YQYQYQ2013 Issue 07YQYQYQYQYQ

2013 Issue 07YQ

The ‘Good Company’

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In this edition...04 “Think Straight, Talk Straight” – Dominic

Cottone attempts to figure out how America’s most upright accountancy firm, Arthur Andersen, took a tumble.

On the Couch – Charidee? Pah! Richard Hawkes, the evangelistic CEO of Scope, on how the disability campaigning group has evolved way beyond mere tin-rattling.

Board Games – It is a truth universally acknowledged that any company striving to be righteous is in want of a good board. Jane Anderson outlines what it takes.

Silent Heroes – Who’s policing your company? Sam Gilpin and Robert Sharrock explore how the once shadowy individuals in the control function have come in from the cold.

Getting Better – You’ve read the arguments, now put them into practice. June Boyle and Rani Bains provide their tips.

Editor: Sam GilpinExecutive editor: Gurnek BainsConsultant editor: Jane LewisAssistant editors: Clare Morse-Brown, Mellissa Ferrier & Donald MinnickProduction executive: Nicola GrahamGraphic design: Simon FinchamAdditional support: Matthew Sinclair

Feedback: please send feedback including ideas for future articles to yq@ysc.com

Subscribe: for a complimentary subscription to YQ, please register your details at www.ysc.com/yq

The ‘Good Company’ – “Lord, make me good…but not yet,” runs the (apocryphal) prayer. On the contrary, say Sam Gilpin and Clare Morse-Brown, companies have no time to lose.

New Horses For New Courses – Zoe Peach argues that applying a polarities-based philosophy means companies secure a win-win.

Future Perfect – They’re young, they’re gifted…but are they any good? Matt Atkinson on how to nurture the next generation of mindful leaders.

Why Good People Do Bad Things – What are the psychological drivers that lead to corporate malfeasance? Beware glass houses before you cast the first stone, say Amos Szeps and Jürgen Hell.

Gut Gracious! – Some inspirational examples of how companies around the world are putting the good into global.

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So, what makes a ‘good company’? Smita Naidu has led some research into interesting examples from around the world. June Boyle and Rani Bains offer practical tips on how to help your own company make a significant shift on the journey to ‘goodness’. Jane Anderson, Robert Sharrock and Sam Gilpin look at some of the practicalities of having a strong board and effective leaders of the ‘control’ functions that act as a check on executive leaders. We are also delighted to welcome Richard Hawkes, CEO of Scope, to share his views on the topic.

To fill out the picture, we look at the changing context with pieces by Zoe Peach and Matt Atkinson. Finally we take glimpses at the dark side, with a mini case study on the downfall of Arthur Andersen by Dom Cottone, and an article by Amos Szeps and Jürgen Hell on the psychological influences on what makes ‘good’ people do ‘bad’ things. We hope you enjoy our contributions to the debate. As ever, please let us know your thoughts.

Gurnek Bains is the Chairman of YSC.

T: +44 (0) 20 7520 5555 / gurnek.bains@ysc.com

At YSC our mission is to release the power of people. We do this by combining industry leading psychological insight with a thorough understanding of our clients’ business needs. We work with clients across their entire talent lifecycles including: recruitment, induction, development, the identification of potential, internal selection, role change, measurement and departure. Our key client offerings include 1:1 assessment, team development, executive coaching, organisational consulting and the measurement of change.

About us...

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Welcome to YQ

One of my proudest achievements during my time at YSC has been when I worked closely with a team of my colleagues to develop, clarify and articulate our insights into the changing nature of successful businesses in the 21st century. That led to the writing and publication of our book Meaning Inc, which looked at how great organisations create a sustaining sense of purpose and meaning for everyone connected with them. More than five years on, after a global financial crisis and in a world that seems to evolve and change faster than ever, we thought it was timely to revisit some of those themes. Rather than re-tread old ground, however, we have decided to look at them from a fresh perspective: through the lens of the ‘good company’.

The notion of a ‘good company’ is deliberately provocative, in that it implies a black-and-white distinction between ‘good’ and ‘bad’. We are not so simplistic that we cannot see the shades of grey and moral ambiguities in business life, however we do believe that the demands from the wider society on companies to be ‘good’ is greater than ever before, with all the indications that it will become more important rather than less so. We also believe, as psychologists, that at root all of us want to feel ‘good’ about ourselves and what we do, personally and professionally.

by Gurnek Bains

The Good Company by Sam Gilpin & Clare Morse-Brown

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What is a ‘good company’, and how do you go about becoming one? Can you, indeed, afford not to? Here Sam Gilpin and Clare Morse-Brown get the debate underway.

Almost every article in this issue begins with a statement along the following lines: ‘in the aftermath of a series of corporate scandals belief in corporate institutions is in a state of crisis’. Looking back over the previous issues of YQ we see the same picture, and it continues to dominate in the popular and business press. The sheer plethora of stories detailing skulduggery in the business world is striking: whether of greed, incompetence, illegality, abuse of position, bribery, concealing of information, tax avoidance, or mistreating customers, staff, or suppliers. Corporations do indeed appear to be behaving like the amoral monsters that Joel Bakan described in The Corporation: The Pathological Pursuit of Profit and Power. Statements like ‘Greed is Good’, or ‘Doing God’s Work’ seem now not just self-serving and naïve, but utterly toxic.

So the early 21st century is a bad time to be a business leader (except for the fat cat salary, of course). Yet the need for the heads of companies to step up and face global and local challenges has never been greater. That’s why we have dedicated this issue of YQ to the exploration of the ‘good company’. In this opening article, we’ll lay out a few key themes.

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1. The social contract – i.e. what people expect from companies – is changing dramaticallyTolerance of ‘bad’ companies is wearing very thin; and the boundaries between employee, customer, shareholder and activist are blurring all the time. Those companies that fail to respond to these changes will find themselves pilloried and destroyed. With the growth of social media, reputational risk is more dangerous to organisations now than at any time in corporate history.

2. There is no such thing as a perfectly ‘good company’ In this issue, we identify some examples of what we think are ‘good companies’, but we put them forward as interesting case studies rather than paragons of virtue. If it turns out that, at some point in the future, they were not as ‘good’ as they seemed, that isn’t the point. We are not trying to put companies on pedestals, but to celebrate organisations that seem to be on the path of genuinely striving to be better. The fact that perfection isn’t achievable doesn’t make it a get-out clause for half-hearted CSR initiatives, or mean that it isn’t worth trying.

3. At the risk of sounding cheesy, the ‘good company’ is a journey rather than a destination The question to ask about your company, or the one whose services or products you use, is as follows: is this company genuinely trying to head in the right direction? If the answer is “no”, we would argue that all of us have a responsibility to challenge, urge change and, if that fails, to boycott.

4. Guiding an organisation to be better requires great leadership Taking people with you through any period of change tests the mettle of even the best leaders. It requires you to know who you are and what you stand for at a deeper level. To have the courage to stand up for what you believe in, and act in the wider interest. And to have the grace to admit when things have gone wrong.

Some background observations...

And some key ideas…

Corporate Social Responsibility (CSR)Although the term has been around for 40 odd years now, there are still multiple definitions and approaches to CSR. At its heart, it’s about businesses having a positive (or at least minimising the negative) effect on society in terms of environmental impact, community or social welfare. CSR is associated with behaving ethically, above and beyond legal obligations; sometimes sacrificing short-term gain or profit for long-term benefits. Sadly, it has also become a buzzword for cynical marketing spin: ‘greenwashing’ – or just as a way to keep regulators at a distance.

Engagement and MotivationThe benefits of work engagement – ‘a positive, fulfilling, work-related state of mind that is characterized by vigour, dedication, and absorption’ (Schaufeli & Bakker, 2010) – and its associations with improved performance are beyond debate. So it almost goes without saying that a ‘good’ company should have engaged employees. Some of the key levers for keeping people engaged, motivated and happy at work include autonomy, belonging, opportunity for growth, and reward/recognition. But according to a 2007 Towers Perrin survey of 90,000 workers around the world, the number 1 element driving engagement is ‘an employee’s belief that senior management is sincerely interested in his or her well-being’.

Corporate Social Leadership (CSL)

This term (used by authors such as Hilton and Gibbons in their 2002 book Good Business) suggests that companies shouldn’t just respond to the expectations of wider society, and their obligations to it. Instead, they should be leading the way and setting a social agenda. CSL is seen as a core part of business strategy – a positive commercial move, rather than a financial trade-off between being ‘good’ and making money.

