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When organisations trash their own values – and why we should care

posted 3 Jul 2019, 19:32 by Michelle Stewart

Despite regularly chastising ourselves for being over governed as a nation  - no less than nine state, territory and federal jurisdictions jostle to rule Australia’s modest population of 25 million people –  our governments are seeking outsourced assistance like never before. Expenditure on management consultancy and legal firms serving the advisory needs of politicians continues to grow. To this outsourcing trend can be added the plethora of Royal Commissions tasked with shining a light onto an ever-expanding number of neglected policy swamps. In a few short years we have had royal commissions into institutional child abuse, the treatment of young people in the Northern Territory juvenile justice system and the financial system. A royal commission into aged care is currently sitting. There are regular calls for a royal commission into the Murray-Darling Basin. In falling back on Royal Commissions and consultancies Australian governments are avoiding their accountability for policy formation and action on an industrial scale. How so? Because very often, governments know what needs to be done. They even possess the expert advice necessary to guide reform or change but choose not to act. It was the fictitious civil servant, Sir Humphrey Appleby, who once quipped words to the effect of, “My dear Prime Minister, one should never set up a royal commission unless one knows already what one wishes it to find!”

And what have our most recent Royal Commissions revealed? When distilled to their essence, the Royal Commissions into banking, child abuse and now ageing have shown that many of our most revered institutions systematically violated their own values and even the law. In some cases, they did so without a pang of conscience, while in others wrongdoing went on for years. Those charged with providing oversight such as boards, senior leaders and regulators, did not seem to notice. If they did notice, they often did not act and if they acted, they failed to act decisively. How condemning that the Banking Royal Commissioner called not for new laws to keep rampant bankers in check, but for the wholesale enforcement of existing legal frameworks! Poor oversight and a form of institutional blindness allowed systemic instances of sexual abuse to go on unchecked, chronic abusers were protected and “moved on”, young children in the Northern Territory were hooded and tied to chairs as punishment while bank customers, both living and dead, paid for services they did not receive. In aged care, we are already hearing that some of the frailest, most vulnerable people in our society are not being nursed adequately by the institutions paid to do just that.

It is not that the organisations and institutions found wanting did not have values, it is just that their values were not upheld in practice. What might be termed universal values such as respect, honesty, customer service, quality, transparency and fairness were printed up in expensive brochures and flashed across websites, yet those very same values were regularly trashed with impunity.

There is a crucial point to be stressed here.  When an organisation’s stated values are systematically breached it can only mean one thing: that other, deeper, unwritten beliefs are in place that have more power. For whatever reason, staff come to understand that the explicit, written values do not actually apply. If, for example, customer service is a corporate value, and customers regularly pay for a service they don’t receive, the deeper, the more important corporate belief in play is corporate profit, short term gain or personal reward, comes before the customer’s interests. This despite evidence that indicates that long term focus on customer interests contributes to long term profitability. Similarly, if an organisation touts openness as one of its values, and then regularly goes to great lengths to block customers and regulators from gaining access to supposed freely available data, the unspoken assumption in that institution is that staff should act to protect the reputation of the organisation at all costs. Strange that it took a royal commission into institutional child abuse to bring to light the fact that many in leadership roles in some of our most respected organisations considered the good reputation of their institution to be more important than the welfare of the children they cared for.

How do we explain the glaring discord between high-minded written values on the one hand and contradictory behaviours on the other? The great organisational thinker, Professor Ed Schein, theorised that there are at least three levels to organisational culture: a. the things we can see in action; b. that which is written down in documents; and: c. the often unconscious beliefs that sit underneath an organisation’s written or espoused values. He calls this third, deepest layer of organisational culture “underlying assumptions” or “shared beliefs”. Values and underlying assumptions are not the same thing. Underlying assumptions are typically held subconsciously. As such they are passed on quietly from staff member to staff member over years and even decades. Assumptions and shared beliefs are thus “caught” not “taught.” It is rare, for example, that a young banker is taken aside and told “It’s OK to screw over your customers, nobody pays attention to our corporate values.” It is far more likely that s/he comes to assume that customers do not matter because over time they observe that profit matters more than treating customers honestly. Put bluntly: they learn that in some circumstance it’s OK, and even rewarded, to trash company values.

The fact that humankind does not always do what is right, even when right is defined in the company values, is hardly a revelation. What should be a clarion call to us all is that as a society we have come to tolerate boards, regulators, executives and even governments ignoring and transgressing their own values on the grand scale that three, soon to be four, Royal Commissions have revealed. In banking and finance, wholesale abdication of the most basic human value of fairness has made bankers, and very many shareholders, rich. Banking and finance sector boards failed to ask probing questions of their executives or accepted evasion and half-truths as answers. The same can be said for the aged care sector where the service levels offered by corporatised providers and large not for profits fall well below the standard set in their stated values. School leaders and boards that touted honesty and integrity to their students, then abdicated those values when it came to investigating and stamping out child abuse, are equally and just as profoundly on the hook.

It is not an organisation’s published values that matter but the underlying assumptions and beliefs behind them. As I have illustrated, if the two do not align, then neither will people’s behaviour – and that is how organisational values come to be trashed. Perhaps one negative outcome of being an over-governed nation is that we’ve come to rely more on law and less on principle; more on an individual’s capacity to coin the right words and less on their personal character as evidenced in their actual behaviour.  Whatever the case, those called to the responsibility of organisational leadership, and especially to governance, need to dig deeper, observe more acutely, accept assurances less readily and act more quickly than they have in the past. Recruiting for, and rewarding, leaders with the right values AND the talent and drive to create long term successful enterprises is more important than ever. After all, we tried the alternatives and they clearly failed. Sadly, I believe we have yet to fully comprehend the impact of those failures.

Philip Pogson FAICD

Director, The Leading Partnership Pty Ltd