“Building an Ethical Culture
– A Leadership Imperative in the
Repositioning Process”
Presentation to
THE CARIBBEAN ASSOCIATION OF INDIGNEOUS BANKS (CAIB)
37th Annual General Meeting & Conference
November 10, 2010.
The Hyatt Regency, Port of Spain, Trinidad.
Presented By:
Lennox Sealy (PhD, MBA)
of
Lennox H. Sealy & Associates
Organization Development
Consultants
CAIB 2010 THEME
Repositioning the Region:
The Role of the Financial Services
Industry
2
THE PRESENTATION OBJECTIVES
1.
To Revisit the Concept of Ethics and
Ethical Corporate Behaviour
2.
Some How-to’s on Building an Ethical
Culture
3.
Defining the Leadership Imperative in
the Repositioning Process– “To Be & To
Build”
3
PRESENTATION FLOW
Let’s Start with…..
1.0 The End
Continue with…
2.0 The Beginning
Finish with…
3.0 The Continuation
4
1.0 The End
1.0 The Leadership Imperative –
As Key Players in
the Financial Services Industry
The Repositioning Challenge
can be articulated as
“To Be and to Build”
To be true to self by being Ethical and
To Build an Ethical Culture
5
CLOSING
THOUGHT
Peter Drucker
“There is only one ethics …
One true set of rules of morality …
One code That of proper individual behavior
in which the same rules apply to
everyone alike.”
6
AN ACTION AGENDA FOR
LEADERSHIP
1.
2.
3.
7
Demonstrating that indeed as
indigenous institutions we know
our customers best by continuously
researching their future needs
Taking advantage of our size by
reducing the cycle time for the
introduction of new products
Riding the waves of new
technologies faster than the bigger
guys
AN ACTION AGENDA FOR LEADERSHIP
4.
Actively bringing back into our
customers’ minds the two magic
words – confidence & trust


5.
Gains confidence but
Builds trust
Ensuring a desired outcome that can
represent competitive advantage – A
region known for “Leadership in
Ethical Banking”
"Never let a serious crisis go to waste. What I mean by
that is - it's an opportunity to do things you couldn't do
before”
White House Chief of Staff Rahm Emanuel
8
2.0 The Beginning
How did we get here ?
“A global banking crisis was last night
threatening to spiral
out of control, and frantic US officials
were locked in talks to save one of the world's
biggest insurance companies
just a day after they let one
of its most powerful investment banks
go to the wall”
The Independent - 16th September 2008
9
A Post –Lehman World?
10
2.1 The Etymology of
Ethics

Origin of the Word Ethics

Definitions of Ethics

Ethics and Values

Personal or Professional
Ethics ?
11
ORIGIN OF THE WORD ETHICS

Origin – From the Greek word –
ethos (accustomed place, habitat of
horses) made popular by Aristotle
Ethics represent codes of morality:
A system of moral principles which
defines the appropriate conduct for a
person or group
www.bing.com
12
ETHICS – WHAT IS IT?
DEFINITION 2
The recognized rules of conduct
in respect to a particular class
of human actions or a particular
group, discipline, culture e.g.
Medical ethics; Christian ethics.
dictionary.com
13
ETHICS vs. VALUES
Values are also principles or
standards but they differ from
person to person, and are more
subject to change and variation
over time. They are however the
principles that guide individual
behaviour even when no one is
looking.
14
ETHICS – NOT QUITE THE SAME
AS VALUES!
 Ethics
are anchor points that
keep us as groups of persons or
organizations from being
drawn in by relativity and
therefore they help us reexamine and accept/reject
changes as cultural norms and
individual values change.
15
BUSINESS CULTURE
The shared values, behaviors and norms
of a group. It includes the patterns of
activities and symbols that give it
significance and meaning. Basically,
culture in a business setting is “how
we do things.”
Culture is shaped by the ethical
standards of an organization whether
written or unwritten.
16
ETHICAL
DILEMMA S
An ethical dilemma is a
complex situation that will
often involve an apparent
conflict between moral
imperatives, in which to obey
one would result in
transgressing another.
17
RESOLVING THE ETHICAL
DILEMMA / PARADOX?
T. S. Eliot wrote,
"The general ethos of the people
they have to govern determines
the behavior of politicians”
“Your personal values determine
how you resolve dilemmas”
18
2.2 The Great Divorce – The
Past
A Separation of
Personal Values
&
Organizational Ethics –
“ How we got unethical in
business”
19
20
ORIGINAL THOUGHTS ON WORK AND LIFE

Originally, life was work and work
was life and one ethical standard
applied.
“The time of business - does not with
me - differ from the time of prayer
and in the noise and clatter of my
kitchen I posses God in as great a
tranquillity as if I were on my knees”
Early Monk in the Monastery of St Benedict's
21
THE MERCENTILE CAPITALIST
PERIOD – THE MARRIAGE

The values of "accumulation of wealth"
and the associated evils reared their
heads in European society in the
fifteenth century

The famous Martin Luther (1483-1546)
moved to preserve that medieval
relationship between life and work, and
sanctified the accumulation of wealth
and serving God as “a marriage”.
22
JOHN CALVIN'S ( 1509 – 1564)
THOUGHTS – THE SEEDS OF DIVORCE

John Calvin, a native of the bustling
financial centre of Geneva, sought
further to encompass “business” in
his theology and did so through the
doctrine of “the elect.” Calvin’s
doctrine was taught as “God’s favour
could be seen in one’s degree of
success i.e. whether you were one of
the elect.
23
THE SEPERATION
 There
was a continual
movement from the idea of
faithfulness in work as the
path to salvation, to one of
observable, measurable
success in work as a mark of
salvation
24
THE WESLEY RATIONALIZATION

John Wesley's (1703 – 1791) Famous
words sought to rationalize the
continuing drift - “Gain all you can,
save all you can, give all you can".