SustainabilityA ‘big’ concept that ties together the interests of the triple bottom-line: People (social), Planet (environmental) and Profit (economic). The central tenet – as defined in the World Commission of Environment and Development’s report Our Common Future – is to ‘meet the needs of the present without compromising the ability of future generations to meet their own needs’. Hugely important for development and urban planning, it can be applied in business to everything from commercial strategy to shift rotas.

Suggested reading...• The Black Swan: The Impact of the Highly

Improbable by Nassim Nicholas Taleb

• Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey, Rajendra S. Sisodia and Bill George

• The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan

• Creating Shared Value (HBR, January 2011) by Michael Porter and Mark Kramer

• Drive: The Surprising Truth About What Motivates Us by Daniel Pink

• Enterprise Rules: The Foundations of High Achievement and How to Build on Them by Don Young

• Good Business by Mihaly Csikszentmihalyi

• Good Business: Your World Needs You by Steve Hilton and Giles Gibbons

• Good to Great: Why Some Companies Make the Leap… and Others Don’t by Jim Collins

• The Happiness Hypothesis by Jonathan Haidt

• Meaning Inc: The Blueprint for Business Success in the 21st Century by Gurnek Bains et al

• Polarity Management: Identifying and Managing Unsolvable Problems by Barry Johnson

• Purpose: The Starting Point for Great Companies by Nikos Mourkogiannis

• Work Engagement: A Handbook of Essential Theory and Research edited by Arnold Bakker and Michael Leiter

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Creating Shared Value (CSV)This concept, introduced by Porter and Kramer in their highly influential series of HBR papers, focuses on the connections and mutual dependencies between societal and economic progress. There is no trade-off: what is good for society is also good for financial and commercial growth. This is capitalism re-defined.

Meaning and PurposeThe idea that our working lives should hold both meaning and purpose is gaining traction: inspired by Victor Frankl’s iconic bestseller Man’s Search for Meaning about resilience in the concentration camps, and our own somewhat humbler contribution Meaning Inc – The blueprint for business success in the 21st century. Meaning and Purpose (for some, closely related to concepts of self-actualisation) doesn’t mean the pursuit of happiness, or wealth; and it doesn’t need to involve a religious epiphany – although for some people each of these elements might be a catalyst. Finding your own sense of it in your working life is personal and can be difficult. But the best companies out there will help you achieve it (and help their bottom line in the process!). Sam Gilpin is a Director and Head of YSC Asia,

based in the Singapore office. T: +65 8452 0962 / sam.gilpin@ysc.com. Clare Morse-Brown is a Research Consultant based in YSC’s London office. T: +44 (0)20 7520 5555 / clare.morse-brown@ysc.com

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Perfection isn’t achievable. That doesn’t mean it isn’t worth trying.

We live in interesting times…Here Zoe Peach outlines how companies can reconcile a growing desire for social change with the need to create profits.

The changing world around us I picked up the newspaper recently to read another story about a large organisation that had compromised the trust of 100 million users worldwide for potential commercial gain. The element that interested me most was that these customers immediately took to Twitter to communicate this to the world. Perhaps the backlash will cause the company’s user numbers to drop dramatically; perhaps it will make its leaders think differently. But one thing is certain: we are entering into an era of a new kind of accountability to do good business.

Whether focused on the media, financial services, energy, coffee, the technology companies or issues such as executive pay and tax, the level of scrutiny from the general population has sharpened significantly since the global financial crisis. Alongside this, social media, growing political pressure and the rise of people power – characterised by the ‘Arab Spring’ – mean that the dynamics in which companies are operating are changing significantly. This change is gathering pace and seems unlikely to fade away.

An attitudinal shiftThese aren’t the only contextual changes. Over the last ten years, and in particular over the last four, we have seen growing numbers of executives who are exhausted or numbed by the relentless pressure to increase profits. Sounds like you? Very

by Zoe Peach

New horses for new courses

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possibly. A significant attitudinal shift is taking place within leadership populations as a generation seeking more purposeful lives emerges. They are thinking about their legacy in fundamentally broader ways than the financial health of the businesses they lead or their own personal success – placing importance on a new set of leadership principles. These are not Generation Y; they’re the generation preceding it: people who have seen the opportunity to be successful through principles such as collaboration, connectivity, trust and innovation. They also want to live fulfilling lives as parents, members of their communities and responsible citizens of the planet.

No-win or win-win? So is the drive for profit, set against the drive for meaning, a no-win or a win-win situation? In his book The Corporation, Joel Bakan talks starkly about the legal requirement of large corporations to maximize returns to shareholders and the ruthless pursuit of profit this can create. No-one disputes that operating conditions are tough: competition remains as fierce as ever and customer expectations on pricing continue to sharpen. Yet set against that is the growing perception that long-term success depends more and

more on operating responsibly, with a sense of purpose that pertains to doing something for the good of society. The tension between these two apparently contradictory drivers is the most significant ‘polarity’ that companies need to learn to manage.

The originator of polarities-based thinking, the US organisational thinker Barry Johnson, describes polarities as “interdependent pairs that support a common purpose and one another” – in this case, maximising profits while conducting business responsibly. In the new paradigm I describe, (which has similarities to CSV concepts), profit generation is seen as a primary force for social good. The organisation is then set up to operate in accordance with both polarities over time. It’s not easy, but in essence there is a compelling argument for a win-win when we commit to really thinking it through. Organisations such as the UK’s John Lewis Partnership – renowned for both its employee-inclusive business model and commitment to customer service – have demonstrated that it is possible to be commercially successful and earn a trusted place in the hearts and minds of customers, politicians and peers. Indeed, the two are completely entwined.

Changing times, changing models Perhaps the most exciting thing about this trend is the opportunity it presents for innovation and the creation of new business models. A great example of this is the partnership between the French multinational, Danone, and the micro-credit organisation and community bank, Grameen. In 2006 the latter’s founder, Dr Muhammad Yunnus, and the CEO of Danone, Franck Riboud, formed Grameen Danone with the common purpose of providing some of the poorest children in Bangladesh with vital nutrients missing from their daily diets. The product is called ‘Shokti Doi’ (meaning ‘strength yoghurt’). It is kept at very low prices to enable the widest possible access and is sold, in large part door-to-door, by ‘Grameen Ladies’ who earn commission. Both the sourcing

Humans have an inherent desire to be creative and to change things for the better.

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of raw materials and production take place locally, providing income and employment to others living in poverty. This organisation doesn’t make money, but Danone does.

The goals of the partnership don’t stop there. Given that Grameen Danone is a social business, Dr Yunnus is a strong believer that the product’s packaging should be biodegradable not plastic. Having achieved that, the hope is to take things one step further. Why not create edible packaging for the yoghurt (along the lines of an ice-cream cornet) to add nutritional value to the entire product? The challenge set by Yunus is succinct: “Can I eat it?” And it has created a whole new set of exciting challenges and possibilities for R&D scientists to explore. The partnership is an inspiring example of an ongoing dialogue that continues to create solutions to seemingly intractable problems. When asked what makes it work, Dr Yunnus said simply, “common purpose”.

Join the revolution So what can we do to take part in this revolution? Is it possible to drive it personally, or does it only happen if the CEO is driving it? Here are some pointers to the attributes you’ll need:

• The first is a clear and compelling purpose to make a positive impact upon the world. Purpose is crucial: it’s the reason why your organisation, team, project or initiative exists. And because it speaks to the emotional and decision-making parts of our brain, it has the capacity to unify, build trust and enable ongoing dialogue in the pursuit of the best solutions. Align this with developmental approaches that help individual leaders tap into their own sense of purpose, and the energy created is significant.

• The second is to see the shift towards good business as an opportunity to innovate. Whether this is edible yoghurt pots or innovation hubs in our cities, humans have an inherent desire to be creative and to change things for the better. When presented with a meaningful challenge, we have an amazing capacity to respond; and seizing it has the wider benefit of injecting greater flexibility into our systems and organisational cultures.

• The final theme is to develop ourselves, and those around us to better manage the tensions and trade-offs that come with leading in a complex time. In essence, this means developing polarities-based thinking: exploring opportunities and not closing down the debate at the first hurdle. This will lead to a much richer understanding of the worlds of our customers, shareholders and regulators – and the millions of people in the world with so many un-met needs. All of these things can be done in both a top-down and a bottom-up way. Everyone can make a meaningful difference; big or small.

