Podcast transcript: How can organisations can maintain a culture of ethics & integrity during COVID-19 and beyond?

Loree Gourley

Welcome to the EYUK Corporate Accountability Podcast Series. Today's conversation explores ethics and corporate integrity.

My name is Loree Gourley, and in the studio today I have David Grayson, Chair of the Institute of business ethics; Fraser Simpson, Associate General Counsel, Ethics and compliance at The Wellcome Trust and Maryam Hussain, EY global fraud and corruption investigator.

Today's discussion will focus on how organisations can maintain a culture of ethics and integrity during, not only the COVID-19 pandemic, but beyond.

Maryam, from your experience, obviously the pandemic has resulted in millions of people working from home. Governments are working to provide financial aid and medical support.

EY has recently conducted a global research project and we'd welcome some insights into the feedback from that piece of work on corporate ethics.

Maryam Hussain

Yes, it was a piece of research that we commissioned through Ipsos Mori to conduct for us, and it started in January/February. It was completed and then, of course, we had the height of the pandemic in March/April. So we went back and we extended the research.

So the questions were around different aspects of corporate integrity, personal integrity (in particular in relation to leadership), integrity in dealing with outsiders (with third parties, suppliers and others), and integrity in dealing with the data with which an organisation has been entrusted. We did have a very wide representative sample - it was primarily large global organisations, but we had 3600 respondents in 33 countries across board, middle management and the rest of the employees. There were three themes that came out in relation to, in particular that first subject, personal integrity which, I think, would be perhaps interesting to start with.

The first theme was that, unsurprisingly, organisations saw pandemics as heightening the risk of unethical conduct. What was surprising was the top response as to the ‘Why’ because the top response was 33% thought it would be a risk because people are working remotely and away from the office. And you kind of asked why would that be? If there's a culture of mutual accountability and trust.

The second theme was the proportion of, surprising proportion of, board and senior management that, in response to questions like ‘Would you ignore unethical conduct?’…so that was called out in the question: ‘Would you ignore unethical conduct in your teams if it progressed your career or if it helped your remuneration or bonus?’. Surprisingly high percentages - so 14% of board members said that they would. We had interviewed 400 board members, so that is 56 individuals. And that was very surprising because, normally when you're doing something, if you thought of it as unethical at that point, you wouldn't do it. So there's something about the culture of boards.

And the third theme was the chasm between the perspective of the employees and the view from the board room. So 67% of the board respondents said we often talk about the importance of integrity, but only 37% of the employees agreed. 70% of the board respondents say, of course, is safe to blow the whistle in our organisation, but only 58% of the employees agreed. Where around a third, from the top to the bottom of the organisation, agreed is that high performers get away with unethical behaviour. So, if that's the case, even if the board does frequently talk about integrity, why would anyone listen? Why would anyone blow the whistle about someone who's bending the rules?

So, I will conclude with this….in my experience, this is often the symptom of organisations where there isn't a balanced set of objectives. There is a single dominating objective, which means that, as long as you’re striving towards that, the means justify the ends. And it applies just as much to a charity as to a corporate. There’s a single focus, and so the different ethical dimensions of decisions fade away.

Gourley

And David, I'd be interested in your views from your work at the Institute in engagement with companies in the domestic market, but equally globally.

David Grayson

So I think the Ipsos Mori research that has been produced for EY is really very disturbing because we know that boards, ultimately, are where the buck stops in terms of the whole conduct, the running of the organisation but, in particular, great accountability/responsibility for checking on the overall culture of the organisation.

And if the board is not itself demonstrating really powerful, ethical leadership, then it's much harder to expect people through the organisation to follow the kind of principles that the company has set out. We've been doing well every three years, just produced last autumn, the 9th in a series of triannual surveys of the users of codes of ethics, or codes of general business principles, in both UK headquartered companies, but also in several continental European countries. Some interesting findings from that.

First, codes are much more comprehensively used nowadays and the nature of those codes is changing from a very narrow compliance focus to one which is much more about broad business principles.

Secondly, and slightly in contradiction with the Ipsos Mori findings, we're seeing more commitment from boards to the implementation of a whole development program around the codes of ethics or the codes of business principles and greater communication.

But I do go back to the point that, if people inside an organisation are not experiencing what the board hopes that the culture of the organisation will be, then that kind of disconnect will mean the results will be, at best, suboptimal. And, in practice, you won't generate the kind of culture that people say that they want to see. So there's a lot of work to be done.

Gourley

I think that notion of culture is really important and outcomes. I'd welcome additional reflections, Fraser, just on activities or good practices, as David said, with regards to organisational activities in that regard.

