In a new white paper, Robert Smith, Director, Compliance & Ethics, Serco Group Plc shares a detailed account of the organisation’s journey from scandal back to cultural health—and lessons any organisation can learn from their approach. In this blog post, he shares the six corporate culture warning signs that, if heeded, could have prevented the scandal altogether.
After a scandal rocked Serco’s world, we realised we had to make a fresh start if we wanted to salvage the business.
One of the first steps we took was a request to NAVEX Global’s Advisory Services division to do a corporate culture assessment. The findings hit home hard.
The good news was that they found no evidence of an endemic corrupt culture, and that everywhere they went they were impressed by a strong commitment to customer service.
But in their final report, the NAVEX Global team concluded that:
“While there is a genuine commitment to service and providing value to Serco’s customers, there are a number of business factors and conditions occurring that collectively can create an environment in which employees may be tempted to make unethical decisions when dealing with customers.”
Are You Ignoring These 6 Corporate Culture Warning Signs?
There were six main factors addressed in the report—all about culture. Any one of them has the potential to be disastrous in a corporate culture, but together, they create a breeding ground for scandal.
Do you recognise any of these in your organisation?
1) An unhealthy and significant pressure to deliver financial results and therefore a focus on the short term.
This included setting unrealistic targets from the top down whilst reducing resourcing and support to deliver.
2) Enterprise-wide systems were not implemented properly, increasing pressure on those having to use them.
To support financial challenges we had introduced enterprise-wide systems but not implemented them properly and withdrew the previous support structures before they were properly embedded, adding increased pressure on those having to use them. So where efficiency should have been driven it led to greater inefficiency and increased pressure to deliver.
3) Pressure to win business at all costs.
This resulted in unachievable and unprofitable solutions.
4) Resistance to deliver bad news.
From a values perspective, the report found a resistance to deliver bad news, not just because it would typically lead to rigorous interrogation and grilling rather than constructive discussion, but also because they, interestingly, didn’t want to disappoint.
5) Internal silos.
This wasn’t helped by increasing gaps between us and them. Both at a contract and support-office level but also between divisions and group.
6) Erosion of values over time.
And finally, our rapid growth, some through acquisition, had seen our values eroded over time along with a lack of clarity of purpose.
What Did We Do to Address These Issues?
If you consider these as possible filters through which the “tone from the top” had to fight, there was a lot of “noise” impacting the business and diluting the intentions that our code and governing principles set out.
The obvious immediate response was to look at our compliance programme, which is precisely what we did. The changes we’ve made have resulted in significant positive impact on our employees, our business, and our customers.
How We’re Doing Today
We have had the NAVEX Global team complete some follow-up reviews. The last one completed last summer found that many factors identified in their initial report have been addressed. They found that 91% of managers, and 85% of all staff, either agreed or strongly agreed that Serco is committed to ethical business conduct. There remain areas for further improvement and plans are included in our business integrity strategy.
But the important lesson we’ve learned is that corporate culture is the biggest single determinant of behaviours in any organisation, and it is on those behaviours that reputation is founded.
Reputation risk is as important and as serious as strategic, operational or financial risks. To manage this risk every employee must understand what is expected of them.
Interested in exploring the ways our experts can help you assess and improve your corporate culture? Get in touch with a solutions expert today to learn more about how we can help.