““Zoe Peach is a former Director of YSC London. T: +44 (0)20 7520 5555 / london@ysc.com

In the new paradigm, profit generation is a primary force for social good

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The challenge of ‘Generation Y ’These individuals also form much of ‘Generation C’ – the ‘Connected’ digital natives who create online communities, web content, and use social media to influence the world around them. They need an enhanced clarity of self-understanding and a work environment that harnesses their talents.

As the world around us changes, so does the outlook of emerging generations. If companies are to survive and prosper, they need to understand what this means for them. ‘Gen-Y’ – the children of the 1980s and 90s – will not be satisfied with a simple rehashing of flexitime.

by Matthew Atkinson (Gen-Y)

Nurturing the good company’s future leaders

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IndividualityIt is no surprise that ‘Gen-Yers’ expect to be treated as individuals. They have grown up with a greater sense of freedom than previous generations, and in a diverse and inclusive culture that values difference. Moreover, the impact of their social connectedness has afforded this generation an opportunity to explore their individual interests by comparing themselves to a wider and more varied pool of people. All of this has resulted in a need to understand their individuality. It is perhaps no surprise that psychology is the fastest growing area of education among this generation.

ImmediacyIn their formative years, the generation’s understanding of the world was centred on the fragility of life. This was shaped by terrorist attacks on a global scale, the death of society’s valued figures (for instance, Princess Diana) and seemingly endless wars in the Middle East. In addition, this cohort has been bombarded by messages about the planet’s impending destruction through the unsustainable use of natural resources. The widespread availability of instantaneous news channels ensured that these images were firmly ingrained

in their minds. As they developed, they had to come to terms with a world where everything could be lost in an instant; a need to seize the moment.

CommonalityCloser to home, the generation’s development has been themed by exam-taking from an earlier age than ever before. Their modus operandi is short-termist and focused on achieving sequential yearly goals. Their world carries with it a necessary expectation of progress, benchmarked against their peer group. And so, their world-order is one of standardisation, not individuality; it is a blinkered track towards graduation. At the completion of their degree, they are faced with an abyss. Their structured view of how to operate has run out of track. It is no surprise that transitioning into the workplace requires something of a major shift for ‘Gen-Yers’.

Work – structure or uniqueness The transition can be handled in one of two ways. For some, it is an opportunity to anchor themselves with a sense of purposeful individuality, linked back to their formative years. For others, this inevitable search is postponed by recreating their structured educational environment; graduate schemes, rotational positions or structured training programmes conveniently fill the void.

The draw of increased salary and structured progress slots these individuals into a career track whose destination is anything but fulfilment. A constant scrap between their need for individuality and their need for immediate progress is often seen by managers as being impulsive and overly demanding in what they expect.

What is neededNow, more than ever, is it important for an organisation’s on-boarding process to include aspects of psychological self-discovery. ‘Gen-Yers’ need to identify their core drivers and what will focus their sense of purpose at work. Provided these individuals can find meaning and passion in their work, the organisation is likely to benefit from their better developed connectivity, their savvyness, their individuality, their need for progress and their desire to make a difference.

A well-prepared organisation that listens to these new employees can create this sense of purpose. The requirements are three-fold. Firstly, psychological self-discovery – individuals need access to the tools and understanding that allows them to identify their own uniqueness. Secondly, diversity and inclusion – the organisation needs to be pragmatic and creative in job design, adapting to individual differences. Thirdly, looking beyond band aids – the challenge of ‘Gen-Y’ is here to stay.

Matthew Atkinson is a Senior Consultant, based in YSC’s London office. T: +44 (0)20 7520 5555 / matthew.atkinson@ysc.com

They need an enhanced clarity of self-understanding and a work environment that harnesses their talents.

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Why good people do bad things

What psychological forces make smart, hard-working, honest professionals lose their way? Amos Szeps and Jürgen Hell investigate.

by Amos Szeps and Jürgen Hell

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As YSC consultants we have the privilege of travelling quite a bit. All over the world we meet senior leaders of high profile global enterprises who are decent, compassionate, responsible people. Yet open a newspaper on any given day and you are likely to see these types of people described very differently. Without a doubt there are ‘bad’ people in the corporate world. But in our experience, these individuals are few and far between. So how do we explain the latest round of corporate scandals?

It is our assertion that ordinary, decent people have – for some reason – done bad things. Not psychopaths. Not just evil people. But everyday honest people like you and us. Why? What psychological forces converge to make smart, hard-working professionals lose their way in such a dramatic fashion? And how can we avoid this? The following is an initial exploration of several psychological dynamics that may help answer these questions – which we would all do well to be conscious of.

We are all capable of bad

“Maybe there is a beast... maybe it’s only us”William Golding, Lord of the Flies

interview, how you scanned the people on the other side of the table and maybe began adopting some of their vocabulary and mannerisms? As humans, we are experts at reading social cues and adapting our behaviour to fit in. This process works well when the group behaves well – not so much when it doesn’t.

A dramatic example is given by a famous experiment by Philip Zimbardo in 1971, where students were selected to adopt randomly assigned roles of prisoners and guards in a mock prison. The participants adapted to their roles well beyond Zimbardo’s expectations, with many of the guards enforcing authoritarian measures and some subjecting prisoners to psychological torture. Similarly, many of the prisoners passively accepted psychological abuse and, at the request of the guards, harassed other prisoners who attempted to prevent it. The experiment even affected Zimbardo himself, who, in his role as the superintendent, permitted the abuse to continue.

Let’s be clear: without our willingness to adapt and conform to a certain degree, we would not have any kind of society or shared moral code. And in business, a strong ‘we’ culture is a feature of high-performing teams. But our tendency to adopt the identity of the group we have categorised ourselves as belonging to is dangerous. We can passively accept the norms of the group and lose sight of our own personal values. “The way we do things around here” can be difficult to resist.

The first thing to be aware of is that we are all capable of terrible things, particularly if they are introduced in a slow, progressive manner. History is littered with evidence of humanity’s ‘dark side’ from Hitler’s Germany, to massacres in Cambodia, Rwanda and beyond. From an evolutionary perspective, civilisation is an extremely recent phenomenon. In a classic study in the early 1960s, psychologist Stanley Milgram demonstrated that 60–70% of research subjects would administer a lethal electric shock to others if they were progressively told to do so by someone in a white coat within an experimental setting. This result and similar others have been replicated with frighteningly consistent results. This is not about an evil few. It is about all of us.

We are biologically wired to conform

“Madness is the exception in individuals but the rule in groups.”Friedrich Nietzsche

The effect of Milgram’s experiment is heightened when we add the power of the group. We are hard-wired to seek social acceptance and avoid rejection from the pack. No matter how unique and independent we like to think we are, we are largely ruled by the systems in which we operate.

Remember how you prepared yourself for your first interview at your first employer? How you looked in the mirror through the eyes of your employer and tried to figure out whether they would like your suit, your tie, your gestures, and whether your tattoo would ‘fit’ with their culture? And in the

“ Operating with integrity in the corporate world presents a significant challenge for human beings, given the psychological machinery we have to work with.

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We justify ourselves – right or wrong

“All the time I feel I must justify my existence.”Charles, Prince of Wales

If we do something that is not in line with our personal values, the mind quickly seeks to avoid discomfort and tension. One way is to tell ourselves a story that rationalises our behaviour and convinces us we are not so bad.

Suppose, for instance, you are a pacifist, but the company you work for announces it is developing technology which will be used in military weapons. The fact you are contributing to something that you disapprove of, even if only indirectly, will make you feel an inner tension which psychologists call ‘cognitive dissonance’. In order to reduce this discomfort, you might quickly change your attitude about military weapons and conclude that, in good hands, they make the world a safer place. Or you may rationalise that the company does

many good things – the same technology might also be being used for medical applications – and that evens things out.

These stories are often breathtakingly irrational but very difficult to catch ourselves doing. They happen fast and we need them. Normally the human mind is so creative and effective in reframing inconvenient truths that we don’t even realise the degree to which we are compromised. Only years later might we look back and say to ourselves: “What was I thinking!”

Short-term immediate drivers win

“D’oh!”Homer Simpson

For hundreds of thousands of years, threats to our survival were immediate. Long-term thinking was not very useful if you were being attacked by a sabre-toothed tiger or lost your footing on a ledge. The necessity to look into the future and consider the broad implications of our behaviour a year or two down the track – much less several generations – is a relatively new one.

