Third of managers witness poor ethical conduct in their firms

30 October 2014 -


UK organisations – especially large and declining ones – still have much work to do to improve their ethical standards, finds CMI

Jermaine Haughton

Despite copious evidence suggesting that good workplace ethics have a positive impact on business performance, 29% of managers say that their organisations are mediocre – or just plain poor – when it comes to behavioural standards, according to new research from the Chartered Management Institute (CMI). In its new report The MoralDNA of Performance, CMI reveals that many British firms have a great deal of work to do in order to instil successful ethical frameworks within their workplace cultures. This is particularly important, CMI says, as across the range of key performance indicators, high levels of achievement are typically associated with strong ethical scores.

Large employers seem to be particularly culpable, with the study showing that managers in big organisations are four times more likely than those in small firms to rate their organisation as poor (12% v 3%). Furthermore, 59% of managers rated the standards of ethical behaviour at small firms as excellent, compared to just 23% at big organisations.

Interestingly, the research suggests that the skill with which bosses produce good ethical behaviour relates to the stage of development that their companies have reached. For example, managers in growing organisations score higher on ethical behaviour than their colleagues in declining ones. More than a third (37%) of managers in growing organisations give themselves top marks for ethical behaviour, compared to 19% in firms on the slide. And 22% of managers at shrinking companies label their organisation’s behaviour as unethical, compared with just 6% at expanding firms.

Disparities between the two main sectors are also apparent. Up to 13% of managers in the public sector rate their organisation as poor, with just 20% giving top marks for ethics – half as many as those in PLCs (40%). A company’s management structure is also crucial to understanding how bosses’ roles can affect perceptions of how ethical behaviours are conveyed at their firms. Senior managers have a rosier picture of current standards than those in junior roles: 48% believe their organisations have excellent ethical behaviour, compared to just 22% of junior managers, who tend to believe their firms could do a lot better.

Comparatively, managers in organisations with coaching, visionary and democratic leadership styles are more likely to report more positive feedback on ethics than those in organisations where “command and control” or “pacesetting” styles are adopted. While only 18% of managers working in the latter types of firm rate the effectiveness of their management regime as “excellent”, that figure rises to three quarters for respondents from workplaces that foster coaching and sharing.

CMI chief executive Ann Francke said: “Management and leadership isn’t about delivering short-term results, maximising margin to meet market expectations, or hitting delivery targets. It’s about how we do business. It’s about how leaders define an organisation’s social purpose and live by it, how they develop and inspire their people, and the steps they take to maximise the potential of the next generation. In each of these three dimensions, managers need to act ethically and professionally, and bring their organisation’s values to life.”

She added: “CMI is committed to playing its part, supporting managers who want to do the right thing and helping them deliver results for their employers. CMI’s revised Code of Conduct and Practice lays down the standards we expect of professional managers. Overhauled during 2014 after extensive consultation with our members, with experts and with other institutes, it sets out the behaviour and values that every manager should live by in their work.”

CMI’s survey shows overwhelming evidence that a more ethical culture is linked to higher levels of employee engagement. This is particularly true in the ethic of care, where individuals think about moral decisions primarily in terms of their impact on others. Crucially, managers in organisations with excellent staff-satisfaction levels score 13% higher on the ethic of care. The ability to attract new staff is also linked to an 8% difference in the level of care.

Risk management is also boosted by coherent ethical attitudes in the office. Excellent risk strategy is associated with higher scores across each of the three ethics measured: reason (8% higher), care (10%) and obedience (14%). CMI Ethics Research Advisory Group chair Robin Field-Smith said: “Anyone who takes the time to reflect on human behaviour will observe the impact – both actual and perceived – of different styles of leadership and management on organisational performance. Organisations are very simply collections of people, ideally sharing a common purpose, a set of values, a thoughtful decision-making approach and a will to succeed. If leadership is ‘getting ordinary people to do extraordinary things’, care needs to be taken by leaders and managers to espouse the ethical behaviours which inspire confidence, trust, and followership.”

He added: “I urge all who read this report not only to do so thoroughly, but to reflect on their own approach – including what they do, what they believe, and what example they set for those they lead. Further, they should take time to engage with their own teams, listen to them, and give them space to reflect.”

Based on the reports’ findings, CMI has cited seven recommendations for how organisations should act to improve their ethics, and support better business performance:

1. Focus on purpose, values, leadership and culture

2. Develop leaders

3. Make decisions that are values-based and show you really care

4. Harness diversity to challenge ‘group-think’ with constructive dissent

5. Win hearts as well as minds – engage customers and empower colleagues

6. Measure what really matters: escape the unintended consequences of short-term targets

7. Reward and recognise values-based behaviours

Download a complete pack on The MoralDNA of Performance, including the report and a special infographic.

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