About Serco Group
Serco Group is a leading provider of public services. It operates internationally across five sectors and four geographies: Defense, Justice and Immigration, Transport, Health and Citizen Services, delivered in UK & Europe, North America, Asia Pacific and the Middle East.
The Challenge: Misconduct Leads to Headline-Making Crisis
“While I wouldn’t advise it, a crisis brings attention from senior management to the areas of ethics and compliance. Lip service doesn’t deliver, but real commitment does. If all you’re getting is lip service, tell this story because believe me, you don’t want a crisis.” - Robert Smith, Director, Business Compliance & Ethics, Serco Group
As a company that works with governments and public sector organisations, Serco’s reputation has always been critical to its success. Knowing the risk of losing that reputation, Serco’s senior leadership made sure to talk about being a values-driven organisation.
However, talking the talk wasn’t enough. In 2013 the headlines hit: Serco was accused of overbilling and misreporting data on two important UK government contracts. Not surprisingly, the scandal had a major impact and share prices plummeted. Senior leadership was dismissed. Then, Serco began a process of corporate renewal, working closely with the UK government and focusing on these key areas:
- Recruiting new senior leadership
- Transparency in customer relationships and commitments
- Governance, internal controls, oversight, monitoring and other systems
- Renewed focus on culture and ethics
The Solution: NAVEX Global’s Advisory Services Team Assessment of Corporate Culture
At the height of the crisis, Serco’s board of directors brought in NAVEX Global’s Advisory Services team to perform a cultural assessment of the UK-based business organisation. The report generated by the NAVEX Global team produced a clear overview of the key issues that were inherent in the organisation that needed to be addressed. While the Advisory Services team found no evidence of a widespread corrupt business culture at Serco, the report identified a number of factors that could collectively create an environment where employees could be tempted to make unethical decisions. While these factors were both operational and cultural, in reality they were all about culture and not unique to Serco. Factors included:
- An unhealthy and significant pressure to deliver financial results and therefore a focus only on the short term
- Setting unrealistic targets from the top down while at the same time, reducing resourcing and support in the divisions to deliver on commitments
- Strong pressure to win new business at all costs, which resulted in the sale of unachievable and unprofitable solutions to customers
- Resistance to delivering bad news to senior leadership, not just because it would lead to rigorous interrogation and grilling rather than constructive discussion, but also because people, interestingly, did not want to “disappoint” leadership
- Increasing trust gaps between us and them – the Serco Group head office and the operating divisions
- Rapid growth, some of it through acquisition, caused values to erode over time and clarity of purpose to be diluted
To fix these problems, Serco had to bring a strategic focus and a defined purpose to the task. A newly formed Corporate Renewal team rebuilt Serco’s governance structure and aligned it with the core values of Trust, Care, Innovation and Pride.
With the renewed commitment from the board and new senior leadership, Serco:
“You have the responsibility to understand the environment that you are placing your employees in and the pressures that you as a business are putting on them.” - Robert Smith, Director, Business Compliance & Ethics, Serco Group
- Revised its governance structure, creating formal committees where ethical issues are aired and discussed
- Better resourced divisions by recruiting individuals who had business integrity included in their roles
- Reviewed policies and processes to ensure they aligned with the values
- Developed a leadership model that focused on leadership competencies and defined behaviours, recognizing that leadership exists at every level of the organisation
- Added rigor to reporting mechanisms to ensure a regular and transparent flow of information
- Completely rewrote the code of conduct, changing the language and adding a strapline – Know it Use it Live it
- Moved from having a whistleblowing process to a ‘speak up’ process – changing the language and focus to make it more engaging and less daunting to use
The Results: A Commitment to Business Ethics
Post corporate ethical renewal, NAVEX Global consultants were brought back in to review Serco Group’s updated policies and practices and reassess the organisational culture in UK operations. The Advisory Services team found that many of the original problematic factors had been addressed and the others were being worked on. Ninety-one percent of managers and 85% of all staff either agreed or strongly agreed that Serco is committed to ethical business conduct. This time ethical conduct is more than just talk; it’s built into the foundation of Serco.
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