Similarly, the impact of your decisions on others in different countries when you were picking berries on the savannah was not particularly relevant. But in the corporate world where the press of a button by a middle manager in Manhattan has the potential to indirectly impact the lives of hundreds on the other side of the world; where hitting monthly targets in Sydney can introduce thousands of tonnes of carbon in to the atmosphere... it matters. We can’t see it or touch it, but it matters. Recognising the consequences of our actions when they are physically removed from us – sometimes by tens of thousands of kilometres – is a challenge. We may appreciate the consequences intellectually and be genuinely concerned, but if we can’t touch them, smell them, or hear them, they can be very easy to ignore.

Power and status don’t help

“Put a bunch of confident, aggressive men in the same room and reward them for taking risks, and you create a pressure cooker, from which probity and prudence evaporate like steam.”The Guardian, 30th June, 2012

Testosterone levels go up and down with status and power – something that is true of women as well as men. It has been demonstrated that high levels of testosterone and a sense of power are associated with lower levels of empathy and an inability to see things from others points of view.

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Given these dynamics, it is all the more important that we create time and space to consult our consciences. We suggest approaching this in the following ways:

Getting deeply connected with who you are, what drives you and your personal derailers. What makes you tick? Where do you find meaning and fulfilment? What sends you off-track and how might you guard against this?

Regularly taking time out to reflect on the big questions. What am I doing? Why? To what end? What are the possible unintended consequences of my actions? What legacy will I leave behind on the organisation? Indirectly on distant communities? On the planet? Will I be proud telling my grandchildren?

Having the courage to stand up for what you believe in. As one of our clients says, “what you permit you promote”. Being a willing member of organisational life, but retaining a strong sense of self, regardless of role or status. Think for yourself.

Rewarding those with character. Promoting a culture of critical thinking and constructive challenge. Looking for people and arguments that disconfirm – rather than confirm – your views, particularly the big ones. To what am I turning a blind eye in order to make my life easier? Where am I colluding with something I don’t really believe in?

Most importantly, act. Do what you can, right now, however small. The challenges we all face on a daily basis can feel overwhelming.

YSC is currently developing a new offering in the area of ethical leadership that explores the above themes further. Partnering with several existing clients and YSC research, we intend to deliver a practical, cutting-edge programme that equips senior leaders with the self-insight to make more ethically courageous decisions that serve them both personally and professionally. For more information, please contact amos.szeps@ysc.com.

In a fascinating recent experiment, subjects were primed to feel either powerful or powerless before being ushered into a separate room, where they were covertly filmed. They were provided with a marker and asked to draw a capital E on their forehead (they were assured that it would be removed before they left). There are two ways to do this: you can draw the E as if you are reading it yourself, which makes it illegible to anyone else. Or you can draw it backwards, so that another person can easily read it. The high-powered people were three times more likely to adopt the former strategy. It didn’t occur to them to think about someone else’s perspective. In the corporate context, a temporary lack of empathy can enable appalling behaviours that decent people otherwise would not dream of engaging in.

So what to do?

“Act as if what you do makes a difference. It does.”William James

Operating with integrity in the corporate world presents a significant challenge for human beings, given the psychological machinery we have to work with. Although we maintain the semblance of rational, broad-minded and independent individuals, we are, in truth, highly complex, largely irrational and self-interested creatures – highly dependent on the communities in which we operate for validation and acceptance, and liable to be swayed in any manner of ways in pursuit of these. We seek social acceptance, justify wrong-doings to retain a positive self-image and tend to respond only when our immediate survival is threatened.

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“In a pitch black room with a weak torch you can only see one step ahead of you. Take that step. And then you will see ahead to the next one.”Tim Costello, Chief Executive of World Vision Australia

So take one thing that you are not proud of doing – and stop doing it. Now!

Amos Szeps is a Senior Consultant, based in YSC’s London office. T: +44 (0)20 7520 5555 / amos.szeps@ysc.com. Jürgen Hell is a Director & Head of YSC Netherlands. +31 (0)26 3530242 / jurgen.hell@ysc.com

International Perspectives:

Americas – Headquartered in Michigan, Herman Miller designs furnishings and related services that ‘improve the human experience wherever people work, heal, learn, and live’. The slogan is certainly lofty, but the company has won accolades to back it up. It has been listed among the Top Ten Most Trustworthy Public Companies (2011), Fast Company’s Thirty Companies That Get It (2011), and spent 22 years on Fortune’s Most Admired Companies list. I conducted several interviews with Herman Miller leaders to understand what sets their company apart. What I found was more community than organisation, with employees steeped in the tradition of the company and understanding the importance of acting responsibly towards each other and the world around them. Meaning is instilled in work performed at all levels of the organisation; employees on the assembly lines are continually reminded that their work benefits real people. Community outreach is commonplace – employees connect with each other and their neighbours by building homes, gardening for senior citizens, volunteering during natural disasters, and renovating schools. In fact, each is given a dedicated amount of paid time each year to volunteer. When a large colony of wasps moved into a new facility in 1995, the company didn’t send for an exterminator. Instead, it brought in 600,000 honey bees, who persuaded the wasps to leave and started making honey. Herman Miller has been bottling the honey ever since, giving it away to employees and friends as a symbol of its core values of stewardship and mutual responsibility.

Angela Castellani is a Director & Head of YSC Chicago. angela.castellani@ysc.com

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Mini case-studiesGood Companies from Around the WorldIn preparation for this issue, we asked YSC consultants around the world to nominate what they thought were ‘good companies’. We got a deluge of responses back – some of them traditional commercial businesses, some social enterprises – here are the ones we liked the most.

by Smita Naidu

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UK – The School for Social Entrepreneurs (SSE) puts its mission in its name: it was set up to provide development and support to help entrepreneurial individuals turn their ideas into projects and enterprises that have a positive social impact. Since the school was founded by Michael Young in 1997, more than 850 social entrepreneurs have experienced its programmes. For the SSE, being a ‘good company’ is straightforward. Most of those who take its courses go on to run successful ventures that address a whole range of societal problems. YSC works with the SSE to offer leadership development programmes, helping its leaders and participants understand their relative strengths so that they can maximise the success of their projects. Together with the SSE, YSC’s work with the organisation has been to help participants harness their strong sense of purpose with the skills to execute – translating the ‘why’ into a tangible ‘how’. “There’s a palpable sense of being ‘good’,” says Hamira Riaz, a Director at YSC. “You feel it when you walk in. People have a real sense of meaning, purpose, and authenticity.” Charlotte Young, Chair of SSE, adds: “We really know what our values are. We are always checking that they are embedded in all activities, organisational habits and relationships.”

Amy Aggleton is a Consultant, based in London. amy.aggleton@ysc.com

Mexico – Although it started as an NGO 12 years ago, Compartamos Banco is now one of the largest and most important micro-financing institutions in Latin America. At its inception, Compartamos set itself the ambitious goal of fighting finance exclusion, offering financial services to people that traditional banking had left aside. The bank now majors on providing credit to small-scale entrepreneurs (especially single mothers) enabling them to grow their businesses. It has a strong unifying sense of culture and purpose connecting back to its NGO roots and the Catholic values of its founders. Employees tend to see their role as contributing to the growth of the communities in which they work. The bank also takes a holistic view of employee growth and fulfilment that embraces physical, intellectual, social, spiritual and professional development. Aside from providing microfinance, Compartamos allocates 2% of net profits to social projects, and has invested MX$204 million in social responsibility and sustainability. It is not surprising, then, that Compartamos won the ‘Best Employee Engagement’ category in the London Ethical Corporation Awards 2012. Although sometimes criticised for its interest rates and the impact of religion on its culture, Compartamos provides a unique platform that has helped sustain and support a previously neglected sector, so important to Mexico’s future.

Steve Van Zuylen is a Director & Head of YSC Latin America, based in Mexico City. steve.vanzuylen@ysc.com

India – 3S Shramik is one of the leading social enterprises in India, making a big difference to the lives of many people still deprived of basic amenities. An innovator in the field of portable sanitation and liquid waste management, the company manufactures eco-friendly toilets for unserved settlements, slums and construction sites – and then services and cleans them. Shramik is the brainchild of Rajeev Kher, who started the venture aged 23 in the belief that making profits should not be the only motto of an entrepreneur. “We started with two portable toilets and a vision and conviction,” he says. “I wanted to reach the maximum number of people through a product whose social relevance is a good business prospect. The focus was on [meeting] the needs of people.” Young at heart and open to experimentation, Shramik’s culture is characterised by an intense passion for a common cause. Growth is another key driver – with personal and collective sense of purpose propelling business results. Shramik employees believe they are in the business of providing ‘dignity’ to people, allowing them to rise above otherwise frowned-upon associations with a ‘dirty’ business. Hence underlying what they do is a deep sense of ownership and idealism attached to the job. Making a positive change in basic sanitation needs and aligning social impact with business goals is what drives people to work each day.

