The business of being ethical

People and profits.

They say a fish rots from the head down.

If you kept an eye on the events of the Financial Services Royal Commission, you would have noticed the governance and cultural practices of some of our largest companies are questionable at best, as reports arise of banks charging fees for no service, planners taking fees from dead people, and staff false witnessing documents.

It paints a grim picture of the major players in our banking, superannuation and financial services industries, and makes you question the leadership abilities of some of our top CEOs and executives.

But how did it get to this point? An aggressive sales culture that rewards bad behaviour? Or perhaps a lack of accountability at the top of the ladder?

2014 senate enquiry looked at misconduct that occurred over a four-year period by financial advisers and other staff at the Commonwealth Bank, sparking a recommendation for a Royal Commission into misconduct in the banking and finance sector.

Rot at the top

Professor Mario Fernando from UOW's Faculty of Business believes wholeheartedly that weak leadership fosters unethical behaviour. Leaders need to be seen in action doing the right thing, not only heard.

He has written extensively on the subject, delving into the intricacies of responsible leadership in his most recent book, Leading Responsibly in the Asian Century.

“If our business leaders don’t model ethical behaviours, it would be difficult to expect their followers to act ethically,” Professor Fernando says. “Leaders must live up to and demonstrate that they are ethical by the moral standards set by society.

“They need to not only have aggressive company marketing campaigns about doing the right thing, but also ‘walk the talk’ and show that these claims are actioned through their leadership actions.”

According to Professor Fernando, recent corporate scandals in Australia highlight not only internal organisational cultural issues, but a complete disregard for the needs of their external stakeholders.

“What is obvious is that leaders seem to have forgotten that they have a duty to be responsible to all their stakeholders, not only to stockholders,” he says. “This obsession with profit maximisation at the expense of stakeholder needs is a global problem and ethical violations are continuing across a range of industry sectors.”

Professor Fernando, who has forged an academic career around responsible leadership has spent the last decade exploring how responsible executive action leads to positive individual, organisational and societal outcomes.

He disagrees with the notion that business schools should simply churn out executives to lead big companies with a socially detrimental obsession for maximising profit.

“In the recent past, business schools were charged with incubating white collar criminals,” he explains. As a response, many business schools – including UOW – now teach ethics as a core subject in their business courses.

“Ethics is notoriously a hard subject to teach, mainly because of the subjective nature of ethics content,” Professor Fernando says. “I think we’re getting better at teaching ethics in our schools, but we still have a long way to go.”

Part of the challenge, explains Professor Fernando, is teaching the ‘doing’ part of ethics in a classroom setting.

“Even if our graduating students know what is right, in a business setting, doing the right thing doesn’t necessarily follow. Therefore building the highest sensitivity to ethical action is paramount, and it’s something we need to instil from a young age.”

(Read more about Professor Fernando's background and unique insights into responsible leadership.)

Unzipping ethical fashion

Professor Fernando recently accompanied a small group of passionate students to Dubai for a project on ethical fashion – a small step in developing students’ ethical sensitivity to doing the right thing.

The project, funded by the Australian Government’s Council for Australian-Arab Relations, gives third-year MGNT351: Responsible Leadership students the opportunity to examine and evaluate the responsible leadership and sustainable business practices used in establishing Dubai as a premier fashion destination.

“The global fashion industry, now worth US$2.4 trillion and could be the seventh largest global economy if it was ranked alongside the Gross Domestic Product of nations,” Professor Fernando explains.

“With the threat of global challenges such as changes in population growth, human labour abuse and the increasing cost of key resources, the fashion industry has housed many irresponsible business practices worldwide.

“We wanted to show our Responsible Leadership students how business ethics could be applied to such an industry by exposing them to prevailing business practices and stakeholders in an international setting.”

Third-year business student Bianca Redfern was one of five students eager to embark on the international learning adventure. “This experience has been the highlight of my university life so far,” she recalls. “From the moment I arrived I was immediately in awe of Dubai’s looming skyline.”

