Driving an ethical culture – what great organisations are doing right

From left to right: Graham Willis, Trent Moy and Tim Capelin

From left to right: Graham Willis, Trent Moy and Tim Capelin

Tim Capelin, Partner Employment Law at Piper Alderman, and Trent Moy, Executive in Residence at The Ethics Centre, engaged in a Q&A session on ethical culture in organisations.

The conversation centred around the following key questions:

What makes an ethical culture?

The enemy of ‘good ethics’ is not ‘bad ethics’; it is a culture where people follow custom and practice in an unthinking manner. The issue of ethics is often not at the fore of our thinking when there’s a clear ‘good vs bad’ choice, but comes into play when we are confronted with the choice between two ‘bad’ outcomes. A framework for reviewing decisions or actions through a values or ethics prism is useful, but there is no checklist. You cannot just put in place a framework or code without context and understanding about those frameworks and codes. A checklist with no context is of limited use.

One of the other points that was covered quite extensively was the contribution that diversity makes to an ethical culture. The different thinking styles, different social backgrounds and different experiences of a diverse workforce will often create a much more robust and considered decision-making process in the face of ethical dilemmas. Better practice organisations are often characterised by having a diverse Board, management and workforce composition and diversity should continue to be a key focus area and, as an outcome, better inform complex decision making.

What role is played by company Codes of Conduct or Codified Values?

We discussed some cases in the Financial Services industry, which has seen some of the worst excesses of unethical corporate behaviour, where there has been an attempt to mitigate that behaviour by what seems like an overwhelming barrage of new governance requirements.
Codes are useful to clarify a company’s ethical position. Their composition, however, (particularly in relation to company “Values”), may create a hierarchy (i.e. some values having precedence over others) or a limitation which could prevent a company having the necessary flexibility to effectively address ethical issues.

From left to right: Graham Willis, Trent Moy and Tim CapelinCompanies do need to be careful that in implementing codes and policies (particularly after a problematic event that may have brought condemnation upon the Company) they don’t over-react and create highly prescriptive rules and “solutions”. Historically (e.g. abolition of slavery, emancipation), this is characterised by a challenge to existing laws, rules and conventions.

Is it unethical to take extreme action if you feel the outcome is essential for the company’s prosperity?

We debated the action that companies like Qantas, Patrick and more recently Hutchison, took which seem quite extreme. Shutting workers out, grounding the fleet or unilaterally sacking workers by text and email. In most cases the actions were legal (some of the actions Patricks took were reversed by the Federal Court) but were they ethical? Ethical behaviour does not necessarily mean difficult decisions are avoided or radical action, which may seem unfair to some, does not occur. Ethical behaviour does normally mean that there have been extensive attempts to reach a shared position prior to extreme action being taken.

What happens where individual employees’ and other stakeholders’ values conflict with the organisation’s values?

We discussed the application of, for example, one set of codes in the Medical Sector (the Hippocratic Oath) potentially conflicting with end of life decisions. The original Hippocratic Oath is very specific when it says “I will neither give a deadly drug to anybody who asked for it, nor will I make a suggestion to this effect.” How does this very clear code work in a Hospice or in an environment where the ‘Right to Choose’ is prevalent? Is the doctor unethical if they ease a patient’s suffering in line with their wishes or are they ethical in assisting an individual end their suffering? Hippocratic Oath aside there are many other social and religious mores that become relevant in creating the backdrop against which that specific decision is taken and subsequently judged.

LuncheonIn order to provide a canvas on which to paint we need to create a view of ‘shared value’ and ensure that we have commonly shared values with stakeholders. That might enable us to get closer to answering the question “What do we all value as ‘good?”. New stakeholders may adopt what is already there or challenge the values that exist…this may cause a rethink, but does not always lead to a change.

We also discussed the situation where a person’s specific value set might not be aligned with that of the company. This was by no means necessarily restricted to issues of deep ethical conflict, but maybe more subtly to a misalignment of the prioritisation of values. So the decision becomes a personal one about how to handle that conflict. Does one leave that organisation ‘die for the cause’ or become a ‘squeaky wheel’ with the aim of changing things. “You don’t have to be a martyr to be ethical – it might be better to be a provocateur.”

Can something be legal but unethical, or possibly more interestingly ethical but illegal?

We talked about the sorts of issues that had emerged in a range of industries, notably in labour intensive industries challenged by international competition. For instance some may argue the clothing manufacturing industry in Australia largely went off shore because it couldn’t legally compete with the labour costs in Fiji, Mauritius, China and Bangladesh. Underpaid outworkers in Australia lost their jobs as a result. Who is better off in this situation? This does not even touch on the issues of potential working conditions and wages in developing countries who now have the work. So it is legal to offshore the work…but is it ethical either for Australian workers or for workers overseas?

Aren’t there always excuses or justifications for cutting corners doing the wrong thing?

There is a role for ‘reflective thinking’ rather than fast, reactive, problem-solving when weighing up any issue that might involve ethical considerations. There will more than likely be a hierarchy of values that has to be thought through and having a framework or set of values to guide that thinking is useful.

Is there a reason for making a more rapid decision? Yes there is and the more an organisation has a clear set of values and a clear purpose the more rapidly they can make a decision. Is there a justification for doing the wrong thing with wrong intent? No.

As a take-away on values, it’s hard for people to relate to abstract values (like Integrity). It is far better to show people what the behaviours that express the values look like in concrete terms.

Key Take-Aways

• Diversity makes a significant contribution in creating richer ethical frameworks.
• Reflective thinking trumps reactive problem solving for ethical dilemmas.
• Frameworks, codes and standards are only guides…rarely the complete answer.
• Ethical decision making is often multi-dimensional and complex…if it was easy you would have no ethicists because the answers would be obvious.

For some further insight please feel free to contact either:

Tim Capelin at Piper Alderman at tcapelin@piperalderman.com.au or
Trent Moy at the Ethics Centre at Trent.Moy@ethics.org.au