Smita Naidu is a Senior Consultant, based in Mumbai. smita.naidu@ysc.com

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International Perspectives:

Germany – Carcoustics International is a global leader in the design, development and manufacture of vehicle acoustics solutions for the automotive industry. Clients include VW, Daimler Chrysler and BMW. Founded in 1952, and privately owned until a management buyout in 2001, the company has more than 1,400 employees in 10 global sites. In an industry where technology usually takes centre stage, Carcoustics has won recognition for its strong ‘people focus’, its progressive ownership model and its developmental culture. Much of what makes Carcoustics distinctive flows from its leaders, including the CEO, Peter Schwibinger and the Vice-President of HR, Thomas Sundermann. In contrast to more traditional CEOs, whose greater energies are often spent on balance sheets, the leadership energy is heavily centred on the company’s workforce – across all levels of the business. There are no turnover targets; the company focuses on reaping a sustainable profit from a fairly small strategic market segment. It describes itself as a ‘hybrid managerial and operational organisation’, combining traditional SME elements (speed of adaption, minimal hierarchy) with efficiencies more common to larger corporations (such as standard global processes). In common with many other ‘good companies’, the Carcoustics workforce ‘co-owns’ the business as shareholders, which acts as a powerful motivator and retention aide. When it comes to people and roles, objective external advisors support not only with recruitment, but also with internal promotion – helping promote a culture of meritocracy over nepotism. Investment in recruitment is substantial, as is the promotion of continuous training and development across all parts of the business.

Ira Ottmann is a Managing Consultant, based in Ratingen. ira.ottmann@ysc.com

Common Themes:Among the different organisations we looked at, we particularly noted the following trends:

1. Social Entrepreneurship. “Enterprises are built for the people, not vice versa”. In other words, profiting from business is not the only motto. Nonetheless, reaching a larger audience with a product or service with social relevance can make for a good business prospect.

2. People Matter. What matters most is making a difference to the lives of people, and appreciating diverse employees and their distinct traits in a sensitive way. It is also about addressing wider social needs – be it providing for underprivileged kids in Egypt, or ensuring health and hygiene facilities in India. Employees tend to see their role as contributing to the holistic growth of the communities in which they work and building strong, long-term relationships with their partners.

3. Real Sustainability. This involves taking full responsibility for the economic, environmental, social and cultural impact of bringing people together. These companies believe in creating long-term success while minimising the negative impact of what they do.

4. Big Objectives. Underpinned by a deep purpose, idealism and values. The distinctiveness lies in the fact that the employees genuinely believe they are discharging their duties with devotion. This fuels a deep sense of ownership and idealism based on authentic commitment.

Smita Naidu is a Senior Consultant, based in Mumbai. T: +91 22 6671 9917 / smita.naidu@ysc.com

At its height in 2002, Arthur Andersen was a $9.3 billion dollar business with 85,000 employees globally. The firm was founded in 1913 by Arthur Andersen – a man of strong principles, who built them into its culture. He believed in honesty and integrity and growing accountants through rigorous training and discipline. His own much-communicated motto, ‘think straight, talk straight’ summed up the ethos.

Fast forward to the end of 2002 when – after being indicted and convicted by the US Department of Justice for obstruction of justice relating to its audits of the energy giant Enron – Arthur Andersen LLP ceased to operate. The conviction was overturned in 2005. But by then it was too late. The clients were gone.

As an exceptionally profitable, legacy business in the United States, the question remains: what went wrong? What part of a culture that attracted and retained some of the most brilliant minds in business had

gone awry? What was going on that the public did not know about?

According to Russ Gates, a 24-year veteran of Arthur Andersen and the Global Managing Partner of Risk Consulting in 2002, several factors contributed to the strong culture of Arthur Andersen. “Hiring was one of our key priorities. We hired the best and brightest in an ‘up or out’ business, and we developed them so they could continue their careers throughout the organisation.” Among other factors that contributed to the positive culture at Andersen, he includes: a “work hard, play hard” mentality, driven individuals committed to their work performance and education, open communication, clear expectations, a competitive instinct, meritocracy and stewardship. “At its best, it was a ‘we’ culture versus a ‘me’ culture. We were willing to make the tough decisions that affected partners, offices and clients because it was the best answer for our clients and our people.”

Dominic Cottone is a Managing Consultant, based in YSC’s Chicago office. T: +1 312 477 0560 / dominic.cottone@ysc.com

Were there cultural factors that got in the way of success? Certainly. According to Russ, two key issues were gatekeeping, and an inability to let go of some parts of the past. As Andersen expanded, the realities of performance measurements and onboarding experienced hires into an already strong culture – coupled with the complexity of communication and information-sharing – sometimes adversely impacted the speed at which things got done. Additionally, some in the firm were too wedded to the past, and had difficulty thinking differently about the possibilities of their work in an evolving business environment.

So what ultimately brought the firm down? And could the culture of the organisation have saved it? Russ is explicit. “Andersen probably could have survived Enron because it was not a ‘culture of greed’ portrayed in the media. It was ultimately poor judgment. But after the indictment, nothing could have saved us, even though we tried.”

His advice to others? “Recognise that your culture needs to evolve and that you have to realistically think through the implications of change. Organisations today don’t have enough healthy scepticism. People don’t challenge the status quo enough. They don’t get beyond the Powerpoint and dig below the surface so that real issues are surfaced. What keeps people from healthy scepticism and challenging the status quo is their fear of confrontation. Embrace conflict. And dig into the details. Keep things as simple as possible, but remember that everything can’t be simplified. Not everything can be communicated on two pages.”

“Think Straight, Talk Straight”by Dominic Cottone

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“Think Straight, Talk Straight” was the once venerable accounting firm’s motto. Something went badly wrong. Dominic Cottone charts the rise and demise of a culture.

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Richard Hawkes discusses politics, Paralympian heroes, private-sector arrogance – and his lifelong quest to advance the cause of social justice.

On the couch with. . .couch with. . .couch with. . .

Richard HawkesChief Executive of

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The Coach’s Notes – Richard Hawkes, 48, is Chief Executive of the UK-based disability charity Scope, which celebrated its 60th birthday last year. A youthful firebrand, he cut his teeth as a student campaigner at the University of Manchester, where he studied economics – when not being distracted by the ‘Madchester’ music scene. After serving as National Secretary of the National Union of Students, he headed abroad: working for the UN in Vienna, and as an international Programmes Director of Voluntary Services Overseas (VSO), among other roles. He was later involved in the Make Poverty History Campaign. Since joining Scope in 2010 (shortly after it had suffered a near brush with bankruptcy), Hawkes has stabilised its finances and established a central mission ‘to drive change across society so that disabled people have the same opportunities as everyone else’. Married with three children, he describes himself as occasionally “mischievous”, but driven by a constant urge “to change the world”.

Richard has been coached for four years by Ken Rowe, Vice-Chairman of YSC

You have questioned whether Scope should “present a nice, cuddly charitable image of itself”. Do you dislike the connotations around the word ‘charity’?In association with disabled people, yes. If you go back 60 years, we lived in a society where most disabled kids were deemed uneducable; and most disabled people were segregated from society. They had no rights. So the idea was “let’s meet the needs of these vulnerable people”, and charities were created. That may have felt like the right thing to do 60 years ago, but there is something fundamentally wrong with portraying disabled people as charitable causes in need of benevolence. Disabled people are not a charitable cause, they’re people with an absolute right to live appropriately in society. If a wheelchair user can’t get into a restaurant because there are steps in front of it, the answer isn’t to get them to rattle a charity tin; it’s to tell the restaurant they should get a ramp. If society is preventing those people from living high-quality lives, it is society that’s got to change.

Did the Paralympic Games last year change attitudes?It’s difficult to measure but, without question, the Paralympics played a brilliant role in getting people to start talking and thinking differently – asking questions they wouldn’t normally ask. We’ll only drive change if people’s attitudes shift, and the Games

provided a platform to build on. If, as a result of cheering on someone like David Weir, one bus driver doesn’t look the other way when there’s a wheelchair user waiting at a bus stop, that’s progress; that’s change.

So role models are important? Yes. But they shouldn’t just be celebrities or Paralympian heroes. There should be role models in every aspect of life. There are about 11 million disabled people in this country, so they should be more visible in every walk of life. But how many times do you go into a shop and get served by a wheelchair user? How many people have a manager who’s disabled? There should be disabled people reading the news; there should be disabled people in Parliament.

