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Trust and ethics: a Greek tragedy with a wider warning

Trust me, I’m... a politician? A finance minister? A European central banker? From the IMF? German? Greek?

Trust has been the word of the week. It was said to have evaporated between Eurozone negotiators and Greek prime minister Alexis Tsipras. And it’s not been great between Greece and the country’s creditors, hence the referendum result. 

But it’s not unique to this week. Trust and ethics have always been at the eye of this storm. In 2004 the European Commission issued a formal warning that Greece was found to have falsified budget deficit data in the run up to joining the Euro. And in November 2011 the Economist commented on the European Central Bank having overseen a ‘binge of cross-border lending’. Reckless lending met negligent weak government, and the Greek people look set to pay for the consequences. For a very long time. 

The vicious circle of recession won’t easily be broken. If Greek GDP continues to drop demand will drop too, unemployment will rise and the recession will worsen. Youth unemployment is currently sitting at 49.7% with overall unemployment at 25.6%, public health measures are deteriorating rapidly, homelessness is escalating and in 2011-12 Greece’s suicide rate rose by 35.5% in comparison to the pre-austerity years. And in exchange for permission to negotiate the latest bailout, previously well-guarded areas of Greek public administration will now come under European Commission supervision. 

So what? 

No matter what nationality you are ‘trust and ethics’ aren’t just words of the week. They’re fast becoming words of the year. 

In his Mansion House address Mark Carney, governor of the Bank of England, launched an attack on the culture of financial markets. Challenging what he euphemistically called ‘ethical drift’, he said this behaviour had gone “unchecked, proliferated and eventually became the norm", creating a "culture of impunity".

But, he warned: "The age of irresponsibility is over."

Nearly half of the respondents to Roffey Park’s Management Agenda 2015 survey reported observing misconduct in their organisation. The research also found one-third of managers facing pressure to compromise their organisation's ethical standards, most commonly to meet overly aggressive business objectives and follow their boss' directives. In the private sector this particular pressure to compromise ethical standards reached 39%. 

Two things are becoming clear; this isn’t about rogue individuals, and regulation isn’t enough. 

First, although an organisation’s ethics and ethical leadership show in the decisions made by individuals, that responsibility isn’t exercised in a vacuum. It exists in the context of external organisational pressures and competition, and internal organisational pressures, constraints and culture. 

Second, the Market Standards Board or regulation alone won’t change that. Roffey Park’s Management Agenda survey has found in previous years that managers have come to see ethics more as a compliance issue than a moral one. But there’s evidence that taking a policy approach only leaves people following rules like automatons, not making ethical value-based judgements. 

So trust and ethics have got to be about culture, performance, what gets rewarded and what gets penalised. A new regulatory body and making certain practices a criminal offence with longer jail terms will help. It will certainly signal a social undesirability of the behaviour.

HR and OD leaders need to shape and embed different approaches to performance measurement and reward, and to developing leadership committed to the ethics of both the business’s ends and the means; i.e. both what the business does and how it does it. 

So should we be saying 'trust me, I’m... in HR? OD?'. I'm not sure how well that will work, but the mandate for HR and OD to be champions of robust business ethics, and for the sake of robust business performance, has never been stronger.

Alex Swarbrick is a senior consultant at Roffey Park