The BFO is the first step in a long journey
In a recent study reported in the journal Nature
, employees of a large international bank participated in a coin flipping game. They stood to earn US $20 each time they flipped a head (or for some participants a tail) over ten consecutive flips. As one would expect, approximately half the participants reported that they were successful on just under 52% of their flips, a result not too different from chance. The remaining participants meanwhile, were asked to provide details about their jobs and professional status within the banking industry prior to commencing their game. This group reported a success rate of over 58%. In addition, the number of mis-reported flips increased from 3% to 16% between the two groups. When the study was repeated with professionals from other industries, both groups reported results close to chance. This led the authors to conclude:
“Our results suggest that the prevailing business culture in the banking industry favours dishonest behaviour and thus has contributed to the loss of the industry’s reputation.”
Although providing a generic explanation for the litany of ethical failures that have plagued the banking and finance industry over the past 10-15 years is difficult, it can be safely said that the majority of them (if not all) occurred in environments that normalised and in some cases institutionalised unethical behaviour. In these types of environments, a code of ethics, no matter how well articulated, can quickly become a redundant document.
There was a period some time ago when the banking industry and the practitioners within it were highly respected. The industry did not abuse this status, but rather accepted it with humility and remained deeply connected to the community they served. Interestingly, there was no overarching code binding the industry during this era, no document articulating what was considered to be appropriate behaviour.
The past 30 years, however, has seen a complete paradigm shift, where instead of being humble servants, a self-centered orientation has permeated the industry. Many people join the industry for the sole purpose of making money, and this greedy, ‘master of the universe’ mindset is not only evidenced by the regularity of ethical incidents, but by the public’s loss of faith in the industry.
So how does one rectify this malaise? Initiatives like the BFO are a good start – a symbolic oath that reminds employees of their moral obligations. However, it is the first step in a long journey. The hard work begins when we try and bring the spirit of the document to life within our institutions.
The onus here sits with the leaders of our institutions, whose actions, choices and decisions will send a loud message about what is really valued. Are we really servants to the community or does personal profit reign supreme? Do we act on employees whose behaviours are at odds with the spirit of the BFO or do we turn a blind eye and compromise the oath? Do we recruit and promote ethical champions who are committed to service or continue to reward on the basis of financial contribution, a narrow and flawed definition of success? As Joseph Baddaracco puts it so eloquently in his book Defining Moments
, how a leader responds to these types of questions will “cut through” the statements within the BFO:
“Defining moments shape an organisation because they cut through all of the finely crafted pronouncements about what the company aspires to do and reveal instead what it actually does. These episodes set precedents and create expectations that shape a company for years or even longer. They define the purpose of the organisation and at the same time how the organisation will pursue its purpose….”
Dennis Gentilin is a BFO signatory.
Since graduating from Monash University, Dennis has spent the last 15 years working in a variety of roles within the banking and finance industry. He has an interest in behavioural psychology and the insights it provides into how people respond to ethical issues.
Cohn, A., Fehr, E., & Maréchal, M. A. (2014). Business culture and dishonesty in the banking industry. Nature
Badaracco, J. L. (1997). Defining Moments
. Boston, MA: Harvard Business Press.
For Cohn et al research in entirety download the research paper