Research shows organisations focus on short-term results at expense of ethics
Organisational and personal ethics are being compromised across the globe as business leaders strive to meet short-term targets, research from the CIPD has found.
Just one in four (24 per cent) business leaders said they are “always” prepared to make short-term sacrifices to protect the long-term interest of people, organisations and society.
But in contrast, nine out of 10 respondents also claimed that they would protect the long-term organisational health and reputation, when given a choice of pursuing expedient or sustainable decisions.
According to the survey of around 3,500 business leaders, and 2,200 HR practitioners in the UK, USA, Asia, Middle East and North Africa, 30 per cent of business leaders would choose to continue rewarding high-performing individuals regardless of the values they demonstrate.
More than a third (34 per cent) of HR professionals said they have to compromise their personal principles to meet current business needs, while 29 per cent of business leaders feel they have to do the same.
A fifth (21 per cent) of HR practitioners said they ignore their personal ethics because they affect their ability to succeed in their organisation, and less than half of respondents believe their core values cannot be compromised whatever the context.
The outlook for staff is not much better, with three quarters of business leaders stating that employees’ ability to influence decisions that affect them was “nice to have but not imperative”.
The CIPD warned that without business decisions based on principles, and greater transparency to increase trust, the next big corporate scandal would be just around the corner.
“Far too many business and HR leaders continue to be focused on the short-term at the expense of the long-term interests of the organisation and its people,” said Peter Cheese, chief executive of the CIPD.
“This risks unintended consequences when people try to cut corners or maximise short-term returns without thinking about the consequences of their actions on all their stakeholders, which includes employees, customers, suppliers, and communities.”
The findings from the report will help to inform a new framework that the CIPD is developing as part of its Profession for the Future strategy, to encourage “more balanced decision-making in the boardroom”.
Cheese said the development of a set of key principles will not only help business leaders and HR practitioners, but employees, to make ethical decisions when under pressure and faced with ambiguous and complex situations.
“The VW scandal is a stark reminder that organisations – particularly large and complex ones – need to think carefully about how they create organisational culture and how they increase the chance that people at all levels of the organisation will make ethically sound decisions,” he said.
“Looking ahead, we’ll be working to ensure the HR professional of the future is equipped to apply these principles with expert knowledge about people and organisations as well as a thorough understanding of the business context,” Cheese added.