Corporate Britain needs more than rules to rediscover a sense of purpose
Round table discussion by Cass Business School and the Spiritual Capital Foundation identifies a need for 'moral culture'.
Compliance rules and corporate social responsibility policies can help companies and their staff re-establish ethical conduct in the workplace. But the ultimate aim should be to build a culture in which staff and management naturally have a sense of moral purpose that goes beyond pure profit maximisation.
This was the conclusion of a round table jointly organised by Cass Business School and the Spiritual Capital Foundation in January 2012. Participants were drawn from a range of academic disciplines and professional backgrounds, to examine Milton Friedman's famous assertion that the only social responsibility of a business is to "engage in activities designed to increase its profits so long as it stays within the rules of the game."
"The rules of the game have changed since Friedman's day. Businesses today are expected to optimise profits in a sustainable fashion, not just to maximise them," said Prof Paul Palmer, Associate Dean for Ethics, Sustainability and Engagement at Cass.
The discussion comes at a time when corporate Britain faces profound questions, with the UK government actively encouraging different corporate ownership models, and increasing scrutiny on executive pay. The round table encouraged chief executives to redefine "winning" the game in a corporate context, to include the company's effects on wider society.
Participants warned about the creation of authoritarian "with us or against us" corporate cultures in recent decades, which made it difficult for staff to question company decisions on ethical grounds. And there was general concern that the growth of rules-based systems, especially in the financial sector, has encouraged a mechanical compliance culture without a deeper sense of individual duty or personal principles.
"Rules can be helpful to create the habit of good behaviour, but they cannot alone bear the weight of moral responsibility," said Giles Fraser, former Canon of St Paul's Cathedral who was responsible for engagement with the City of London.
Inevitably, staff reflect the moral values in wider society when they join a company. But panellists argued that this places an even greater responsibility on businesses to create a moral purpose in their own workplace.
Corporate transparency is needed to increase the probability of moral failings being revealed. And participants also emphasised the value of extensive professional training in giving staff personal capital in maintaining their reputation and that of their company.
The discussion also touched on the use the use of annual performance reviews to entrench spiritual capital. It was suggested firm targets for activities such as community volunteering should be included in the review process, to establish a sense of duty throughout the company hierarchy.