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Rebekah Brooks quits News International: Rebuilding a rotten culture requires trust, not just regulation

Rebekah Brooks has resigned as chief executive of News International, following days of escalating pressure for her to step down as the phone hacking crisis grew.

Was she responsible for the unethical behaviour of employees? Should leaders really take responsibility for everything that goes wrong in organisations? Is it reasonable to expect leaders to be aware of every dodgy deal, every bung, every illicit action? In a large organisation, leaders simply cannot be aware of every single thing that happens.

Sometimes the destructive behaviour of one employee is down to that person alone. If so, there are usually grounds for dismissal. However, if unethical behaviour becomes widespread, it is unlikely to be down to individual employee choice. It is almost certainly down to organisational culture. And leaders not only set an organisation's culture: they are also its guardians. It is ultimately their responsibility.

Ten years ago, the world discovered that US energy giant Enron was not the profitable powerhouse it claimed to be. This was an illusion created by systematic, institutionalised accounting fraud. Subsequently, 19 former executives either pleaded guilty or were convicted in court. Enron remains a strong symbol of corporate corruption.

Much more recently, we have witnessed the uncovering of widespread phone hacking at the News of the World. It will be some time before we hear the results of the public inquiry into this scandal. However, reports do suggest that unethical behaviour was institutionalised - ingrained into the culture to such a degree that it was considered normal and rarely questioned. The same thing happened with the MPs' expenses scandal.

The Westminster expenses system had been abused by a significant number of MPs for many years, to the extent that the abuse had become acceptable - part of the culture. During the official inquiry into the expenses scandal, some MPs claimed they were victims rather than offenders, and accused Commons officials and Government ministers of encouraging them to 'milk' the system. The Independent Parliamentary Standards Authority has since been established to ensure MPs no longer 'milk' the system. Tighter financial regulations are now in place to prevent Enron-scale fraud ever happening again. But regulation alone will not solve all the problems associated with corrupt corporate culture.

Too often, regulation can be a knee-jerk reaction, resulting from a desire to control a situation which has got out of hand. The most important factor in rebuilding rotten culture is trust. Regulation is easy. Rebuilding trust is a monumental challenge. Whereas imposing order through regulation tends to be all about command-and-control, creating a culture of trust requires leaders to devolve power and responsibility across organisations. Leaders are powerful role models. If they have strong morals and clear principles, others take note.

If it is clear that leaders won't tolerate employees refuting their principles, this sends out an unambiguous message that unethical behaviour will not be tolerated. If leaders also celebrate employees who bring values to life with passion, this reinforces that message in a very positive way. Trusting others requires leaders to 'let go' of control, something which many leaders find counter-intuitive and difficult to do - particularly when faced with a corruption crisis. However, demonstrating a genuine willingness to trust others and share responsibility can build an appetite and momentum for change.

It can engage and motivate employees to co-create a new culture. Another core element in rebuilding trust is transparency. Working in a corrupt or unethical environment can make people very distrustful. Employees need to see very real changes in leadership behaviour to help them trust again. To rebuild trust, leaders need to be open and honest and to communicate authentically. They should admit any errors - people appreciate it.

Many leaders fear that owning up to mistakes can make them appear weak, but in reality this type of honesty often restores rather than erodes confidence. HR leaders do not have sole responsibility for safeguarding an organisation's ethics, but they can be powerful influencers. They can educate and advise colleagues, as well as acting as role models.

Most HR leaders are unafraid to challenge questionable behaviour. They are well-placed to transcend bureaucratic command-and-control systems when necessary. We can put systems and regulations in place, and many of these will be helpful. But they will only help generate real cultural change if leaders also engage employees across organisations to co-create positive values.

Simon Hayward, managing partner (pictured), Cirrus