Can the security industry be trusted? Ethical questions around incentives and commissions in Australia’s banking industry, writes Institute for Business Ethics’ New Zealand Representative Jane Arnott, are worth asking within the context of New Zealand’s security industry. With the banking sector already on the receiving end of a damning report – despite pleading that ‘it won’t happen again’ – the ethical behaviour of all sectors is now potentially in the spotlight.
In New Zealand, over recent months the final report of the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has dominated headlines. Perhaps the most poignant summary of facts lies within the comment of Commissioner and former Australian High Court judge Kenneth Hayne who states, “we’ve called them (the banks) too big to fail … but they’re not too big to clean up their act for the good of the little guy.” Right now, the impact and repercussions of non-financial risks to a sector or company is high on the business agenda. Trust is an essential component of any business relationship, but more so for a sector which safeguards security. Non-
Jane Arnott is IBE’s New Zealand Representative, and Director of JRA Associates.
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financial risks rise in importance when consumer trust and confidence is eroded. Any sector that fails to live up to expectations about how they conduct their business – and how their employees behave – risks losing that trust, and as a result, its license to operate. Questions to ask The question for the security industry is: could that happen to you? As an industry, are you confident that you are operating to highest ethical standards at all times? Regulatory compliance is one measure to determine trustworthiness, but ethics begins where the law ends. While the law is black and white, ethical challenges inhabit the grey areas. It is impossible for regulatory authorities or the law to detail every situation, and that’s where a code of ethics, built on the industry’s values, can provide guidance for individuals to empower them to make decisions with responsibility and fairness. It is not a check list of instructions to follow. The NZSA’s code of ethics prioritises integrity: “NZSA members shall maintain high standards of integrity and professional conduct with fairness and honesty at all times in dealing with clients or employees, past and present, with members of the NZSA and with the general public.” Putting the customer first Fairness is good shorthand for talking about ethical issues. The Institute for Business Ethics (IBE) has three simple tests for helping with decision-making when faced with an ethical issue: 1. Transparency: do I mind others knowing about it? 2. Effect: who does my action affect? 3. Fairness: would my decision be considered fair by those affected?
The Australian Royal Commission identified how an aggressive sales culture created a toxic ethics environment in the banking industry. But whatever the business, in an environment where winning sales is paramount, good judgement is clouded. Short term, personal gains are prioritised over what service or product mix meets the customer’s needs. Incentives There is pressure on all sides for companies to perform. The demand for profits means companies need to sell more, quicker, cheaper and retain more market share. Goal setting has long been seen as an effective management technique, and one which helps companies to measure and improve their performance. The best way for organisations to measure and report on how they are doing, both internally and externally, is to create targets and drive to meet them. However, research indicates that although most people are basically honest, those who are set specific goals were more apt to cheat than those who were simply asked to ‘do their best’, regardless of whether there was financial encouragement. Although employees respond well to the motivational use of targets and goals, it seems that when there is a lot at stake, for example, if a job is on the line or a significant bonus is in jeopardy, employees are more likely to behave unethically in order to achieve targets. If an employee cannot speak up or challenge then more is likely to be at risk, including ultimate reputation loss. A climate of competition can encourage staff to put their personal goals (achieving the target, beating their colleagues) above those of the company
April/May 2019
