Ethics And The Spiral Staircase For Business In The United Kingdom
Ten years after the financial crisis, we are still talking about the loss of trust in business and there is fundamental questioning around its role in society. But the flip side of a loss of trust - and much less discussed - is the disappearance of loyalty.
Loyalty is built on affinity and identification, and comes in part from engagement. When it evaporates in uncertain economic times amid rapid technological change and changing senses of identity and aspiration, business models need to change rapidly. Otherwise the disconnect between businesses, their employees and their customers will continue to grow.
A sense of ethics is the undercurrent running beneath many of our loyalties as sentient beings. But this, too, comes under fire when economic pressure starts to feel unrelenting. For a United Kingdom seemingly mired in chaos more than two years after the vote to leave the European Union, there are stark warnings on the horizon for all businesses.
A survey just out by the UK’s Institute of Business Ethics (IBE) finds that UK employees “seem to take a more lenient approach than the European average to questionable workplace practices.” The Ethics at Work: 2018 survey of employees is the only one of its kind covering all of Europe, and it asks employees how they experience ethical dilemmas in their day-to-day working lives.
In the UK, one in eight (12%) of respondents say that they have felt some sort of pressure to compromise their organisation’s ethical standards - up from 8% in 2015. The equivalent response across Europe is 16%, so not much difference there in 2018. But according to the survey, for UK employees, the main source of pressure to compromise ethical standards comes from being under-resourced.
“Although we see this increase in pressure across other countries surveyed, this is particularly relevant to the UK as we are about to enter a period of uncertainty regarding Brexit,” said Philippa Foster Back CBE. “Employees are under more stress to deliver than ever before, and this is increasing the pressure to then cut ethical corners. These figures should be seen as a warning sign to organisations that they need to be more supportive of their employees when it comes to making ethical decisions.”
The survey’s findings do not seem surprising, given ongoing national turmoil on future direction. When people feel that they have been struggling on a daily basis for far too long, they start to dispense with the things that are not making it any easier.
But its findings have implications not only, as the IBE suggests, for businesses to be more supportive of employees, but for them to think hard about their core values, their employee connection, and how that translates into better corporate governance. It’s a lot to ask when businesses still don’t have clarity on the face of their economic future, but if they don’t do it, they will fail - and the fall-out will be huge for all their stakeholders.
A good example of this turmoil can be found I think, in the UK’s retail sector. There are many complicated reasons for the challenges it is facing, including technological transformation, changing consumer preferences, a rise in alternatives and choice and a price cutting market. But there is also a disappearance among customers of loyalty to brands which many retailers have painstakingly built up over the years and now cling to them like glue - but may no longer appeal to a new generation of shoppers.
When that brand - on which megabucks have been spent in terms of marketing - loses its relevance to people’s lives and it also struggles with the technology to deliver smooth and easy service, it’s a toxic combination. In my view, this is partly what has been going on at the retailer John Lewis, which just saw profits plunge 99%.
When it comes to shopping, the reason for Amazon Prime’s success is easy : it works with people’s daily lives. Even those (like me) who rail at many of its working practices - and tell them off for over packaging - use it.
With that thought in mind, think also of some of the incentives given by Waitrose, the grocery arm of John Lewis, to customers holding its ‘loyalty’ card. Waitrose has struggled to find the balance between free coffee for just showing your card, and free coffee if you buy something. In my local store in well-heeled Sevenoaks, self-scanning used to believe you when you pressed the button saying you had a car park ticket for a refund. Now you have to call an assistant, with the inevitable delay. Why? Because (I was told by a Partner) shockingly it was costing the store £16,000 in fraudulent use.
It wasn’t long ago - six months maybe - that there was no CCTV around self scanning in this store. Now there is, and a watchful patrolling security guard too. The same is true at the local M&S, where managers in the food hall speak despairingly of well-dressed shoppers walking in, helping themselves to the most expensive items, and simply walking out again. Under-resourced security appears to go hand in hand with assumptions on customer affinity.
These anecdotes are merely a snapshot and just a sample of many more, but the underlying issues are very real, with implications for all business. There are those who say it was always thus in terms of taking things without paying if you could get away with it but now you can’t because of surveillance. I don’t think that’s true - and the evidence seems to be hidden in the profit figures. We do not know just how much the retailers are losing from being “ripped off.” Is it a consumer sense of “turning the tables?”
At the beginning of Board Talk back in 2010 (still accessible on dinamedland.com, my legacy website), I remember talking about a serious need to put ethics on the national curriculum in schools from a very early level. I believe it caused some mirth on Twitter at the time. Maybe it’s not such a silly idea.
This post will, I hope, lead seamlessly into another one this weekend. Thank you for reading.