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Ethical Leadership

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Why Bankers Are As Popular As Traffic Wardens

January 16, 2018PaulArticles, News


By Paul Peters MCIPD, Personal Development Consultant and Trainer

John Kenneth Galbraith, Canadian-American economist, suggests that; “A banker need not be popular. Indeed, a good banker in a healthy capitalist society should probably be much disliked.?

The necessity for bankers to be set apart and distanced from the social / emotional concerns of everyday life may well have been an acceptable business norm in the past when bankers perceived themselves as bastions of good judgement. Now economic tides have shown them to be as susceptible to emotional charge that fuels the serial gambler’s desire to win; as susceptible to the tendency to subordinate what is right in order to fulfil ones own desires as the rest of human kind. Unaware of the emotions that drive behaviour in the pursuit of shareholder value - growth at any price and personal wealth - banking is perceived as solely self-interested and often at times exploitative of its customers.

Popularity And Trust Is A Source Of Competitive Advantage

Lack of popularity today is not a symbol of professional distance that comes of having to make difficult and sometimes unpopular decisions in the best interests of the public; rather it is a sign of complete loss of faith in the moral judgment of financial professionals. Put simply, the public don’t trust bankers’ motives. As if to further cement this perception in the public mind Alexander Dielius, CEO Eastern Europe Goldman Sachs, January 2010, in the Wall Street Journal, said; “Banks do not have an obligation to promote the public good?. This was said only 14 months after the disastrous events of September 2008, exhibiting a level of arrogance and lack of self-awareness that staggers even the most naïve of investors. John Kenneth Galbraith went on to say; “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it?.

Popularity for banks is now essential if they are to regain public trust and subsequently attract investment and growth. The time for worship of wealth is over as customers flock to what they perceive as more ethical sources, craving honesty, transparency, and simplicity from their professional advisors. The public mood of dissatisfaction waits eagerly upon the emergence of an ethical banking source where a reasonable return is made for financial service. The bank that successfully and authentically transforms its culture to a culture of integrity will be in huge demand.

What Makes Good Men Do Bad Things?

This is not unique to bankers. Put any human being in a position where temptation is put so plainly in front of them, and in the absence of ethical rules that keep the individual safe from inducement, most of us would fall victim to the vices of self interest and greed. Banks are in fact full of good people, who have been placed in a position of economic power for so long, where, in the absence of a focus on virtuous business practice, good people have made bad and unprincipled decisions. It is clear that all types of organisations are vulnerable to creating context where social pressures, arrogance and the lack of moral awareness can influence good people to make bad and even unethical decisions.

The psychological transformation from a good person into someone who takes part in wrongdoing is explained by psychology professor Philip Zimbardo, who conducted the infamous Stanford Prison Experiment, in the following way; “When people do not pay attention to ethical considerations of their daily decision making on an on-going basis, it can impact the long term success or failure of an organisation and the personal lives of many.?

Character Ethics And Organisational Development

Organisations are a collection of individual human animals co-operating to create wealth to safe guard their existence. Sets of social rules are necessary to allow humans to co-operate in this way, and these rules may be spoken and recorded in codes of conduct, values statements, and policies.

Often other rules are at play, unspoken behavioural norms that everyone conforms to in order to belong. These unspoken behaviours are often perceived to promote the most effective strategies for survival of the organisation and the individual. Unspoken rules sometimes diverge from the publicly stated procedures in powerful ways. This divergence from the ‘socially acceptable policy statement’ on ethical conduct and the ‘colluded, subconscious behavioural norm’ is witnessed by customers and seen as incongruence - more commonly known as lying. The mismatch between what organisations say they do and what they do is at the heart of customers and investors willingness to trust. This is the ethical dilemma facing many professional service organisations today and the key to business transformation and success. Don’t say you’ll do the right thing; just DO the right thing - consistently, reliably, and forever.

Dr Melissa Thorne writes masterfully about the role of doing the right thing or what he calls ‘character ethics’ in organisations. As a result of a study he undertook where he read the last 200 years of writing on organisational and personal success he noticed a significant pattern. The most recent 50 years of literature concentrated on what Covey describes as the “Personality Ethic? technique driven methodologies for ‘quick fixing’ the customer to give you more of what you want.

