Phone hacking scandal highlights need

for HR ethics
James Brockett
8 Jul 2011
Comments18 comments
Organisational failings such as the phone hacking scandal at the News of the World are often the
result of a bureaucratic company culture in which HR plays a part, according to a leading professor
of corporate ethics.

The beleaguered Sunday paper, owned by News International, will close this weekend after
revelations that journalists had hacked phone messages belonging to murder victims and the
families of dead soldiers as well as politicians and celebrities.

While the closure of the paper will lead to 200 redundancies, many commentators have sought to pin
the blame on executives and senior managers for turning a blind eye to the behaviour of those who
were working at the paper.

But Professor Roger Steare, Professor of Organisational Ethics at Cass Business School and
adviser to many top businesses, told PM that most moral lapses that endanger a company -
including risky trading in the banking crisis - would also be more likely to be prevented if HR
professionals were more willing to accept responsibility for behavioural standards in their
organisations.

HR are delinquents when it comes to ethics they have derogated responsibility for behaviour in
organisations so that it rests only with leaders, said Steare. HR professionals need to educate
leaders and the board about how human beings are going to behave in the workforce when faced
with certain situations its basic psychology. They should be presenting the board with the
evidence of what is going on around them in the company.

He said that there was no doubt that leaders bore overall responsibility for the ethics of
their organisation, but that HR should be more willing to speak up when things go wrong. However,
while he had worked with some fine HR leaders who were willing to provoke and challenge in this
way, he had also spoken to senior executives who saw HR as a puppy wagging its tail waiting for
the master to tell them what to do.

It is usually bureaucracy and an authoritarian culture that stops HR professionals from taking a more
challenging stance on ethical behaviour, said Steare.

The problem is that that the corporation is a totalitarian construct its set up in law with a
command and control hierarchy. Leaders at the best organisations transcend that, and come across
like they are leading by democratic consent; but in a command and control system the only levers for
getting things done are fear and bribery, and thats when ethics in business can be forgotten.

The recently-introduced Bribery Act will challenge more HR professionals and managers to confront
the issue of ethics in their organisations, he added.

In the wake of the News of the World scandal, Labour leader Ed Miliband has led calls for a new
external regulator to take the place of the industry-led Press Complaints Commission. But Steare
said that external regulation was not necessarily the answer to raising standards.

The legal and medical professions are a perfect example of self-regulation. Ive been calling for
some time for a similar set-up for company directors a professional institute where you have to
qualify, where complaints can be investigated and you can be subject to the judgment of your peers.
Psychological theory suggests that self-regulation is the best route, if the capacity for discipline is
properly built in.

The fact that advertisers pulled out of the News of the World following the phone hacking revelations
shows that ultimately there is a strong business case for behaving in an ethical way, Steare
concluded.

If people think that the behaviour of another person or company is morally reprehensible, whether
from an advertiser or a customer point of view, they have the right to withdraw support from that
business, he said. When my friends start moaning about the behaviour of banks or the
supermarkets or anyone else, I say, its simple: dont shop there, dont bank there, and they will get
the message. When things go really bad this is the final arbiter and it can even lead to the death of a
corporation.