October 22, 2015

Short-term sacrifices trump more sustainable business thinking

Too many organisations leave themselves open to the risk of becoming the next big corporate scandal because they focus on short-term needs rather than ethics. So says a new report by the CIPD into ethical decision-making in business and the principles and values that influence corporate behaviour.

The research found that 30% of business leaders would reward high-performing individuals, regardless of the values they demonstrate.

Peter Cheese, chief executive at the CIPD, says this mentality is one that makes organisations very vulnerable, as well as being ethically unsound. “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 says. “Our research suggests that 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. 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.”

Of the 3,500 business leaders and 2,200 HR professionals surveyed from around the world, only one in four (24%) said they are always prepared to make short-term sacrifices for the long-term interests of people, organisations and society. This figure conflicts with what they is ‘the right thing to do’, with up to nine in 10 saying they would protect the long-term health and reputation of their organisation when faced with the choice of pursuing expedient or sustainable decisions.

Another interesting finding from the research is business leaders’ attitudes towards employees. It found that three-quarters of business leaders think their employees’ ability to influence decisions that affect them is either ‘nice to have but not imperative’ or as ‘applying but can be compromised’.

The reports looks into how good business leaders are at adhering to their principles. What does it find? It finds that 29% of business leaders and 34% of HR professionals report having to compromise their principles in order to meet business needs. Less than half (48%) of business leaders and HR practitioners in the survey believe that their core values cannot be compromised, whatever the context.

Moreover, 22% of business leaders and 21% of HR professionals claim that they have to compromise on their principles because they affect their ability to succeed in their organisation.

When asked to choose between thinking it is okay for organisations to make decisions that are justified as long as they follow the laws of the country or making decisions that take into account the moral responsibility towards employees, 37% of business leaders and 43% of HR professionals plumped for the former.

This report is the first step in the CIPD’s Profession for the Future strategy. The CIPD plans to use the findings to inform a set of core principles to provide a framework for more balanced decision-making in throughout organisations and in particular, in the boardroom. “We’re starting by identifying some key principles that can help business leaders, HR practitioners and employees make ethical decisions when under pressure and faced with ambiguous and complex situations,” says Cheese.