Read the latest blog by Mark Chambers, IBE's Associate Director (Governance).
When a major ethical crisis engulfs a company, there is no shortage of moral indignation from onlookers. The criticism from the sidelines is often fuelled by a firm conviction that ‘it couldn’t happen here’. But is there a strong basis for that level of confidence?
Despite claims to the contrary, corporate wrongdoing is rarely restricted to a group of ‘bad apples’ in the workforce. Of course, there are some obvious problems where you have morally reprehensible people in senior roles without the checks and balances to prevent them from doing wrong. But companies that go wrong are not full of bad people, even if the behaviours that ultimately bring the company down have become endemic. The problems come when decent people across the organisation collectively lose their moral compass. The reality is that good teams can go bad, with a gradual cultural drift that eventually engages and consumes everyone.
So why does it happen? There are some interesting insights from behavioural psychology and the studies on cheating (see, for example, Dan Ariely’s book The (Honest) Truth About Dishonesty). The exercises described in Ariely’s book are a sobering reminder that dishonesty is a part of everyday life and that most people take the opportunity to cheat in some way on a regular basis. Cheating for most people is not a careful balance of risk and reward. Rather, it is our personal morality that keeps it in check. Provided that we can rationalise each step on the journey (that extra 10mph on the deserted motorway, the artful embellishment of our CV), we can still feel good about ourselves.
And it is a similar series of small steps that can take a team to a bad place. An organisation going bad is rarely an overnight thing and it is not easy for everyone to feel the drift away from what is right. A vigorous discussion about accounting judgements turns into increasingly aggressive approaches to income recognition and invisibly crosses the line into fraudulent accounting. The good people don’t realise how far the tide has taken them until it is too late, or too difficult, to speak up.
It is hard because the problems usually involve some ambiguity about a judgement. Confirmation bias and the behaviour of others can reinforce a poor decision, and the influence of pressure and overly demanding targets is huge. Of course, reward plays its part but I think reward as a stand-alone factor is routinely overplayed.
There are interesting insights from areas of society where the risks of not handling these pressures well are even more extreme. Care environments can become toxic and dangerous if the attitudes to those in care become dehumanised. A long series of avoidable airline accidents emphasises the risk that checklists are rushed due to operational pressures.
Supervision helps, and the sustained success of crew resource management in the airline industry is probably the strongest example. Speak-up arrangements for people to raise concerns when something just doesn’t feel right are vital. But perhaps most compellingly, the behavioural studies on cheating show that timely moral reminders (in their case, simply including reminders not to cheat at the top of the answer sheet) can be hugely effective in re-grounding people if they are delivered just before they have to make a difficult judgement call.
The simple exercise of grounding people regularly in ethical standards through training, story-telling and discussion has a surprisingly positive impact.
Associate Director - Governance
Mark brings 30 years of experience from a successful career in business to help grow the IBE’s interaction with boards, regulators and policy makers.
After graduating in Zoology from Oxford University, Mark re-trained as a lawyer and spent his early years at Slaughter and May in their London and New York offices before moving into business. During his career, he managed world-class global functions responsible for governance, legal and regulatory risk management in large, complex, regulated businesses. He was General Counsel & Group Company Secretary at RSA Insurance Group and at Worldpay Group, and held senior positions at American Express and GE Capital. He retired as Deputy Group Company Secretary of HSBC in 2018 to pursue a second career, which also includes non-executive and advisory work.
For many years, Mark has had a successful career as a non-executive director. He is a member of the board of the Care Quality Commission, the independent regulator of health and social care in England, and chairs their Regulatory Governance Committee. He is also a non-trustee member of the Audit and Risk Committee of Maggie’s.
Previous roles included the Chair role at Amref Health Africa and Audit Committee Chair at WWF, where he also led the Committee that oversaw the development of the charity's exemplar new headquarters building. Mark was a finalist in the 2014 Sunday Times Non-Executive of the Year Awards.
The truth of the matter is that you always know the right thing to do. The hard part is doing it. – General H. Norman Schwarzkopf