What Can The Philip Green Scandal Teach Us About Toxic Company Culture?

How can businesses set high ethical standards - and stick to them?

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How can businesses set high ethical standards - and stick to them?


What Can The Philip Green Scandal Teach Us About Toxic Company Culture?

How can businesses set high ethical standards - and stick to them?

Share this article

The majority of global corporations have Codes of Ethics. These outline an organisation’s standards, which employees are expected to abide by, and tend to cover everything from how to treat fellow colleagues to protecting the corporate brand.

Yet, in many businesses, this does not lead to the ethical, transparent, positive company culture one might expect it to. Despite the Codes of Ethics so many corporations have in place, each year brings fresh instances of corporate scandals that have arisen from toxic company cultures.

The Philip Green scandal – which flared up in late 2018 after allegations of sexual harassment, bullying, and racism began swirling around the British retail magnate, leading to calls for the removal of his knighthood – is just one example of this.

In reality, written rules and superficial platitudes about “doing the right thing” simply aren’t sufficient to prevent toxic, abusive cultures from festering.

The alleged events at Arcadia bring to the fore important challenges for business: dealing with larger-than-life, eccentric figures with blind spots; using non-disclosure agreements to avoid litigation and public relation issues; dealing with the after-maths of a toxic culture.

So what can be done to tackle toxic company cultures? Here are six suggestions:

1.       Think Critically

Understanding the humanity and fragility of organisations is critical in building an ethical company culture. Company leaders need to take a hard look at the way our businesses operate.

CEOs especially need to focus on building teams driven by integrity and actively promoting a culture of ethical decision-making. This means a culture that encourages people to reflect on their conduct, ask questions, and think critically about why things are done the way they are done.

2.       Where you lead, others will follow

The most effective way for leaders to inspire ethical conduct in employees is to demonstrate it every day in their own behaviour.

This means asking the right questions to arrive at ethically informed decisions, getting all the facts about allegations of misconduct, and being willing to say no to business practices (and business partners) that conflict with the stated values of the organisation, regardless of how lucrative they might appear.

3.       Empower whistleblowers

Ensure that the organisation has an accessible, well-publicised hotline for confidential whistle-blowing, alongside adequate processes to investigate all allegations.

A company should provide whistleblower lines (and other channels) that allow anyone to report information about misconduct, seek guidance and/or offer improvements to the ethics and compliance programme – and to do so in confidence and without fear of retaliation.

Further, it is important to publicise these lines widely and to urge people who are feeling pressured to commit misconduct to report as early as possible and as often as necessary.

4.                   Check your blind spots

CEOs sometimes have ethical blind spots, especially around the conduct of their most ambitious, high-achieving subordinates.

Highly intelligent, charismatic employees are often allowed to operate largely unchecked; their departments and business units sometimes become semi-autonomous kingdoms lacking sufficient central oversight. I call these potentially dangerous characters the ‘superstar managers’.

Part of leading by example means holding these high performers accountable for their actions and not allowing ethical double standards to persist and undermine the organisation.

5.       Bring ethics into HR training

Incorporate real-life dilemma scenarios into training modules on ethics and compliance, so that employees are primed to recognise issues when they do arise. As clear as a company’s policies may be, unusual and difficult circumstances will arise from time to time when employees are not sure how to handle something.

To address this reality, employees of all levels (and third-party business partners) should be provided with communication channels to obtain guidance on navigating ethical dilemmas and making the right decision.

6.       Incentivise ethical conduct

Company leaders too often view ethics as a niche functional concern, or a series of talking points, or a hindrance to strategy and growth; this viewpoint impedes efforts at reform.

Incentivising ethical conduct, empowering whistle-blowers, eliminating double standards, and rejecting wilful blindness are all essential steps to infuse integrity throughout the fabric of your organisation.

In large organisations filled with high performers driven by relentless pressures to compete, these can be difficult actions to prioritise. However, in the long run, it will make for a more profitable, resilient, and sustainable business.

José Hernandez is the CEO of Ortus Strategies and the author of new book Broken Business: Seven Steps to Reform Good Companies Gone Bad (published by Wiley), which is available now in hardback and ebook.

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What Can The Philip Green Scandal Teach Us About Toxic Company Culture?

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