It’s a topsy turvey world. Can ethics provide direction?

“May you live in interesting times” is, I believe, an old chinese curse. I do not know how interesting you judge recent events in world banking to have been but many commentators have called them “unprecedented” and are in little doubt that they presage bad times to come.

The old adage - what goes up must come down - teaches us that nothing continues unchanged over time. And bearing in mind that chickens always come home to roost should we not have been prepared for this turn of events? Easy to say now but when the good times were rolling a fear of missing the gravy train seems to have had a seductive effect. The boundaries of what was deemed acceptable became more and more stretched and less and less notice was given to the problems being stored up. Apparent freedom to do anything we want was over-ridden by a fear that we should do as everyone else or we might lose out. Sheep-like, keen to get on the bandwagon, many of us followed those who promised the earth, did not question what was happening and chose not to think about the consequences. If everyone is doing it, it must be OK. Right? Wrong.

Now we seem to have lurched in altogether the opposite direction, but will that help? Much is being made of “doing the right thing” and “taking responsibility”; but do we have any better idea of what the right thing is other than we want someone to sort out the mess we are in. From “look after number one and devil take the hindmost” the mantra appears now to be “help me, help me I didn’t know what I was doing!” and “I do not need to worry about right and wrong because someone else must worry on my behalf” So much for personal responsibility! This is not the way forward.

Growing up

We all want to get what we expect and none of us wants to be cheated but do we all take the time and trouble to be clear about what we are being offered? If we are not sure what we are being sold we should not buy it. If it sounds too good to be true it probably is. If something has fallen of the back of a lorry it is not a bargain - it is stolen goods. Everyone knows this and yet we do not always behave accordingly. I am not suggesting we question everyone and everything - trust is the very basis of community life. But I am saying that we need to grow up, think for ourselves and recognise our actions impact others as well as us. We cannot just allow others to control our lives and launder our consciences in the process.

In small, close-knit communities people can see clearly and relatively immediately how what they do affects others. There is a direct connection between what is done and its consequences; people are clear about who is responsible and how they are accountable. Should problems arise the community metes out justice and recompense as it deems fit. As communities grow, connections between people become more complex and distant. New allegiances are forged with different customs and mores and though all the smaller units exist within the wider community there is less and less cohesion and sense of mutual obligation.

Extraordinary times have called for extraordinary responses. Individuals, companies and even countries acting unilaterally out of rational self-interest have seen their efforts at self-preservation create a self-defeating spiral of beggar thy neighbour. Never has it been more evident that we are all in this together but to identify and agree shared values and to keep alive a true community ethos, special effort is needed. Leadership, mutual respect and trust is needed if we are all to pull together in the same direction.

A new direction

How do we find direction? I was 15 when I heard someone say that maths and history were a good A level combination to go on to study economics at University. I thought that’s for me! It wasn’t that these were my best subjects; but economics - the study of the allocation of scare resources, sounded very interesting. And so it has proved. But progressively I realised two things.

Firstly, decisions about allocation are made by individuals and political and religious ideologies shape what they decide. Scarce resources can be allocated in many different ways. Allocation can be left to free markets, determined by centralist governments or any combination between. Secondly, individuals do not always behave rationally as the text books suggest. Economists’ predictions about the future are based on their best assessments of what has happened in the past. Assumptions and hypotheses, are rigorously tested and logically applied but they can never fully take into account all the variables that actually have an impact on events. Also my experience has been that the more systems and controls we put in place to control behaviour the more innovative and skilled people become at finding new ways to do what they want and that might not accord with what you wanted them to do. Human resources are intrinsically different from all other resources and their allocation involves fundamentally different considerations.

So what makes people tick? Everyone is unique. We all begin with a specific genetic inheritance and we are also shaped by our environment but what drives us? Why are we inspired by some people and repelled by others? What brings us together and what brings the best out in us? Are we here for a purpose? Why do we do what we do? What gives meaning to what we do? There is no doubt that people make the difference but how does that happen? These are age-old questions which just goes to show there are no easy answers. But do we need answers?

I think we do. People create a complex, dynamic interconnectedness. I d not know if people are inherently good or bad or if our souls will be saved in the after life but I do believe that if we act selfishly in our own self interest, and deliberately to the detriment of others, this is a recipe for not getting what we want. It might lead to good things in the short term but it creates a disequilibrium that will eventually be reversed. What is true for us as individuals is equally true for us all collectively.

Where ethics fit

Self interest in itself is not the problem. It is the lack of consideration for others that is key. Ethical behaviour involves doing the right thing right and the right thing embraces what we intend to do as well as what we actually do. Intending no wrong to others is as important as doing no wrong in determining whether behaviour is or is not ethical.

The problem is that we cannot know what people mean to do. We can only see what they actually do and then there are two more filters. What they do may not fully and/or accurately match what they mean to do and what is done may or may not be received as it was intended. We have all experienced situations when we have been let down or have let others down but this does not necessarily mean the root cause is unethical behaviour. Failures to meet expectations can arise because we do not really know what to do or are not up to doing it well enough. If there is mutual trust and respect others may give us the benefit of the doubt and problems can be sorted out but without trust there is less likely to be such generosity of spirit, suspicion can set in, relationships become more fragile and can ultimately break down completely.

We have only ourselves to blame if we choose to engage with people we know to be unethical but we cannot always tell who they are. Even if we take due care in our dealings with others we can unknowingly be duped. Not everyone is trustworthy and fraudsters are always very plausible. It’s not for nothing they are called confidence tricksters.

So we have a difficult challenge in spotting what is and is not ethical behaviour. But this should not stop us trying. And for those working in financial services as competence is defined in the Training & Competence sourcebook as including “achieving a good standard of ethical behaviour” it behoves us to be able to identify what it is.

Judging if behaviour is ethical

I suggest that ethical behaviour involves

• wanting to do our best for ourself and others equally
• saying exactly what we mean; so that
  • what is promised is clear, fair and not misleading
  • there is genuine shared understanding about rights and obligations
  • there are no misplaced/false expectations;
• knowing how to deliver what we promise
• being able to do what we say we will; so that
  • what is delivered is as promised; and
  • what is received is as expected
• taking personal responsibility for any failure in any part of the process
• standing accountable for our own actions and the resultant consequences.

Everyone can and does use an inner sense of right and wrong to judge what they do and how they are being treated by others. This is the concept of fairness. Many different personal values underpin what is deemed to be fair and not fair. But if we use the two simple criteria of self interest and equal reciprocal consideration for others we can begin to build ethical measures for all actions. We can assess company culture and ethos and companies can manage both recruitment and appraisal processes more effectively to ensure employees are genuinely acting in line with organisational values.

Hope for the future

We are never wholly masters of our own destiny and though it may not always seem like it we can exercise control over how we live our lives. We always have a choice. If we choose an ethical path more often than not the world will be a better place.

“Companies need to recruit and train people in whom they have confidence and whom they can trust. It is confidence and trust that are real safeguards against fraud and disaster, and they can only be fostered and instilled on a sound ethical basis”

Sir Adrian Cadbury, Committee on the Financial Aspects of Corporate Governance, 2002

• FSA compliant pre-employment screens
• Request a quote
• What can we Verify?