HR and Leaders face ethical issues this month
Last month, we commented on the Great British Bake off and the leaders involved with the British cycling team. Both have been back in the news this month for very different reasons……
Sir Bradley Wiggins and leaders from the British cycling team have been questioned over the use of banned steroids.
The culture of marginal gains has been well documented. The coach, Dave Brailsford credited with instilling this culture said in 2010 ‘The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.’ So did an improvement of 1% come from drugs enhancing the cyclist’s performance? Brailsford would refute this statement. In September he reported that he used to tell his team ‘There is a line. You can go up to that line but you do not go over it. You do not cheat in this team in any way, shape or form.’ He added that the leaders of the sport had done nothing wrong and ‘could look at myself in the mirror.’
More ethical issues arose for leaders and management in the sporting world as Sam Allardyce left his job as England Manager by mutual agreement with the FA after only one game in charge.
After Sam’s suggestions of bypassing player transfer rules, the FA said his conduct ‘was inappropriate’. They added that ‘the manager must show respect for the integrity of the game at all times.’ The sports minister Tracey Crouch stated ‘The integrity of sport is paramount and we have been clear that we expect the highest standards of governance and transparency from leaders of the sports governing bodies.’ Other governmental departments seem to share this view..
Government plans to launch an official inquiry into leaders of companies and in particular, executive behaviour featured in the news in September.
Senior pay, diversity and governance issues come under investigation in reaction to Sports Direct and BHS scandals. In addition to this, Teresa May pledged to make executive behaviour and remuneration a key focus of her administration.
The TUC published a report this month and further fuelled the debate. It revealed that Britain’s highest-paid chief executive earned £38,437 per hour or £70m in 2015. That’s more than 2,500 times the average UK salary, according to listings in FTSE 100 directors’ pay. The BIS committee said its inquiry followed issues highlighted in its recent investigations into BHS and Sports Direct. Lines of inquiry will include whether board decisions could be better scrutinised; whether regulation should be introduced to ensure leaders and directors fulfil their duties; whether the government should seek to control executive pay; how more diverse boards could be created; and whether there should be worker representation on boards.
BIS committee chair Iain Wright MP said: “Irresponsible business leader behaviour and poor corporate governance certainly act against the interests of workers. They also act as a brake on long-term prosperity and profitability in companies, as well as tarnishing the reputation of business and undermining public trust in enterprise.” CIPD chief executive Peter Cheese said the “sharper focus” on corporate governance “has to be a very good thing”.
He added that HR and business leaders should improve the factors now, rather than waiting for legislation to follow. Institute of Directors director-general Simon Walker stated “The prime minister has made clear that company boards are in her sights, so directors must fully engage in this debate.”
Boards could be prosecuted for failing to prevent corporate crime<
Company directors could face prison if they fail to prevent corruption and fraud among their employees. This comes as Theresa May broadens her focus on corporate excess and wrongdoing and commits to introduce new plans. The plans could create a new offence of failing to prevent actions that lead to prosecutions for corruption and fraud. Attorney General Jeremy Wright said: “When considering the question ‘where does the buck stop?’ and who is responsible for economic crime, it is clear the answer is to be found at every level, from the boardroom down,” It is hoped that the threat of prosecution would encourage business leaders to “take the actions necessary to discourage such offending in the first place”.
Currently, companies are only liable for failing to stop bribery. The new legislation would prevent boards from claiming they were unaware of any wrongdoing taking place at an operational level. New proposals will follow the text already used in bribery cases. Here, companies can be prosecuted for ‘failing to prevent’ corrupt payments. This is even if senior management had no immediate involvement in the dishonesty nor knowledge of it. Read more at https://www.cipd.co.uk/PM/peoplemanagement/b/weblog/archive/2016/09/16/mps-announce-official-inquiry-into-executive-behaviour.aspx
On a lighter note – The BBC lost the broadcasting rights for the Great British Bake Off to Channel 4 and a flurry of decisions were announced and scrutinised.
Mary Berry, Mel and Sue have all pledged loyalty to the BBC. Meanwhile, Paul Hollywood has moved with the show to Channel 4 after claims he’s been offered a hefty pay increase!
So, if you’re faced with an ethical dilemma, whether in HR, Leadership or Management, consider this. Could you look at yourself in the mirror like Dave Brailsford? Would you feel comfortable explaining to your loved ones what you’ve done? If the answer is no, then you know what to do!
For more on ethics, take a look at our courses in HR or Leadership and Management.
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