Only 50% are currently in work. Is that statistic improving? It’s getting better, but it’s still appalling.

So how far would you go to encourage companies to recruit? Would you go for quotas? History shows us there are times when quotas work – and times when they don’t. Ideally, you want to get to a place where people just do things naturally because they see the advantage. There are very minor things companies can do that would make a real difference. Is information about jobs available in braille? Could a deaf person turn up to an interview with a sign language interpreter? At Scope, we’re

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always looking at different ways of recruiting. But we should not assume that disabled people want to work for a disability charity. They may want to work for an international charity – or not for a charity at all! So as an organisation we’re trying to role-model the way things can be done. There are brilliant disabled graduates out there, what are you doing about making sure you employ them?

What do you understand by the ‘good company’?It’s one that recognises it has responsibilities beyond its ‘core purpose’ of making profits – and I think most do exist for something more than that. There are some very large companies in this country that also see their role as influencing change, or providing livelihoods for people. A good company needs to recognise that its actions, both internal and external, have a big effect on people’s lives and on society.

Has the wave of corporate scandals changed views? Yes. I think we now expect companies to behave better. People have been quite disgusted about some of the stories they’ve heard – whether about the banks, or about companies selling horsemeat to people who think they’re buying beef – and it’s fuelled an expectation that companies must behave in an appropriate way. 25 years ago, we might not have heard about many of these things – or, if we did, there wasn’t much we could do about it. That’s all changed. There’s

so much choice, people will just go elsewhere. Companies are realising it’s not just about their products, their behaviour matters too.

What can for-profit companies learn from the charity sector? A huge amount. I get really irritated when I hear people saying how much the charity sector can learn from the private sector – that it’s got everything to offer – in a way that puts charities down. There’s a lot we can learn, but the same applies the other way round. At times there’s an arrogance within the private sector. Too many people think: “right, I’ve been successful, I’ll go off and do something good and work for a charity, or make a big donation”. It can feel really patronising. So what are the sector’s strengths? Charities are very good at really understanding what motivates their staff. They’re values-driven organisations, so they tend to attract people who share the values of the organisation. That means they’ll have done a lot of work thinking about the culture. We can’t often reward employees by giving them big bonuses, but we can motivate them in many other ways: by making them feel more autonomous; making them know that their ideas are listened to; encouraging them to have suggestions for the future of the organisation and so on. There are a whole range of different employee engagement tactics that give

There are brilliant disabled graduates out there, what are you doing about making sure you employ them?”

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people a stronger sense of association – and that gives them satisfaction. You end up with greater loyalty.

You’re a former National Union of Students leader, is that where you learned to fight your corner? Yes. And, I had to do it more than most other people because I wasn’t a member of a political party. I was political, but not party political – an Independent. So I did it without the backing or endorsement of any of the political parties and that was rare. I had started becoming quite passionate about issues to do with social justice and injustice and realised the student movement as a whole would be far more powerful if it wasn’t just the mouthpiece of a political party.

What did you gain personally from your student activism? An experience of leadership, management, meetings, politics, public speaking, influence... from a very early age. Without realising it at the time, it gave me a strong feeling for things like stakeholder relationships – how the things you do can land in very different ways on different people.

So what do you consider your distinctive strengths as a leader? I work really hard at thinking about the impact I’m having on those around me. It was something I never did until I met Ken Rowe. I was nowhere near as aware. Now I work at

it all the time. I’m constantly thinking through how I want people to feel after different interactions and what might be the best way for me to behave to get those outcomes. Of course, occasionally I get it wrong.

How do you translate that into daily business life? Once a week, I go through all the things I’ve got coming up, every single meeting, and think proactively about the outcome I want. There will be times when I want someone to know that I’m annoyed about something; and times when I want people to feel really motivated and excited. So I’m trying to control my emotional impact rather than just letting things happen by accident.

You seem to still relish a scrap. Do you consider yourself quite combative? Probably so. But it’s driven by a sense of trying to make things better. I spent 15 years working in international development. When you go to orphanages in Romania in the early 1990s and see some of the horrific things that are going on, it makes you really want to do something about it. And trying to change the way people think isn’t easy. You’ve got to be determined and you’ve got to be up for it.

Who has inspired you most? A little Romanian boy, born deaf and blind, who was living in an orphanage. Once a week, on a Wednesday, he went to deaf school where he’d get attention, people would play with him

and so on. He’d wake up so excited. One day his teacher told me this would be his last Wednesday for a while: the three-month summer holiday was about to start, and he didn’t know it. It was really just so sad. I remember leaving feeling incredibly guilty that I hadn’t taken him with me. But it would have been the wrong thing to do. So I used how awful I felt emotionally to think about how I could resolve the situation, by forcing policy change. Three years later, Romania introduced new legislation on special education. It was a powerful example of how a specific individual can inspire you to bring about greater change overall.

What would your 16-year-old self have made of you now? I hadn’t got a clue what I wanted to do at 16. I hadn’t got a clue what I wanted to do at 30. I’m 48, and I haven’t a clue what I’ll do when I’m 55.

Isn’t there a danger of just drifting along? Well, I’ve always been quite strategic about where I’ll go. Certainly, from my early 20s, I’ve wanted to change the world – to make it a better place; to try to do something about injustice. So I know that over the next 20 years, I’ll keep trying in the most powerful and influential way I can. Exactly what that role will be I don’t know – and it doesn’t bother me. It excites me that I don’t know what it is.

“Richard Hawkes spoke to Jane Lewis, YQ’s Consultant Editor.

“ There’s so much choice, people will just go elsewhere. Companies are realising it’s not just about their products, their behaviour matters too.

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It is a truism, sadly too well highlighted of late, that leading a great company requires a great board. Recent corporate failures and scandals have led to many searching questions about the role of boards: Who were they? Where were they? What were they doing? How did it go wrong? In all the noise, it’s easy to lose sight of the more positive story that there are many complex, thriving and well-governed organisations in all sectors, doing a great job under increasingly difficult circumstances.

Not only are modern boards facing growing complexity, global pressures and uncertainty in volatile economic conditions, but they are also being challenged to make a greater contribution as stewards, committed to making a broad economic, social and environmental impact for the good.

YSC has been working with Mazars, the accountancy partnership, and Tomorrow’s Company, the ‘think and do tank’ voluntary

sector organisation, to assess how we can help make poorer boards good, and good boards great.

The aim is to provide a route map for each sector – companies, charities and pension funds, through the myriad complexity, questions, official guidance and comment. To that end, we have created a polarity model, adapting it for each sector, building on the work of Barry Johnson, author of Polarity Management: Identifying and Managing Unsolvable Problems.

In essence, boards balance a number of ‘both-and’ requirements – or ‘polarities’ – which offer choices and apparently contradictory pressures. To get to grips with these, they need to start with a clear vision and also focus on operational effectiveness. How many businesses have failed historically by failing to set goals, innovate and keep up – or by having strategic goals that are never realised? Good companies both create ways forward, and build the

capability to deliver. The successful push of many multinationals into new developing markets, for example, is led by a strategic and practical understanding of ‘why’ and ‘how’ to do it.

Another potential conundrum that demands to be balanced is that of promoting the financial success of the organisation, while also living by the values that should guide its behaviour in the marketplace and as part of the fabric of society. Increasingly, consumers are making choices – about which coffee they drink, where they buy their books, or where they bank – based on the values a company demonstrates. Yet commercial pressures continue to proliferate. The ‘good board’ keeps both constantly

The Role of the Board

Running a company, or indeed a pension fund or a charity is essentially a balancing act. Here Jane Anderson outlines some of the conundrums facing boards – and offers a route map towards solving them.

by Jane Anderson

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under review. Another vital role is to articulate an organisation’s risk thresholds and intolerances. The tension between entrepreneurial, value-building activity and managing risk – in other words, being both risk-taking and risk-averse – needs to be tabled, discussed and resolved.

It goes without saying that the composition and behaviour of the boardroom team can make or break an organisation. Resilience is key when it comes to ensuring and embedding the everyday processes that lie behind board effectiveness: the information flow, and discipline, that ensure an organisation can rely on good decisions being made in good time. Boards need to be mindful that they are there to

boost governance and effectiveness, rather than themselves becoming a block in the system. Equally, when crises arise, it’s crucial – often to the very survival of a company – that they adapt and respond effectively.

