MT Round-table: Take me to your (ethical) leader
By MT Saturday, 01 October 2011
Corporate culture comes from the top and recent scandals have pointed up how important it is for leaders to foster an environment of accountability and integrity. Our panel debates what UK business can do to enhance its reputation.
Matthew Gwyther: This summer has seen upheaval in both the economy and the world of business. There have also been riots which gripped the country for a few days. We've had the phone-hacking scandal, resulting in the closure of one of our biggest selling newspapers, the News of the World. Julie, as ex-chief constable of Cambridgeshire Police and now a Press Complaints Commission (PCC) board member, do you think the country is in a state of decline? What does it say about leadership?
Julie Spence: There's a big question mark around the people management within newsrooms, certainly. Newspapers have been guilty of a misguided view of public interest, when in fact often the information was only just 'of interest'. They're driven by a commercial benefit, whereas the impact needs to be assessed and the interests of all parties considered, regardless of whether or not it's news. So management needs good, auditable processes and proper compliance. There has been an absence of humility from editors. They thought they were in the right and didn't take into account the perspectives of the people involved. As a press commissioner, I deal with public sector leaders and there is a real absence of leadership. As a public sector leader, you should be there because you want to make a difference and want your public to have the straight facts. It is not about not taking on a bully boy press. But they made the press more of a bully boy, because nobody was taking them on and putting boundaries in place.
David Kershaw: I take a fairly crude capitalist view that most people behave according to how they are motivated and incentivised. This particularly concerns the tabloids - wanting to be the most successful paper led people to do very dark things. Success was based on whether journalists had the better story, and if they obtained it first. They were condemned fairly rapidly if they did not. It was absolutely leadership - and the way it affected the motivation of people in the workplace - which did that.
Laura Tenison: But we all knew it was happening. We knew newspapers got their stories by underhand means. Did the PCC know about the phone hacking, Julie?
Julie Spence: I'm not sure we did know. We knew journalists were getting information, and we knew some of it was illegal. Quite often I'd sacked police officers for leaking information, particularly personal data. We had also set up sting operations to find officers who were giving out confidential information. There is no way we should be feeding stories, unless it is done through an official route. We also knew the press used to listen in to police radio. Often we would arrive at the scene and think, why are reporters here before we got here? Since our radio systems changed and that stopped, you have to realise that journalists are going to get their information from other means.
Jasmine Whitbread: If the police knew it was going on but couldn't prove it, why was the investigation not pushed harder?
Julie Spence: Some of it comes down to government policy. When the phone-hacking scandal erupted in 2006, the Government was not interested in people being convicted for phone hacking. There weren't the officers and the resources available to take every inquiry as far as it would go, but they did hope it would send a strong message to journalists. And after 2006, the journalism industry cleaned itself up - the allegations come from 2006 and before.
Marg Mayne: On both the MPs' expenses saga and the phone-hacking scandal, the public debate has been at a superficial level. If other newspapers were doing it, why weren't they shut down? The News of the World's reputation was shot, but no other journal's. Likewise, with MPs' expenses, the severity seemed to take into account how much individual MPs had spent. The point of leadership, surely, is that you stand up and are counted on a serious level for what you believe to be right, whether it's claiming for a Mars bar or a duck house?
Peter Cheese: The parameters of what we regard as ethical and moral behaviour have been enlarged. Some of the younger generation, I think, are setting a different standard. We can criticise them for rioting on the streets, but they have a good sense of the standards that corporate behaviour should follow.
Matthew Gwyther: Debbie, as corporate responsibility MD at BAE Systems, you must have to make some tough decisions. Can you honestly tell me that as an organisation you can go and obtain contracts in wild places such as Libya without 'facilitation payments'? If you don't pay them, the French or the Americans will, and then lots of people will lose their jobs. How do you get your head round that?
Debbie Allen: Yes. Not everybody likes the defence, or the arms industry, as it's sometimes called. When it comes down to a commercial point of view, we have to say: 'Which are the countries that we will do business with?' BAE can't afford to deal with those where we cannot uphold standards. It is a business issue as much as an ethical issue - we can't deal with Libya or countries in Africa. At BAE, there was a time when we became arrogant and complacent. We weren't doing the checks; we were assuming - and the boundaries became stretched. A number of years ago, we told Parliament: 'Yes, we have policies and processes in place, but we are not always following them.' As Julie said, you need rigorous policies and processes.
Matthew Gwyther: Robert, Arup is subtly different from most organisations. Is it not owned by the people who work for it - has that changed your leadership methods?
Robert Care: Arup Consulting is owned by a trust, which means the person who does a menial task in the office has as much ownership as I do as chairman. That's important, because we are all constantly aware of the firm's values. We follow the guidelines of values entrenched in the firm when it was formed in 1946. Leaders have to behave in a certain way. In some firms, the leaders say one thing, but do another. At Arup, our values permeate the whole organisation, even through to junior staff.
Laura Tenison: Absolutely, and that's about transparency. JoJo Maman Bebe employs 400 people in this country and globally we subcontract to many thousands more. I am confident we never do anything I would be ashamed of. We subcontract our factories, yes, but we keep an eye on them. We audit them; we go in and see them as much as we can. We do our best to ensure we don't do anything unethical.
