Organisations need to stop taking a “flick it to HR” approach when it comes to workplace culture and ethics.

In a recent version of this column, an outline was provided of some key learnings for our profession from the current Banking Royal Commission (BRC). As we move through 2018, company directors and HR executives have been taking the BRC proceedings onto their compulsory reading lists, along with the recent APRA Audit report into culture at the CBA.

Over the last two years, APRA and ASIC have both made public statements that organisational culture is a critical part of the fiduciary duty of Boards, with concomitant responsibilities to monitor evidence on this within their organisations, and to intervene with corrective action and remedies, when necessary.

HR’s problem

Many readers will recognise that culture often becomes part of a “flick it to HR” list when Boards and CEOs find the going too hard to get their heads around, or where they don’t like the results that come forward from culture surveys. The APRA Culture Audit and current evidence from the BRC however have both moved this topic from the ‘flick it to HR” list to the “running on empty” schedule.

In recent times, I have attended a range of seminars and meetings on ‘culture in business and board / executive responsibilities’, and its most regrettable the dominant reaction has been ostrich like. Culture is seen as a topic where “someone else will get caught, and not me”. Or that “I think our organisational culture is very strong” without having any objective evidence of this.

APRA and ASIC themselves will be subject to extensive questioning at the BRC, and some predict its final report will cover regulatory shortcomings. As a result, culture is likely to be a highly positioned meter on regulators’ 2019 dashboards. To demonstrate they are doing their job better, these regulators may also be looking for some high-profile scalps.

These signs serve as a warning light on HR’s own dashboard. It is the time for our profession to step up on culture within our employing organisations, to monitor the signs and to ring the bell within the senior management team and board, on the risks and consequences of ignoring bad systemic behaviours.

It’s worth getting it right

Culture has been described by former Australian of the Year, and retired head of the Australian Army, General David Morrison, as “what’s seen as the acceptable norms of behaviour in an organisation, and is expressed also by the stories we tell each other about ourselves.” Morrison also said to his colleagues that “if you walk past bad culture and inappropriate behaviours, but do nothing – you are culpable too.”

Culture is therefore vested in an organisation’s values and their practice. Culture is also enshrined in an organisation’s business ethics. The good news is that positive culture and good business performance are highly correlated in both public and private sectors. So it’s worth trying to get it right.

Whilst HR practitioners cringe when the full responsibility for culture and ethics is flicked to them, our profession does have some primary responsibilities here. In high performing and ethical organisations, HR plays a vital role to ensure that:

• Your organisation adopts a values-based approach to ethical decision-making;
• Co-workers are better equipped to face ethical dilemmas on the job;
• Ensuring your colleagues know that ethics in business is about ‘doing the right thing’ and
• Advocating that organisations can suffer reputational damage if their values and practices aren’t embedded within an ethical framework. 

A quick lesson in ethics

HR practitioners sometimes see business ethics as the astrophysics of the social sciences. Professor Bob Wood of the Melbourne Business School, and one of Australia’s leading business ethics practitioners, said to me “it takes about two minutes to learn the history of ethical principle, but a lifetime to practice it”.

That two minute tutorial goes something like this. In the centuries following the writings of Socrates on what makes for a compassionate and sensible society, two main schools of thought developed on ethics.

First, the Kantian school stressed the importance of absolute duty or principle. Values like honesty, trust, and good faith are typical centre-points within Kantian thinking. But as we know from HR itself, there are always conundrums thrown up by inflexibly pursuing absolute standards.

For example, each of us would probably claim honesty as being hard wired within ourselves. Yet would each of us be honest with a person seeking to do serious harm to a third party where only we knew the potential victim’s whereabouts? In that instance you would probably choose not to be honest with a menacing perpetrator.

The second ethics school is known as Utilitarian. Here the governing principle is to pursue the “greatest good for the greatest number”. But this school accepts some will miss out against access to a universal standard, but the majority will do ok.

Sound ethical practice essentially requires a balancing up of the teachings of both schools.  My next article will cover the main areas where ethics impacts the workplace, and also some features for a successful execution of the HR role.

All part of getting ready for the expected turbulence around culture and ethical work practices during 2019.

This article originally appeared in the November 2018 edition of HRM Magazine.