Board members must strike a balance between being a member of the team and maintaining a clear sense of individual integrity and contribution. Only then can they discuss the issues frankly and robustly, decide on a course of action, and move the company forward in a united, functional way.

So what does this mean for you if you are currently sitting on a board? We recommend you bear the following simple thoughts in mind:

• Firstly, understand your own personal tendencies with regards to the polarities outlined above, and make a conscious effort to balance your contributions. Are you the CFO who always calls attention back to the commercial matters when conversations turn to values? Are you the Chairman who places risk management over entrepreneurialism?

• Secondly, do this at a team level, i.e. pay conscious attention to where the debate goes (and where it tends to go again and again), and ensure that the alternative viewpoint is heard and incorporated into the decision-making – even if it is not the perspective that you would customarily raise.

• Finally, remember these are not ‘either-or’ problems that need to be solved, but ‘both-and’ interdependencies that need to be optimised.

Jane Anderson is a Director, based in YSC’s London office. T: +44 (0)20 7520 5555 / jane.anderson@ysc.com

Figure 1 is a summary of our thinking

Figure 2 a warning of what can go wrong.

VISI

ON

RISK

VALUE DRIVER

S

I N T H E B U S I N E S S

IN TH E B U S I NESS

Adaptive to crisisPull together and move forward successfully

in times of significant transition and crisis

Steady-statePut in place processes to ensure good decisions are made in a timely manner

Team-orientatedWork as a team to fulfil responsibilities

Making personal impactMake full use of individual contributions and challenges

CULTURE

RESILIENCEIN THE BOARDROOM

I N T H E B O A R D R O O M

Strategic Set direction, long-term goals and milestones

Practical Oversee operational effectiveness

Values driven Ensure integrity, the fulfilment of obligations to stakeholders and the meeting of broader social and environmental responsibilities

Driven by value Promote shareholder value/the financial success of the organisation

Entrepreneurial Lead and respond to a changing marketplace through development and innovation

Manages riskEnsure that risks are identified, evaluated and managed

Too much emphasis on thefinancials/shareholder value

RISK

Trap

eze ArtistVISION

Dreamer

VALU

ESHe

artle

ss

CULTURERubber Stamp

RESILIENCE

Fairweather Sailors

Insufficient focus on risk management

Insufficient focus onstrategy implementation

Too much emphasis on united team

leading to groupthink

Insufficient attention to board adaptability in times of crisis

Much of the popular attention in the aftermath of recent corporate crises has been on the irresponsible behaviour of executive leaders. Less acute focus has been placed on the people who should have been working alongside them to prevent the crises from happening in the first place – those who head up what are technically called the ‘control functions’, namely risk, audit, legal, compliance, and finance. The composition of a control function varies according to different industries and countries, but broadly speaking it consists of those technical leaders who report to the board of an organisation about its financial affairs, risk exposure, and the efficacy of its internal systems and controls.

Heading up a control function is something of a thankless task: if you do the ‘controlling’ part of your job brilliantly, and your company never suffers a crisis, no-one tends to notice or appreciate your contribution. Nassim Nicholas Taleb, in his seminal 2007 book The Black Swan, describes this phenomenon as a “vicious kind of ingratitude: the feeling of uselessness on the part of the silent hero”.

At YSC, we have had the privilege of carrying out in-depth profiles of many of these ‘silent heroes’ over the course of more than twenty years. We have looked into their personal and professional histories, their psychologies and leadership capabilities and styles. Here are the five attributes that we tend to see in the best of them:

CourageFirstly, you need to have individuals in these roles who have a strong sense of principles that they are prepared to act on. All ‘silent heroes’ have a clear set of moral values: some they have devised for themselves, others are based on religious teachings, and some on professional ethics. These individuals are prepared to raise difficult

Silent Heroes

Power means nothing without control, say Robert Sharrock and Sam Gilpin. So what are the personal attributes needed to keep the good company firmly on the right rails?

by Robert Sharrock & Sam Gilpin

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Courage

Rigour &

Flexibility

Commercial nous

GravitasCultural

Leadership

success of their business. Increasingly, we see control function leaders who have successfully performed large-scale general management roles. Indeed, ‘poaching’ and ‘game-keeping’ should be seen as complementary sides of the same coin. Regrettably, in the past, poor ‘poachers’ have been side-lined into ‘game-keeping’ roles; and great ‘game-keepers’ have seen their careers back into executive roles blocked because of their willingness to challenge those further up the hierarchy.

Gravitas‘Gravitas’ can be a rather loaded and old-fashioned word, with its air of intimidating, clubbable men of a certain age, wearing stiff suits and ties. We don’t look for that. Neither do we look for those who can be labelled as team-players but whose need to belong (to a social group) threatens their ability to question those around them. What we are interested in is the ability to command the genuine attention of key opinion formers, whether

issues with powerful executives, challenge received wisdom, and use their own position to say “no” where necessary. Linked to this, we like to see leaders in control functions who are prepared to question the status quo, to ask “why?” and “what if?”. They are prepared to puncture the bubble of certainty that comes from groupthink.

Rigour and flexibilityBut how do you know when to challenge and when not to challenge? A key issue for any control function leader is to understand the materiality of a particular concern. A control leader who is constantly challenging and saying “no” will quickly lose respect around an executive table. So we look for people who can get beneath the surface to the underlying causes of issues, step back and see the wider picture and context, and bring logical and analytical clarity to problems of high complexity. People, in short, who can make great judgement calls. They need to separate their judgements from personal feelings (for example, anxiety about the reactions of others whose judgments are being scrutinised) and bring cold objectivity to analysis. Rigour on its own, however, is not enough, and needs to be enjoined with sufficient flexibility to envisage alternative courses of action that mitigate the downsides of a course of action, in line with an organisation’s appetite for risk.

Commercial nousComing up with alternative courses of action is much simpler to say, of course, than to do – which is why we look for leaders who really understand the organisations they work in. They are strong, strategic and operational thinkers in their own right, able to make sound judgements about the impact of different trends and courses of action on the immediate and longer-term commercial

fellow executive leaders, non-executive directors, or regulators and government. Given that part of the job of the control function leader is to show ‘courage’, this will inevitably from time to time produce frustration, and even anger, from some of these key opinion formers. The best people are able to strike a fine balance between developing, maintaining and retaining effective relationships, while never compromising on principles. To do this requires strong interpersonal skills; in particular, the ability to flex and adapt dexterously to different situations and personalities, while retaining authenticity and consistency.

Cultural leadership Finally, no woman or man can do everything on her or his own, however many of the qualities above they possess. They must also ensure that the function they lead has the right skills and culture to provide effective support and challenge across the whole organisation. It goes without saying that they need sufficient technical and professional expertise, and the ability to stay on the leading edge of best practice. More important, though is the need to be strong people leaders in their own right: able to attract, develop and retain the best talent; build an effective team from experienced and diverse senior players; and lead the function on a journey of transformational change. Preventative change is what the true ‘silent heroes’ do, even if most of the media glory goes to the leaders who clear up the mess that others leave behind.

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““ ‘Poaching’ and ‘game-keeping’ should be seen as complementary sides of the same coin.

Robert Sharrock is Co-CEO (Europe), based in YSC’s London office. T: +44 (0)20 7520 5555 / robert.sharrock@ysc.com. Sam Gilpin, is a Director and Head of YSC Asia, based in the Singapore office. T: +65 8452 0962 / sam.gilpin@ysc.com.

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1. Establish a vision that serves all stakeholdersVision is the guiding direction of an organisation, based on its underlying sense of purpose. However pressing your immediate performance goals are, achieving them may not be enough to achieve longer-term success, or enable your company to compete effectively in the marketplace. Recent events in the UK

(for instance, the attention paid to the tax affairs of multinationals), illustrate just how much an organisation’s reputation depends on meeting its broader stakeholders’ needs and expectations. This may be the moment to reflect on how effectively you are taking care of these responsibilities. How well do you know your stakeholders? How well are you leading and managing your organisation in line with your broader goals? Take stock of your current reality.

2. Tell storiesCommunication, communication, communication is a huge part of enabling individuals and teams to stay connected with the organisation’s deeper purpose. Creating ‘aliveness’– and sharing how the purpose is being acted upon every day through storytelling – helps build confidence and reinforce what it takes to bring the vision into existence. Leaders

are central to creating the conditions for these stories to be shared and told. And it’s important that teams across the organisation find ways to express the difference they are making and create a sense of their shared mission.