Fraser Simpson

Thanks, I think your terminology about listen up is spot on. We frame our new framework around ‘speak up’ and it's very important to give our stuff the psychological safety and space and trust to be able to speak up.

But we're never going to generate that if we're not conveying that we, as an organisation, are going to listen up to those concerns and act on them appropriately. And that’s a really integral feedback loop.

Now, for me, a lot of what we've done is what many organisations have done – we’ve put in place a speak up framework that has the right policy environment. We provide the right mechanisms for people to report concerns. We have those triaged and dealt with. We have a partnership where we provide an external advice line. But, for me, all of those are essential but not enough to get to the ultimate ambition.

The ultimate ambition should be that we bring everything down the curve to try and deal with incidents at source before they become toxic, before they degenerate further. And, for me, there's some really interesting stuff that we've been trying to pilot and I would hope that we’ll roll out further across the organisation.

One of those is around training as active bystanders to empower our staff with a toolkit for enabling them to challenge poor conduct in the moment. How can they deal with that? What tools can we provide for taking direct action when misconduct is seen? What tools do we all have at our disposal?

We have language. We have the ability to cause a conversation. We have the ability to distract from it. We have the ability to invoke others with moral authority. We have body language. We've got intonation. We can really make points and challenge things in a constructive way for the organisation and for the individual. And wouldn't it be nice if we can shift the dial from whistle blowing after the event to challenging bad behaviours at the moment of the event and dealing with them before they become problematic? That has to be the ultimate ambition that's a constructive positive outcome for everybody.

Gourley

Thank you. Maryam, from all of your work, are there any best practices or good practices that you've seen that can achieve exactly what Fraser’s just spoken about now?

Hussain

One comment is, by the time people get to the point where they’ve blown the whistle formally, there really is so much trust lost in the organisation. It’s a really bad place to be. So anything that, as Fraser’s said, that brings it down the curve and enables the problem to be dealt with earlier is a really positive step.

The other observation is, it feels to me like we've kind of pendulum with whistle-blowers. We either treat them as saints or sinners. The reality is they just human beings like anyone else. So it's really important that the process that you do have at the point when it has become formalised is really neutral and is fair to all parties, both the individuals blowing the whistle and the individuals who are subject of the allegations and there’s a fair process around that without making any assumptions. But anything that brings us further back down the curve, as Fraser described, is a really positive way to go.

My last reflection would be, as issues arise in the organisation, often all the reporting and focus is on what is happening. And to take it one level down and reflect on why it is happening because the themes will tell you something about the environment and the culture in new organisation. Why are there reasons that people are choosing to behave in certain ways and, in the moment, it feels like it's the right thing to do?

Grayson

But I think all of that really emphasises why we mustn't think about either whistle blowing and speaking up in isolation. We shouldn't think about codes of ethics in isolation, and so on. We need to consider what's the overall culture that the organisation wants to have, one that is genuinely going to be resilient for a very, very tough 2020. It was going to be tough anyway, it’s going to be even more so now as we go into this massive economic shock after the lockdowns.

But I think we're talking about a culture which is sustainable in every sense of the word - in the sense that we're talking about how can this organisation continue into the indefinite future? And that therefore has to be a culture which is really engaging and empowering people is, as Fraser said earlier, is inclusive and is giving people the support, is empathetic, to encourage them to take the initiative….whether that's taking initiative in relation to being a social intrapreneur inside the organisation to come up with some new product or service to help society as well as help to build a business as much as taking initiative in terms of challenging poor behaviour much, much earlier (before it becomes so totally toxic and really problematic for the organisation).

So I think, looking at the kind of overall culture that the board wants to see the organization having, regular checking whether that is the reality or whether the reality is a very long way away from what they're hoping for by doing those kind of deep dives into the system and checking on how people are.

But I think of also the kind of culture that the organisation needs to have, is also one which is responsible, is recognising that it has to take responsibility for its social and economic and environmental impacts. So this takes us back to the fact that culture doesn't exist in a vacuum. It has to be related absolutely to the purpose of the organisation.

So is there a strong purpose which is authentic, is practical and is inspiring people across the organisation to want to give of their best. So these are not hermetically sealed boxes. We have to take a holistic view of all of this.

Gourley

Thank you, David. And Fraser, we'd welcome some reflections from you on the importance of culture.

