Is your organisation’s culture increasing risk of failure?

There has obviously been a lot of discussion, especially in the financial services industry, about increasing regulation and legislation as a means to reduce some of the unethical behaviours and risks recently seen.  However, as Peter Cheese (CIPD) was quoted as saying “And while there are some gaps to be closed, the real issue that needs to be understood and addressed is that of culture and leadership. No amount of regulation will stop people from behaving unethically if they either don’t see it as that, believe they can get away with it, and particularly where the rewards outweigh the perceived risks.”

In addition, as a leader, do you understand whether your organisation’s culture could be preventing people from providing you with the true picture?  A blame culture, fear of making mistakes, senior executives who prefer not to hear that their ideas may not be workable etc, all contribute to an environment where many end up staying quiet, against their better judgement, or risk losing their job.

Damages to an organisation’s customer loyalty, reputation and bottom line can be substantial when high profile management issues and unethical behaviour become public.  Additionally, many of the events of the last few years in Financial Services have highlighted that areas of risk have the potential to go unnoticed by senior management until a major event happens.

Could your organisation’s working environment unintentionally encourage employees to take unnecessary risk, hide mistakes, manage only good news upwards, or concentrate on their own benefits rather than those of the organisation and customer?

Senior executives and leaders can review their current ethics and behavioural risk status by asking themselves the following questions:

• Have projects/initiatives failed and you’ve been unaware of the extent of the issue until too late?
• Do you have questions about events/processes/errors and have yet to find a satisfactory explanation?  Do they have a concern that they might not be getting the full story?
• Have error rates increased?
• Are you surprised by customer feedback which doesn’t tally with internal information/KPIs?
• Could the remuneration package include incentives that reward the wrong behaviour (eg targets that encourage a focus on the reward for the individual rather than the best option for the organisation and/or customer)?

Assessments regarding the Code of Conduct/Ethics and processes and procedures are vital to get a better understanding of the internal practices of the organisation, and where there are potential gaps and development areas.   However, these are unlikely to uncover the deeper insight into individual effectiveness of leadership and communication, and to review how developing these skills can encourage a step change in awareness and managing risk.

Organisations are expected to prove themselves more and more to their customers (especially in light of all the recent scandals).  Even if you feel that you are a small cog in a large wheel, you can develop your leadership skills to encourage employees’ trust and embed an ethical culture for future success.

I was recently invited to a great roundtable discussion of finance industry professionals about preventing risk, and one of the findings was that we needed to help leaders who want to make a difference, despite any negative culture, to have the courage to do so.  Therefore, you can download our brochure on executive coaching with regard to Ethics and Behaviour Risk, which aims to find a deeper understanding of behaviour and the attitudes of all employees and embed an ethical culture, or contact us for an initial discussion about how we could help.