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A tale of three banks: how companies get ethics right – and wrong


by Jackie Allender

In March two Australian banks were nominated as among the world’s best for their ethical approach – and one became a local byword for a failure of ethics. Which then begs the question – how can two banks get it so right, and another get it so very wrong?

The Ethisphere Institute has just released its list of the 131 most ethical companies in the world, featuring a host of US-based organisations and just two Australian ones – NAB and Teachers Mutual Bank.

I’m guessing that we won’t see CommBank on that list any time soon, given the quagmire in which it has been bogged after revelations that its CommInsure arm was denying apparently legitimate disablement claims using outdated criteria. This is the second time CommBank has been embroiled in controversy over significant failures that involve its approach to ethical behaviour.

Ethisphere honours companies that excel in three areas, all of which I see arising from organisational culture. They are:  promoting ethical business standards and practices internally, enabling managers and employees to make good choices, and shaping future industry standards by introducing tomorrow’s best practices today.

Are NAB and Teachers Mutual really so much better than other Australian companies? What did they do right?

Well, it has to be said that the first thing they did right was to enter the Ethisphere process!

The institute uses a self-assessment process followed by investigation and validation to determine its ‘most ethical’ list. Engaging with the process suggests an organisation is confident in its ethical approach and wants to promote it to employees, customers, suppliers and regulators.

To paraphrase Tolstoy, all ethical companies are somewhat alike in their ethical approach, but unethical companies may be unethical in their own individual way.

I’m not privy to the fine details of what NAB and Teachers Mutual do, but based on my engagement with companies over a number of years here’s some tips about normalising ethical behaviour in your organisation.

Don’t leave it up to values or mission statements

Most large organisations these days have some sort of statement about their values – and I haven’t seen one yet that says ‘when it comes to a conflict between people or profits, profits win for us every time’. Most of them say something about the way they want to do business – operating fairly and ethically, treating people well etc.

But here’s the thing – you need to walk the talk.

Promoting ethical business standards and practices within the organisation means boards and managers have a role to play in modelling the behaviours that they expect from the rest of the organisation. If senior managers constantly give the message that profit is the only thing they are concerned about – then it should be no surprise if staff cut ethical corners in order to achieve profit.

If organisational culture is essentially about what people understand about ‘the way we do things in here’, then you can’t just rely on published statements, you have to operate in a way that makes it meaningful.

Interestingly, just last week, as the CommInsure issue was about to hit the headlines, the Australian Institute of Company Directors held its first Governance Summit, including a session about the Board’s role in influencing culture: “Managing culture within an organisation is a challenging task, and the board has a critical role to play in influencing the attitudes, behaviours and values appropriate to their organisation,” says the program.

Reinforce your ethical purpose

Do you ensure everyone is trained in your organisation’s ethical values? Not just given a copy of the employee code of conduct on induction, but given clear understanding of what is expected and the ways in which they should deal with any potential conflicts between ethics/values and business directives. Do you have a whistleblower policy and process – and is it understood, promoted and accessible to the workforce?

Enabling employees to make good choices means more than having policies in place. It’s how you implement those policies that’s important.

It’s also worth saying that while organisations often focus in their public statements and policies on the ‘big ticket items’ such as fraud and theft, it is the small daily decisions that form the bedrock on which values and ethical purpose sit. How do you make those decisions – and how does the organisation support the workforce in making those decisions? Is it your practice to automatically take an approach that will privilege the organisation’s interests before those of employees, regulators, local communities etc.?

Transparency works

In my work I read a lot of sustainability reports. Most address the issue of governance and ethics – talking about structures and policies, whistleblower protection, codes of conduct and the like. But I wish I saw more about how they were implemented in the organisation’s daily life.

When governance and ethics and integrity are highly material – as they are in sectors such as financial services – more information (and not just fine words!) about the organisation’s approach, how it is implemented and how the implementation is assessed, would be useful.

I’d like to see for example, how many issues were raised through a whistleblower or similar process, and, without going into too much detail, what actions were taken on matters deemed serious. That would help to tell me whether the workforce feels they can access the process without jeopardising their employment, and whether the organisation takes matters raised in that way seriously.

Make your CSR strategic

But ultimately, all the disclosure in the world won’t help if the organisation hasn’t woken up to the fact that it operates within society, and the mantra People, Planet, Profit is more than a catchy slogan.

Organisations that integrate CSR into their strategy across all areas of their business are more likely to adopt an ethical approach, as their decision-making will incorporate an assessment of impacts and benefits to society, the environment and their business.

Making sustainability strategic is another way to support an ethical organisation.

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