Matthew Gwyther: Do you think a large organisation is still able to maintain those sorts of small-company values?
Richard Sexton: A leader has to set out very clearly the firm's principles. You can't dictate everyone else's actions, but you can conclude whether or not they are compatible with the way you want to behave. With regards to size of company, you have to be careful you do not toddle off down a blind alley, because in a smaller organisation you are more capable of acting as a dictator. A large organisation challenges the effectiveness of how you execute shared ethics and moral values. It increases the need to address it in the right way.
Debbie Allen: The culture needs to be there. Yes, with a large company you can't dictate it. But a large company is just a pyramid of lots of little things. What the CEO says is irrelevant; it's what your line manager says that's important. One of the things we have found, and we are the same as any other company in this, is the importance of the middle manager.
Peter Cheese: Historically, large organisations have done a poor job of training middle managers. It is difficult to teach the company's values to a middle manager in a way that allows them to be true and honest about who they are.
Julie Spence: When I was a chief constable, I had seminars with my 450 middle managers twice a year. Most of our discussions were about ethics and leadership, but I also kept a weekly blog of what I had been doing. This gave middle managers a reference point and a guideline of what they should also be doing. Prior to this, communication between national and local police had been minimal.
Robert Care: I agree with Debbie about cascading responsibilities, but you shouldn't underestimate what the leader at the top does. Especially if they do something negative, it will spread like wildfire. If something goes wrong, it is important for leaders to show they are big enough to admit they made a mistake.
Laura Tenison: To give you an example of that, I used to do a lot of hand-knits through the cottage industry in Peru. It was, as far as I was aware, a totally ethical business. But as the company grew, our Peruvian hand-knits had to stop because I couldn't monitor every knitter. I couldn't be sure women knitting beautiful jumpers in their huts did not get their children to help with the embroidery. While I am certain there was no child exploitation, I still had to make this change in our supply chain.
Jasmine Whitbread: That's not the position Save the Children would take. Children have rights, including the right to an education and time for play and development, but it doesn't mean they can't help with the family income. In fact it's necessary in many situations. Laura, you have set some clear standards and you are sending a strong message that you are serious. But I will say that, as you grow, you might want to check your standards aren't too stringent. Then again, maybe it is the line you have to take to avoid being embarrassed through any negative media coverage.
Marg Mayne: As CEO of VSO, which sends lots of volunteers all over the world, trust is central - not just for our employees, but particularly for our volunteers. People have huge expectations of their leaders. We are somehow supposed to be paragons of virtue and to be aware of things such as climate change and gender awareness. I agree with Robert that ethical leadership is important, but integrity is also important: part of that is owning up if you have done something wrong.
Jasmine Whitbread: There isn't a single organisation in the world that does not have some element of slipped integrity. It's better to have it out in the open, make an example of it and deal with it.
David Kershaw: Internal communication is often an issue that needs management intervention. I have large clients who still publish newsletters saying how well the company is doing, never admitting any mistakes. But you have to be honest with your staff and, if you've messed up, admit it.
Matthew Gwyther: It is normally the organisations that are the most fearful that are still doing those sorts of things.
David Kershaw: Yes, absolutely.
Peter Cheese: ILM did some research about graduates coming into the workforce. We found there's an expectation they will move up faster and will have more opportunities. Over the past decade, we have often seen graduates coming out of universities with less relevant degrees, but they still have great expectations about what they are entitled to. Trust comes into it, because most young people work for middle management. They do not work for the CEO; they work for middle management, in the large organisations.
Jasmine Whitbread: They want more for themselves, but expect more from employers.
Matthew Gwyther: Do you really think that Generation Y is any different from the way we were between 15 and 23?
Richard Sexton: They have a confidence that we did not.
Robert Care: They're better informed.
Richard Sexton: Over the past 30 years, the level of confidence among the 1,200 graduates or so we bring in each year has increased dramatically. But their access to information and technology has also risen dramatically and our expectations about how they use it have gone up enormously. When I went for job interviews, there was an assumption you might know roughly what the business was about. Today, you are expected to have looked at the website and to know exactly what the values of the organisation are.
David Kershaw: The death of deference is a good thing. We have 12 graduates a year, but they aren't afraid to challenge what the old farts are saying. The important thing is to create a culture in which they are not afraid to challenge. People are coming through more quickly and having a real effect on the organisation, so there is a good side to being sceptical about authority and challenging leadership.
- Have a look at the full transcript of the round-table.
- Jasmine Whitbread - CEO, Save the Children (International)
- Laura Tenison - founder and MD, JoJo Maman Bebe
- Julie Spence - Press Complaints Commission member (ex-president of British Association for Women in Policing)
- Robert Care - chair, UKMEA region, Arup Group
- David Kershaw - CEO, M&C Saatchi
- Marg Mayne - chief executive, VSO International
- Matthew Gwyther - editor, MT
- Peter Cheese - chairman, Institute of Leadership and Management
- Debbie Allen - director, corporate responsibility, BAE Systems
- Richard Sexton - head of reputation and policy, PwC