Breeching ethical principles is easy to do!
For small businesses, breeches can be hard to see from the outside. For corporations, breeches can be hard to see from the inside, as the recent Banking Royal Commission revealed. Many CEOs under oath, appeared to be in shock. Some wondered how they had missed so much and others were dismayed that their firm’s most profitable and opportunistic tactics were now backfiring on them. Some opportunistic patterns included breaking the law, hoping not to be caught and being willing to apologise and pay a fine down the track. Others behaved in a way that avoided imprisonment and unethically maximised profits and executive bonuses. In the end, most of these symptoms arose from values-based ethical dilemmas.
Avoiding the alligator swamp
Ethical dilemmas come in many flavours. Group harmony at all costs, ambiguity avoidance, business efficiency and rogue power structures can take shape. When compared with smaller firms, large corporations are more prone to executive self-interest (ahead of organisational needs), abusive dominating behaviours, deceptive acts and lying to employees. So how do we re-design a failing bank or less than perfect government agency from the top down? An answer lies in authentic values alignment. When employees and officials espouse high moral values but operate at odds with those values, a beautiful vista transforms quickly into an alligator swamp.
So which human values are in conflict and what needs are at play?
Level 1. The lowest level of employee behaviour is instinctual and concerns itself with basic survival. There is little room for ethics, particularly property rights, at this level.
Level 2. Once basic survival needs are consistently met, employees want to band with others to create a sense of order in small groups - they value families, teams and tribes. The ethic of fair competition between groups is largely absent at this level. Leadership is needed.
Level 3. Once the tribe, family or small team has stabilised and has a sense of shared identity, the strongest and most clever members tend to rise to the top and take charge, in either a corrupt and violent or ordered and ethical fashion. The group values strong leaders but despises their corruptness. At this level, the ethics of leadership reliability and fidelity are key.
Level 4. Once an ordered way of operating becomes stabilised, employees will value moral leaders, councillors and wise persons who can be relied upon to administer order. As order starts to govern activity, the ethics of transparency and responsiveness are tested again and again. This is where poorly monitored firms and agencies tend to fail.
Level 5. Once order becomes a given and not something employees and citizens have to worry about, new levels of growth an economic prosperity become possible. If adhered to, fiduciary duties at this level prohibit things like negligence, bribery, unauthorised self-dealing and self-benefit at the expense of the firm.
Level 6. Once collective economic prosperity and cash flows are steady, minds become socially aware, with more energy and resources being diverted to caring for the natural environment and those less fortunate. At this level the ethics of citizenship are paramount. Any damage to the environment or society breeches the code of good corporate citizenship.
Level 7. With few issues left from previous levels, the next level is one of being balanced, integrated, ethical and flexible. From this level, one can see where they have been, what levels others are at and value all the ways to help others evolve. At this level the ethics of dignity and affirmative action need to be upheld.
Senior leaders and CEOs are charged with a multiplicity of tasks. These tasks require increasing levels of complexity with each stage: maintaining group order (Level 2), taking charge (Level 3), self-regulating and legally complying (Level 4), pursuing economic results (Level 5), demonstrating social responsibility (Level 6) and being balanced and integrated (Level 7). At Level 7, a leader is able to relate ethically and effectively with each level.
Alas, most organisations and people have left over issues from lower levels, which appear as surface cracks in higher levels as they form. Without an understanding of left-over issues and an organisational design that addresses and accounts for them, these surface cracks become crevices and things fall apart.