So often when we are called in to investigate allegations of misconduct in an organisation we find employees who are disillusioned with and do not trust the behaviour of senior management.

No matter how good your policies, no matter how clear the organisation’s values, they will be diluted or rendered meaningless if your management and the Board do not recruit and reward employees who show good behaviour ‘at the top’, do not understand the importance of “walking the talk”, or indeed turn a ‘blind eye’ to the poor behaviour of “organisational rainmakers”. Culture must be clearly led from the top in order to ensure policies and values are realistically supported and strived for.

If employees see upper management rewarding or condoning poor behaviour (for example at the service of unsustainable organisational change or in worship of ‘the bottom line’), this will undermine any good work done by HR in drafting, promoting and enforcing good Workplace Behaviour policies and promulgating the organisation’s values.

In the KPMG Integrity Survey undertaken in the U.S. in 2013, the most commonly-cited driver of misconduct was attributed to pressure to do “whatever it takes” to meet business goals (cited by 64 percent of respondents). Other employee perceptions of the roots of misconduct, included:

These results show that employees are aware that cultural priorities drive the organisation, will determines to a large extent how employees will be treated, and whether its policies will be honoured or promoted.

A publication by the Ethics Research Centre (U.S.) found that the most significant factor in ethical leadership is employees’ perception of their leaders’ personal character.

Leaders who demonstrate they are ethical people with strong character have a much greater impact on worker behaviour than deliberate and visible efforts to promote ethics.

Therefore ‘the message from the top’ can either make or break otherwise laudable efforts to promote good workplace behaviour.

In March this year, it was reported that Orica chief executive Ian Smith had been hired by the Board as chief executive of the explosives company in February 2012. On 18 March 2015, however, the Board announced that Smith had agreed to step down as soon as a replacement CEO with a different management style was found.

This was apparently prompted by a very serious bullying allegation in January involving a senior staff member, GM, investor relations, Karen McRae, and this was apparently the last straw for chairman Russell Caplan. A few days later, Smith was asked to step down immediately as an interim CEO, Alberto Calderon, took over.

As announced to the ASX on 18 March 2015, Caplan said the company would “transition to a new leader with a different management style.” As was reported over the following days, the bullying allegation in January 2015 was not an isolated allegation.

It appears that the Board knew that Smith had an aggressive and confrontational manner well before he was hired by Orica in February 2012, but these qualities were seen as part of the package they needed in appointing “a change agent” for tough decisions needed for the company to go forward, to restore profitability and growth.

To give an idea of the task given to Smith, profit in 2012 was the lowest in seven years (partly due to much lower commodity prices) and the company was facing several problematic issues including the possible loss of its operating licence at Kooragang Island in Newcastle. Smith, a tough and seasoned Mining executive, was evidently seen by the Board as the ideal man for the job, given that about 2000 jobs had to go.

As the journalist Fiona Smith wrote:

‘Smith was given the task of turning around the company, selling off its chemicals business and making it a “pure play mining services company”. In the process, around 2000 jobs were slashed.’

She commented that such organisational change:

‘… is a painful process and is bound to have ramifications when it comes to company culture. Because of this, company boards will often opt for a change-agent CEO to crash through – appointing someone who doesn’t care for popularity and won’t be there for the long term.

Usually, the strategy is to get them in to perform some emergency corporate surgery with a hacksaw and no anaesthetic and then replace them with a leader who can take the company and its people forward to a better place.’

As noted in another article by Tony Boyd, Smith admitted he had a “robust, forthright, challenging” management style, and that at Orica, he was under intense pressure to get results (the turnaround strategy involved organisational restructuring, heavy cost-cutting and redundancies).

He also admitted that “from time to time he was overly aggressive”, in particular in relation to the January 2015 incident.  The article notes that a number of employees reported being apparently shouted at by Smith and told they were idiots.

It was reported that upper management at Orica evidently knew that his aggressive management style was unpopular with staff in the company, but only the Nominations Committee, headed by Russell Caplan (later chairman) put the issues to Smith, who agreed to a monitoring of his behaviour.

Throughout 2013, the Board believed Smith was moderating his actions and no further action was required in terms of unacceptable behaviour.

It therefore appears that the Orica Board hired Ian Smith specifically to make ‘the hard decisions’ necessary for major organisational change. Arguably then, it might be said that Smith achieved exactly what he was hired to do.

His departure now allows the organisation to take a new leadership tack whilst still having achieved what it wanted to do.

The Orica situation above, however, does beg the general question: what are the repercussions for an organisation when it espouses one particular model of leadership in its values and policies, but implicitly supports another? How does an organisation ensure that it retains the trust and loyalty of its employees in such circumstances? In relation to Orica, it has since appointed a new Chief Executive, Alberto Calderon who acted as interim CEO.

In a press release on Orica’s website, Mr Calderon stated:

“My focus will be on ensuring the execution of Orica’s strategy as we continue on the path to being a simpler, more flexible and efficient company, and a partner of choice for our customers globally. At the same time, I want to ensure a culture of respect, collaboration and performance.”

Certainly, such specific statements by any CEO that they want a culture involving “respect, collaboration and performance” is a great start.

From Worklogic’s experience, such statements should be also supported by specific attention through training for leaders and all staff about how they can specifically support the right type of workplace culture and understand the many pitfalls and risks for an organisation of where a culture may not support organisational values.

Whilst Worklogic continues to conduct investigations into alleged workplace bullying at any level of an organisation, our proactive work for clients in rolling out workplace values and culture training for organisations makes sense for so many reasons.

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Integrity Line

Integrity Line is an independent whistleblower service for complaints about inappropriate conduct at work, provided by Worklogic. Click here to visit the Integrity Line website.