The shallow concentration on social image, media skills, interpersonal influencing strategies, marketing, and customer service skills etc. These “superficial…. social band-aids and aspirin that addressed acute problems and even appear to solve them temporarily, but left the underlying chronic problems untouched to fester and resurface time and again.? In stark contrast the literature of the first 150 years focused almost exclusively on what Covey calls the “Character Ethic.? These include traits and attributes such as; humility, compassion, fidelity, temperance, courage, diligence, simplicity, honesty, integrity etc. He suggested that individuals and organisations “can only experience true success and enduring happiness as they learn to integrate these principles into the organisations (and, therefore, individuals) basic character.?

After World War 1 the shift from Character Ethics to Personality Ethics was quite pronounced as technology and media communications brought the leaders out into the public domain. The dominance of the media and technology as the major influencing vehicles of our age has meant many leaders have lost sight of the character that drives the collective behaviour of a business. For years organisations have invested in pubic behaviour, image improvement, and technique driven relationship management.

We see this today with many banks formulating ‘Customer Charters’, ‘Service Pledges’ and investing heavily in personal branding workshops, and customer service skills training. This is all positive and extremely necessary; however, it is a distraction which has caused leaders to take their eye off the motives that underpin their practice. No amount of fancy rhetoric can compensate for a lack of trustworthiness. Many customers would prefer far less spin with their messages and much more straightforward honesty, compassion and knowledge that service providers are genuinely acting in their best interest.

Lack of investment in character ethics has lead to moral creep, which combined with shareholder pressure and bonus cultures has lead to the many organisational failures of recent times. To mention a few; Enron, Swiss Bank UBS Kweku Adodoli fraud, Bernard Madoff, the political expenses scandal, the sub prime selling scandal, News of The World telephone hacking scandal, protection insurance miss-selling scandal……. etc

The cultural development of Character Ethics in organisations is the conscious and subconscious solution to develop trust, increase popularity, and as a result deliver growth. It won’t ‘fix’ the customer but it might ’fix’ the bank! The slow and demanding process of exploring the character of your organisation, and every individual within it - especially the leadership team, makes sound commercial sense. Some progressive service sector organisations have already realised the economic advantages of ethical practice and are moving rapidly into the field.

The Agenda For Personal Excellence

“Leadership is about character, no… leadership is character? says Alexandre Havard in his remarkable book ‘Virtuous Leadership.’ Character ethics create a space in which leadership occurs by instilling trust. We acquire character ethics through our own efforts, “the very act of acquiring them is an act of leadership? says Warren Bennis.

We have created a model for the development of Character Ethics in leadership which we have called ‘The Agenda for Personal Excellence’ TM. It is devoid of faith based moralising or religiosity and is a practical and secular approach to character development. In developing the model we see no conflict between the need to be successful economically and the pursuit of moral integrity. It is necessary for moral leadership to produce wealth and success otherwise the practice of character ethics would not be sustainable.

The Agenda For Personal Excellence - The Model

Self Awareness - At the heart of this model is self awareness. A leader is able to focus attention on their own behaviour and evaluates it logically. Working from the inside out and consistently lives up to their own personal standards.

Self Determination - Acts without external compulsion based in his/her character. Freely chooses his/her own course of action and acts autonomously without direction.

Professional Moral Courage - Follows a self-imposed code of conduct and consistently delivers on his/her promises. Role models positive leadership behaviour.

Being Open Minded - Demonstrates intellectual curiosity and often uses active imagination to resolve difficulties and remove obstacles. Is willing to suspend their own judgement to consider the views of others.

Authenticity - Behaves in a way that is consistent with his/her own personality. Is honest and truthful. Leads from the authority that stems from their personal beliefs.

Self Confidence & Belief - Speaks openly, but not arrogantly, about his/her successes and achievements and appears to be happy with their achievements in life. Shows no need to prosper at other people’s expense.

Sharing Knowledge - Shares knowledge, skill and expertise frequently in a confident and comfortable way. Creates a family/team/organisational culture or atmosphere that encourages everyone to share knowledge.

Humility - Shows respect for others regardless of status. Is modest about their achievements.

Charisma, Presence - Possesses a compelling attractiveness or charm which commands attention in a non-threatening way. Demonstrates no unrealistic sense of superiority.

Compassion - Consistently shows empathy for others and actively demonstrates sympathy for the suffering of others. He/she regards kindness as a strength and cruelty as a weakness.

Respect - Value the Individual - Expresses an attitude of positive regard for others and accepts others as different without diminishing them.

What do you think? If any of these themes or views have stimulated your thinking or curiosity we would love to hear from you. Please leave us a comment.

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