3. Understand what it will take to get thereOnce the overarching vision has been developed, invest time in understanding exactly what it will take to achieve it. Taking the time to understand the context, history and past successes of the organisation are central. Never underestimate how much has been invested in creating its habits and modus operandi. Reward often stands out as an area that needs to be reinvented. If sustainable change is to be realised, tackling issues through the wider involvement and engagement of

Getting Better by June Boyle & Rani Bains

How can your organisation take the first steps to becoming a ‘good’ company? June Boyle offers seven tips on how to shift the paradigm in your organisation. Rani Bains shares her insights into how to bring the four key areas of purpose, self-realisation, connectivity and belonging alive in your business.

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employees is key. Their ideas and knowledge of how things really work are critical to helping change future behaviours and ways of working.

4. Encourage leaders to take a journey of self-discovery

Any organisation striving towards a deeper purpose needs leaders who can adapt to, and lead, change. The more enlightened invest in the development of a cadre of leaders, helping them to discover who they are, how they got here and what they need next. This thinking typically starts with building a deeper level of self-awareness. The more time leaders take to deepen their self-insight, understand the impact they have on others and explore their own purpose, the stronger and more capable they become at engaging and building meaningful relationships with their teams and other stakeholders.

5. Shift the emphasis from “what can I get?” to “what I can give?”Are the people in your organisation in it for themselves, or for something greater? What has shaped their commitment over time? Are they connected to their own values, beliefs and sense of purpose? Creating deeper levels of engagement that tap into these richer sources of identity will lead to more happiness, energy and engagement with the organisation. 20th century management practices tended to steer us towards an entitlement-led culture, reinforcing individualised behaviour. In a much more interconnected and interdependent 21st century world, we need to focus more on our social responsibilities and the contribution we make to the broader community. Widen your thinking; emphasise collaboration.

6. Change habits What are the habits you currently find yourself falling into at work? Our sense of wellbeing is often compromised by the hard graft and long hours that it takes to deliver performance. The challenge is to be able to step back from the daily grind and consider whether we are tapping into the broadest set of energies available to us. It is extremely hard to change habits. Try writing your signature with your opposite hand to see just how difficult it is! Indeed, in many organisations, existing routines and rituals are followed almost unconsciously. The best way to achieve a shift is by encouraging individuals to look at how they manage their energy. The work of psychologist Jim Loehr, co-founder of the Human Performance Institute, has established that managing energy, not time, is the key to sustained high-performance. So it is essential to explore the physical, mental, emotional and spiritual aspects of how people lead their lives.

7. Establish the conditions for creative dialogue In an increasingly complex and unpredictable world, the notion that companies can control and set fixed rules is no longer sustainable. So the more adaptive, resilient and creative organisations are developing open systems to unlock the potential value and ideas of their people. Social networking technology has pushed the boundaries of how we communicate and create relationship networks – and that needs to be reflected in organisations. Leaders need to let go of certain controls and loosen up the boundaries between different siloes. The more open platforms there are to share learning, the more opportunity there is for individuals to tap into each other’s experience and know-how.

How to bring purpose alive• Help individuals identify their key

values and then connect and realise these within their work. This requires reflection and investment of time, particularly from their line manager.

• Help individuals establish clearly their personal brand and align this with the organisational brand to maximise integration.

• Frame clearly for the employees what change/success according to the company’s purpose would look like and feel like. This should be done in as creative and memorable way as possible.

• Give continuous focus on the standards which need to be understood and applied. Communicate this in a way that identifies the Why, the What and the How.

• Draw upon stories of organisations living purposefully and which help to inspire and engage people within and outside the organisation.

How to support genuine self-realisation• Recognise that helping people to

grow is not a ‘nice to have’ for a business but a fundamental component of what people want and expect from their work.

• Establish mentoring, coaching and 360° feedback processes.

Top tips...

• Ensure developmental interventions are aimed at helping people find their own sense of meaning. This means adapting interventions to individual need as opposed to dropping programmes of activity on people.

• Take risks and apply the ‘believe in everyone’ principle as far as it can legitimately be applied in your organisation. Allow people to succeed in their own way in positions. Take chances, but leave people in a post long enough to be able to evaluate their performance and for them to learn by seeing the consequences of their efforts.

• Instil a culture that focuses on people’s strengths. Develop processes for honing these to the highest levels. Look to create teams that have spike strengths rather than average qualities across the spectrum.

• Recognise that the other side of creating the room for people to contribute in their own way is the need to develop a laser-sharp approach to evaluating people’s performance. This keeps a positive philosophy of growth grounded in business reality rather than being a licence for indulgence.

• Instil a high-performance coaching culture. Recognise that this is not the same as assigning everybody a coach.

• Finally, make growth the agenda of all leaders and managers. It impacts the business most powerfully when fully supported by the CEO and integrated with other initiatives. Do not just delegate to the HR function. Measure the impact of developmental interventions on the bottom line so that commitment can be maintained throughout the business.

How to encourage connectivity• Recruit outsiders carefully. Try instead to

achieve as much as possible with people who know your business and understand your DNA.

• Inject a sense of fun in the day-to-day running of the business.

• Host events which create connectivity between internal and external stakeholders.

• Ensure communication is maximised to create unified understanding, this should be done to build ‘top down’ and ‘bottom up’ perspectives.

• Help people to understand each other beyond role/task work context.

• Develop people’s ability to form strong relationships and to influence effectively.

• Maximise the development of informal networks.

How to create belonging• Do not be afraid to create a demanding

‘family business’ culture. This entails a mutual process of providing people with high levels of loyalty and commitment and expecting the same in return. Newcomers should be welcomed with open arms; people should be given opportunities, with internal promotion preferred to bringing in outsiders wherever possible.

• Build strong relationship cultures that emphasise the importance of trust and a genuine win:win mindset. Encourage people to challenge themselves to bring honesty, empathy, understanding and respect for both themselves and others to their relationships.

• People feel they belong in environments where they can genuinely relax and be themselves. Therefore, rather than merely tolerating difference, leaders need to actively encourage expressions of individuality.

• Belonging is not the responsibility of leaders alone, but of all company members. Concerted efforts should therefore be made to build and maintain a sense of team unity across the company. Keeping teams together over time enables people to develop a real understanding of how best to work together, utilise each other’s strengths and capabilities to an optimum level, and to develop the depth of trust and fluid efficiency that is so integral to team and organisational effectiveness.

““

June Boyle is former Director & Head of YSC Scotland. Rani Bains is a Managing Consultant, based in YSC’s London office. T: +44 (0)20 7520 5555 / rani.bains@ysc.com

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Recognise that helping people to grow is not a ‘nice to have’ for a business but a fundamental component of what people want and expect from their work.

““ Belonging is not the responsibility of leaders alone, but of all company members.

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InsIde Yde Yde sC

YSC Asia ExpandsResponding to increased client demand, we are pleased to announce the opening of two new offices in Asia. YSC Singapore will be led by Sam Gilpin, and YSC Shanghai is to be led by Rhonda Gutenberg.

New Offerings Coming Soon...Futures - a new approach to help executives transition with meaning in to the next phase of their professional lives.Maternity Coaching - aimed at helping businesses support their senior and high potential women to return to work.

Responding to increased client demand,

The View team continues to grow...The success of View – the YSC consulting service aimed at emerging talent – has led to the recruitment of new team members Nicola Maycock, Ella Oaneca and Cher Hill and a move to larger office space on the top floor of The YSC Building in Covent Garden.

Among other things, View is developing a range of tools for the assessment of potential against the YSC model of Judgement, Drive and Influence.

Paul Ballman will now be bringing together View and YSC Online under single leadership in order to offer clients a more integrated service that can deliver YSC IP, products and services to very large numbers of people in a cost effective manner.

For more information please visit www.yscview.com

Resilience - a new survey offering a powerful diagnostic across five core areas with results being used as a platform for coaching, leadership development, team or organisational interventions.

PiXEL - a new offering using digital behavioural coding.

The View team continues to grow...

www.ysc.com© YSC Ltd. YSC is the trading name of Young Samuel Chambers (“YSC”) Limited. Registered in England at 50 Floral Street, London, WC2E 9DA. Company Number 2402857 Printed on recycled paper

We do this by combining industry leading psychological insight with a thorough understanding of our clients’ business needs. We work with clients across their entire talent lifecycles, including: recruitment, induction, development, the identification of potential, internal selection, role change, measurement and departure. Our key client offerings include 1:1 and team assessment, executive coaching, organisational consulting and the measurement of change.

We are a global firm of business psychologists helping organisations achieve commercial success by releasing the power of their people...

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