Simon Longstaff has been recognised as AFR Boss’ True Leaders for the 21st century. Since 1991, he has been guiding businesses in navigating the complexity and uncertainty of ethical issues. In this conversation with Connect Intelligence, Simon draws upon his extensive experience to discuss the ethical challenges facing Australian businesses and how they can overcome them.
1. What do you believe are the most pressing ethical issues Australian directors and boards currently face?
Boards face two distinct (but potentially related) challenges. The first is the precipitous loss of trust in business institutions and still more dangerous, their legitimacy. The second is the risk that even very junior members of an organisation are capable of causing strategic failures. Directors are having to come to terms with the fact that neither challenge can be met by the traditional means of increased compliance. Instead, it is cultural formation (built on a solid ethical foundation or purpose and core values and principles) that makes the greatest difference. Unfortunately, many company directors feel themselves to be poorly equipped in relation to the ‘soft’ skills needed to manage this dimension of business.
2. What do you believe is the relationship between business ethics and organisational performance?
It is generally well known that superior performance is a result of employee willingness to make a discretionary effort. The key to unlocking that discretionary effort is the maintenance of a strong alignment between what a corporation says it stands for and what it does in practice. As a rule, employees withhold discretionary effort from employers who are perceived to be hypocrites.
3. What benefits can an open-forum approach for individuals and professionals seeking to resolve professional ethical dilemmas provide?
Many conflicts at work are based on a fundamental misunderstanding between people of good will who would resolve their apparent disagreements if only there was an open forum within which they might be discussed. Perceived ‘gaps’ between what an organisation espouses and does often generates not just internal scepticism but outright cynicism. This can lead people to ‘blow the whistle’ when, instead, a culture of open communication would have allowed issues of potential concern to be resolved.
“Individuals now have to work a lot harder to develop their own ethical ‘compass’”
4. How can providing greater support resolving ethical issues and conflicts of interest benefit the workplace today?
An increasing number of people expect their workplace to provide them with an opportunity for meaningful employment. Ideally, they hope that their personal ethical code will be compatible with those of the employer – thereby reducing the risk of either internal or institutional conflict. It is far better to allow ethical issues to be raised within the company – rather than have them become a source of conflict. Addressing ethical issues often begins by a clarification of core facts – which once made clear will often dissipate concern. Equally, explicit attention to ethical issues and perceived conflicts of interest enables a company to show how its decision-making is grounded in an ethical framework that defines purpose, values and principles.
5. ‘Given the range of conflicting ideas and divergent opinions currently driving debate, do you believe that people today are more ethical than their generational counterparts?’
I think that people are as principled today as ever was the case in the past. However, given the loss of legitimacy amongst social institutions (like religions), individuals now have to work a lot harder to develop their own ethical ‘compass’. I also think that people may be slightly less hopeful when it comes to assessing their capacity to be a force for good in the world. So, the field of ethical action may have shrunk – with the focus being on areas that are more easily influenced … family, friends, etc.
6. Why is developing an ethical organisational culture important to strengthening robust end-to-end business practices and strong supply chain management?
Companies no longer have the relative luxury of defining the boundaries of their obligations in terms of formal legal structures. Instead, the community judges a corporation according to its conduct across the full sweep of stakeholders – including through its supply chain. So, responsibility now attaches to the organisation that is seen to derive the greatest benefit (including profits) within the value chain. Given this, there are no ‘exogenous’ elements and every part of the supply chain is treated as if it was part of the company at its head. Although it may not be possible to have a homogenous ethical framework applying across a whole value chain – it is essential that each part at least be recognisably part of the same broad ‘family’.