According to Victoria Whitaker, co-head of advice and education at The Ethics Centre, many business leaders struggle to understand how their organisation’s values and goals are being communicated to staff but are not being implemented in practice.
“Directors are pulling their hair out going ‘we just don’t understand why people are making these decisions’,” Ms Whitaker told My Business.
“But it’s very clear they’re being rewarded for something that they believe the organisation thinks is good, even though when they stick them on the wall – these are our values, the things we believe are good – they’re quite different.”
Remuneration is a prime cause of this divergence, she said, where financial incentives to drive short-term sales can deliver adverse outcomes for the reputation of the business and repeat business.
This was a key problem that has emerged from the banking royal commission, where bankers who were paid largely or solely through a bonus or commissions structure engaged in questionable, if not illegal, behaviour in order to meet their targets.
“What we often see going into an organisation is that they say accountability, customer focus… are important values within the organisation. But when they reward their people, they reward them for volume sales,” Ms Whitaker explained.
“They reward them for things that are not in alignment with their values, and as a result they get these sort of perverse behaviours coming through.”
The Ethics Centre’s education programs manager, Sally Murphy, added that language and rhetoric is another common problem, particularly pertinent to well-established businesses.
“Some of it has to do with the language that can be normal language within the organisation [for example] ‘I was just doing what I was told to do’; ‘this is the way we do it around here’,” Ms Murphy said.
“[It’s] what we would call shadow values – not the stated values of the organisation or the way an organisation would like to be… but the way things are actually done on the ground.”
As such, for critical areas such as compliance and positive customer outcomes to be achieved, a whole-of-business approach is required to ensure these are the primary areas on which everyone and everything is measured.
“Align different parts of [your] organisation to ensure those core values are being lived,” Ms Whitaker said.