruth Steinholtz is a fully certified consultant in the use of the Cultural Transformation Tools™, of which a CVA is one. She is not an employee of the Barrett Values Centre.
There is no point in sitting in the Board room and choosing values in a vacuum; no matter how well you think you know your business, unless…
The view from the C suite is different from the view from other vantage points. It can be a reality distortion field. I’ve seen it for myself. No matter how well you think you know the business, it is good to be open to other perspectives. Indeed, good governance calls for it.
So, the first point I would make is:
Your (core) values, even though aspirational, must be achievable by the human beings who make up your organisation, unless of course you plan to change the people and keep values that they are not interested in or are not capable of achieving. In most instances that would not be the first choice.
It is important to know what values are important to your employees, and to find that out you have to ask them.
One of the main purposes of core values is to both inspire and motivate people to be the best they can be, so that the organisation can achieve its highest potential.
Let’s take a peek at how core values can inspire and motivate. The crew of the SouthWest Airlines Flight 1380, in an interview on CBS News, attributed their success in safely landing the plane to their shared values. This may be a dramatic example, but every day, every where, employees make decisions inspired by their values. In companies that take their values seriously you will hear people ask, when considering what to do, “Is this in accordance with our values?” – I have heard it many times myself.
In addition, people all over the organisation possess wisdom that, if shared and acted upon, would improve results. They know what needs to change to fix any dysfunction that currently is holding you back. Unless your values encourage an open, “just” culture, they may not be sharing.
So, before you identify your core values, here is a practical guide. Asking these questions can provide you with strategic insights to help you start your journey:
Personal: What personal values are important to your employees ?
Current: What values & behaviours do they experience in your organisational culture today?
Desired: What values & behaviours do they believe would make the organisation reach its highest potential?
These are the questions posed by a Barrett Values Centre Cultural Values Assessment, called a CVA for short.
A CVA allows you to collect the insights of all of your employees and use the data as the basis for an organisation-wide conversation. This powerful tool creates engagement with the process of identifying the best candidates for your organisation’s core values. Then, armed with the results of such an assessment and the consultation that follows, you could go back to that Board room, and make a wise choice of the right core values to support your organisation, and the people in it, to reach their highest potential.
Regulating for Ethical Culture in Behavioral Science & Policy – “In ‘Regulating for ethical culture,’ Linda Trevino, Jon Haidt & Azish Filabi review the org behavior literature on ethical culture, define the components of ethical culture in organizations and summarize research into how to assess and strengthen it”.
I thought it would be useful to pull together things that have caught my attention and that relate to Ethical Business Practice and/or Regulation in some way. That gives me quite wide leeway to bring things to your attention that I think are relevant to your mission.
AretéWork Quarterly
a-re-té [Ahr-et’-ay] noun – virtue, excellence, being the best you can be, reaching your highest human potential.
It is brief, to the point, links to lots of resources for further reading, and it has proven popular.
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I’ve written earlier about the work I’ve been doing focused on Strengthening global integrity and ethics – as part of a team of 70 experts from 30 countries across the globe. I’m excited that the education modules we’ve worked on are now available – you can find them, and much more about this work, here: unodc.org/e4j
If you’re new to this, here’s a quick, and thought provoking, primer on what it is all about:
Are we facing an ethics crisis?
How to promote ethics through education:
You can help spread the word:
Building a culture of lawfulness starts with strengthening our ethical values and the ability to act upon them. To that end, #Education4Justice developed a series of Integrity and Ethics Modules for lecturers across the 🌍. Available at https://t.co/Jx2yvZGCGU
— Doha Declaration (@DohaDeclaration) June 9, 2018
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