The group of students visited the Dubai Institute of Design and Innovation, were treated to a cultural tour, experienced life in a garments factory, toured major fashion agency Runway Dubai and took part in panel discussions.

“We debated whether the fashion industry is caught up in a kaleidoscope of ethical issues and if students have what it takes to become tomorrow’s moral role models for fashion brands,” Bianca says.

“The chance to meet with industry experts, committed academics, factory owners and students was fundamentally invaluable and provided insight into an array of issues in the world of ethical fashion.”

For Bianca, the trip to Dubai was about more than just responsible leadership in the world of Gucci and couture.

“Although our primary focus was ethical fashion, I came to understand that ethical conduct can be administered throughout so many facets of our everyday life, whether you are a student, business owner or customer,” she says.

“This, however, is dependent on awareness of ethical problems. It was clear that this awareness, particularly with regard to ethical fashion, is lacking globally. Ethical leadership is so important because it looks beyond the traditional profit-driven goal that has consumed corporations in the past and which is no longer adequate.”

A group of UOW Business students visit the Dubai Institute of Design and Innovation

Responsible Management Education and the United Nations

With a background in IT and corporate management, Dr Belinda Gibbons from UOW’s Faculty of Business embarked on a PhD some seven years ago with the aim of evaluating an alternative approach to teaching and learning responsible decision making in undergraduate business education.

“I wanted to produce something that had an impact, I didn’t want a thesis that just sat on a shelf,” she says.

The outcomes from Dr Gibbons’ work have since been ingrained in UOW’s undergraduate business curriculum through a capstone subject and the development of a computer simulation, as a means of embedding responsible decision making in business higher education and training holistic business graduates who understand the role of organisations in the economy, society and the environment.

“As a faculty, our vision is to produce responsible and sustainable leaders,” she says. “It’s really important that at least one of our course outcomes is around ethical judgment and responsible and sustainable decision making.”

Dr Gibbons wears a number of hats: she is a Senior Lecturer in UOW’s Sydney Business School and the Australia and New Zealand Chapter Coordinator for the UN’s Principles for Responsible Management Education (PRME) initiative. She also sits on the UNPRME Advisory Committee representing Australia and New Zealand higher education in the future direction of responsible management education.

The PRME initiative focuses on raising the profile of sustainability and equipping today’s business students with the understanding and ability to deliver change tomorrow. “We map a student’s ethical and responsible journey and we look at how students are getting a taste of these initiatives,” Dr Gibbons says.

UOW was the first university in NSW to join the United Nations (UN) Global Compact, committing to supporting the ten principles of the UN Global Compact with respect to human rights, labour, environment and anti-corruption.

Dr Gibbons’ latest project focuses on instilling the UN’s Sustainable Development Goals (SDGs) into the fabric of the University and the wider community.

“What we’re doing here at UOW is about more than just putting a few nice ideas into our curriculum, we’re also implementing them in the wider region and focusing on cross-collaboration.”

Dr Gibbons has partnered with Healthy Cities Illawarra to host conversations about global sustainability and development concepts, giving Illawarra-based small businesses and organisations the opportunity to gain a deeper understanding of what SDGs mean for the region and how they can be supported.

“In our most recent workshop, we found that everyone was really interested in what the goals mean for their sector and what we were doing as a region overall,” she says.

“It’s definitely a step in the right direction.”

The spoilt generation?

Generation Z are the first generation to grow up in a digital age, with social media at their fingertips. They are digital natives, often accused of losing interest quickly and harbouring a sense of entitlement.

Dr Gibbons doesn’t believe that the generation of students coming through her classroom are spoilt or entitled.

“When you see them out shopping, they’re not the ones using plastic bags. They’re making some quite different and mindful decisions on how they live their life and the impact they have.

“The next generation will be at that level where they’re making key decisions by 2030. For our business graduates, the decisions they are making will be on a global scale and have a huge impact on this world.

“It will take action from all sectors to realise the SDGs, including business. We will continue to prepare our students to lead these corporations into a better society.”


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