25
Seminal thinkers like Adam Smith
(1723 – 1790) and John Locke (1632
– 1704) eventually helped move the
mind set from vocation in the name of
salvation to wealth accumulation,
individual freedoms and material
success as the benchmarks of the
new capitalism
THE DIVORCE
26

This new 'ethic" created a new
kind of workforce: Self-motivated,
dedicated to the task at hand
focused on material gain.

The accumulation of wealth
eventually became an end unto
itself and work was no longer a
means of serving God. The divorce
was official and complete.
3.0 The Return to an
Ethical Culture –
The Continuation
Challenges &
Solutions of the
Remarriage
27
28
3.1 The Continuation

Definitions of an Ethical
Culture

The Challenges

The Ethical Process Map &
its Elements
29
AN ETHICAL CULTURE
A set of attitudes, and values
that an organization
subscribes to that helps in
making decisions that are in
the best interest of the
organization, its stakeholders
and the society
30
ETHICS & THE BANKER
The
Banker’s role is one of stewardship based
on trust.
He/She
is trusted to look after people’s money
and has a duty to manage that money
responsibly. The context of all fiduciary
responsibility therefore goes beyond legal to the
ethical. Is it not then obvious that ethical
behaviour is a prerequisite for a banker?
31
CHALLENGES OF DEVELOPING AN
ETHICAL CULTURE – THE SELF
Ethical behaviour comes from
1.
2.
3.

32
A firm commitment to adhere to sound moral
principles and values
A second commitment to verify that the
resultant behaviours are congruent with
ones principles
A third commitment to continuously
improve
These commitments are manifested Spiritually,
Mentally and Emotionally in our dealings with
our colleagues and how we preside over the
financial transactions of our institutions
CHALLENGES OF DEVELOPING AN
ETHICAL CULTURE – ORGANIZATIONAL
Implementing governance processes that
demand ethical conduct
2. Recruitment of employees who are already
committed to morally sound behaviours
3. Taking clear action when behaviours
border on the unethical
4. Willingness to lose “business” by not
dealing with those who are unethical
1.
33
CHALLENGES OF DEVELOPING AN
ETHICAL CULTURE – THE EXTERNAL
Societal norms focused on the “quick”
accumulation of wealth
2. Country norms that accept bribes as part of
business
3. Poor examples set by societal leaders
4. Opportunities presented by technology to engage
in fraud
5. Stakeholders who do not have ethical standards
1.
34
DEVELOPING AN ETHICAL CULTURE
 Map the organization’s vision,
governance structures and its code of
ethics
Identify where the organization is
doing a good job in managing risks
and encouraging and maintaining
ethical behavior?
Where is it falling short?
Take corrective action using your
process map
35
Clarify Vision &Values
Model Values
Openly
Discuss
Difficult
Ethical
Cases
Package Values as
Code of Ethics
Adopt Code of Ethics
as an Anchor Point
Do Compliance:
• Audits
• Enforce
Discipline
Continuous Monitoring
of Behaviors
A Defined
Governance
System is
Imperative
Revisit Code of Ethics
Regularly
Process for Implementing a Culture of Ethics
Adapted from Kirk O. Hanson
Process Elements for
Ethical Culture Development
1.
2.
3.
4.
5.
Statement of values and Code of
conduct
Examples for senior executives
Training and repeated
communication of values, standards
& Company Code of Ethics
Systems which embody the values
Continuous evaluation of behaviors
Process Elements for Ethical
Culture Development (Cont’d)
6.
Effective hotline system – Whistle
blowing
7. Clear mechanism for resolving tough
cases
8. Compliance enforcement system
9. Periodic renewal process for values and
standards
10. Overall governance system for ethics and
values
4.0 The Leadership
Imperative –
Remarriage and
Repositioning
40
"Never let a serious crisis go to waste. What I mean by
that is - it's an opportunity to do things you couldn't do
before”
White House Chief of Staff Rahm Emanuel
41
Asking the Right Questions?
“Better to have an approximate
answer to the right question, than
an exact answer to the wrong
question.”
Statistician - John W. Tucker
42
FOUR RIGHT QUESTIONS
Am I seen as an ethical leader?
Does my corporate governance
policies effectively state our ethical
position?
3.Do I have the processes in place to
deal with ethical dilemmas?
4. Are my people acting in an ethical
manner on a day-to-day basis?
1.
2.
43
THE NEED FOR SELFEXAMINATION – An issue of
credibility
Credibility refers to believability of
a person, source or message.
Leadership credibility therefore
has context: Today that context has
to be an ETHICAL one and
leadership must build an ethical
culture that defines the conduct of
the
business
44
AN ACTION AGENDA FOR
LEADERSHIP
1. Demonstrating that indeed we
know our customers best by
researching their future needs
2. Taking advantage of our size by
reducing the cycle time for the
introduction of new products and
riding the waves of new
technologies faster than the
bigger guys
45
AN ACTION AGENDA FOR
LEADERSHIP
3. Actively bringing back into our
customers’ minds the two magic
words – confidence & trust


Gains confidence but
Builds trust
4. The desired outcome – Leadership
in Ethical Banking
46
CONTINUING QUOTE
“Divorced from ethics,
leadership is reduced to
management and politics to
mere technique.”
James MacGregor Burns
47
THANK YOU
FOR
YOUR ATTENTION
PLEASE CONTINUE YOUR
IMPROVEMENT PROCESSES
48