Barclays & News International scandals – get to grips with ethics 03/09/2012

Over the past few weeks, the Barclays Libor-rigging scandal has dominated the media. It’s already claimed the scalps of their chief executive and chairman, and more may follow. Barclays leadership is clearly in crisis mode, with shareholders, politicians, business leaders, and the public demanding further investigation as to how the scandal could have happened.

Although their accusations of wrong-doing are mired in technical financial terminology, this isn’t just about numbers. Indeed, it’s a pattern that’s being repeated within a number of organisations. News International is still in the limelight over management failures a year on from Rebecca Brooks’ resignation, and GlaxoSmithKline was recently fined $3 billion after admitting to bribing doctors.

It’s easy to use the few bad apples excuse, or to look for high-profile scapegoats while entire sectors reel from these types of revelation. However, an obsession with finger-pointing can mean we’re failing to fully consider the real issues, which are much more deep-seated and complex than clearing out a few figureheads.

While change at the top is needed, the recent revelations are a firm indictment of what happens when those managing businesses at senior and mid-levels don’t adhere to professional standards, follow a code of conduct, or treat management as a true profession. Questions also need to be asked about the effectiveness of management structures, and whether senior managers are investing in developing and guiding their own managers. If nothing else, the Barclays and News International scandals have highlighted a remarkable culture of not knowing what actions are being taken and a weakness in line management and the chain of command.

In cultures where pressure and potential rewards are high, it’s inevitable that this lack of a professional approach will create confusion about what is acceptable and where boundaries lie.

This is what we mean at CMI (Chartered Management Institute) when we talk about bad management damaging British business and UK plc. Employees have no sense of what’s right and wrong because managers and leaders don’t work to strong ethical standards themselves, and don’t impart them to their teams. With the public distrusting big business, now is the time to start putting the ethics back into management.

At CMI, raising professional standards is at the heart of what we do. Our members must work to a code of conduct and ethics, signing up to practice with integrity. From feedback and research, we know that this has a positive impact on organisational performance and reputation. Many organisations have their own code of conduct but, as recent events have shown, they’re ineffective if not enforced from the top down. A more effective strategy would be for businesses to commit to a standard of integrity and a code of ethics at the start, and then review annually. This would allow for excellence in management and leadership. It’s something managers at every level could sign up to and, when reviewed, would provide an early warning system for potential ethical risks.

Qualifications must also be at the heart of improving UK management standards; individuals must be able to demonstrate the skill needed for the job they’re doing, and organisations must show commitment to professional and ethical management. Only 1 in 5 of UK managers are professionally qualified. As a professional management and leadership-standard-setting body, we’re working hard to increase that number. It’s hardly surprising that people make mistakes while working in roles they’ve not been trained for, especially if leadership at the top level is lacking.

UK business (the City in particular) has claimed to have a ‘nice guys finish last’ culture. Nice guys don’t finish last – they just do things that are right and make best business sense. These are the leaders we should be looking to as our business beacons – those who have the most engaged employees, the most productive organisations and, ultimately, the best-performing bottom lines.

It’s not a case of social responsibility, it’s about everyone taking individual responsibility to set an example in management, and reap the many business benefits that this will bring.

UK business leadership has seen some dark days in recent months. Let’s make this the moment we start putting ethics back into business and earning the trust of the UK public.