Simpson

Thanks, I completely agree and the important thing about culture is it's about behaviors. And people and processes and procedures are important, but they're absolutely not the answer in themselves. And so those processes and procedures need to be humanised. And I think one of the good bits of feedback we get is actually when we put faces to this speak up framework that we have and that we talk to people on a human level. And that enables us really to make things real for people, to make people feel safe to use those mechanisms. I think that's really, really important.

I think also it's really important to evaluate the effectiveness of those measures and to be able to communicate that back to the community of staff at large. So we're planning an annual report back to say here's what we're doing. We're listening. And here's what we've heard. And here's what we've done about it. Now we're not going to be able to provide full details because there are confidentiality elements and elements of trust. But at a high level we can reassure staff that, not only have we listened if you've spoken, but we've done things about it. And it might mean that we've changed our policy or procedure on this or that we're doing something else differently. But it completes a feedback loop that says this works. I think that's essential for this to be a critical piece of building a trusted culture.

Gourley

As we bring the podcast to a close are there any concluding messages for the listeners on this important topic?

Hussain

So, I would leave with this, which will be familiar to many of the listeners, which is where the regulators are going and what the expectations are.

So, for example, recently the Department of Justice (DOJ) guidance asked prosecutors to assess whether the company has evaluated the extent to which training has an impact on employee behaviours or operations, raising the question how would you actually do that? Because behavior is a function of lots of factors which includes, but is not limited to, training.

So, for example, for one of our clients right now we do a root cause analysis for all the issues around misconduct that they have, and for everything that happens, think, well why did that happen? The first category is they didn't know any better. So that's about training. Or they did know but didn't care. And that's for a whole host of reasons, but primarily culture. Or finally they did know and care, but there was another factor. For example, they got bad data and they made poor decisions. So that's about fixing a process or a system.

So regulators are increasingly focused on this area. Organisations need to think about how they will implement in their organisations a realistic approach so that it separates out the different root causes of misconduct in their organisation.

Grayson

So yes, first of all, picking up Fraser’s point, we can learn a lot between the sectors and so just because something is happening in the charity sector doesn't mean that some of the good practice may not be also relevant to business or vice versa.

I think to Maryam’s point about the fact that some people knew it was wrong, but still went ahead and did it. Yes, that's culture, but that's also down to bad leadership because the leadership has not made clear that it's not just what you do and what you achieve but also, crucially, how you go about achieving it. And just because you're a highflyer or the great success for the organisation shouldn't give you any dispensation to behave unethically.

So I think it's increasingly important for boards. It's in the governance code now that boards have to look at what is the culture of their organisation and to check it. But I think it's increasingly important for boards first off to say: When did we last review our code of ethics or our code of general business principles? Have we done that regularly? And, if not, then just like you have a regular MOT on your car then you should be having a regular review of your ethics code. Is it still up to date? Is it still fit for purpose?

And then critically, not just have we got about a date code but are we socialising it? Socialising it both with regular training programs, but also with communications talking about it. What the leaders talk about in an organisation is critically important. I think we're going to get a closing of that Ipsos Mori gap that Maryam started with about what people think at the board versus what they think in the rest of the organisation. That requires the socialization of a really strong and effective principles-based ethics code.

Gourley

Fraser, any concluding remarks?

Simpson

Yeah, just a couple.

One to follow on from Maryam’s point around where regulators are going. And I think this is really interesting in the charity sector where we've historically had a very non-interventionist regulator. And I think perhaps that might be a reason why, with that sort of laissez-faire approach, has allowed certain issues to bubble in certain organisations. But even with the Charity Commission were seeing through their latest statement of strategic intent and right through to yesterday's regulatory alert, a real focus on this - an advisory note yesterday really requiring charities to put in place adequate speak up measures.

So I think that's really important, and I think it's really important for organizations not to wait until there's a burning platform to respond to. If you treat this as a cultural issue rather than a compliance correction issue, you should get stuck into this now and deal with it proactively and use it as a positive organisational development mechanism.

I think the point David made on leadership is bang on as well. And, for me, we've been very lucky. At Wellcome, we have leaders that have heavily championed the work we're doing around speak up and I think what’s so essential is to have a leadership that is deliberately developmental, that is open to being challenged and, for us in a community of scientists, that's the nature of the way they work. And critically, to get people in that leadership environment that are comfortable with being uncomfortable. Because this is all about having those norms challenged and being open to change. And if you don't have that, there's going to be a problem.

Gourley

Thank you. So, with that, David Grayson, Chair of the Institute of Business Ethics, Fraser Simpson, Associate General Counsel Ethics and Compliance at Wellcome Trust and Maryam Hussain, EY Global Fraud and Corruption Investigator, thank you.