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VW scandal a ‘stark reminder’ of the dangers of compromising firm values

Prioritising short-term profits can 'significantly damage even the biggest brands', warns Peter Cheese

28 October 2015

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By Manju Manglani, Editor (@ManjuManglani)

Organisations which allow leaders to compromise their values for short-term profits are at significant risk of reputational damage.

That's according to a CIPD survey of approximately 3,500 business leaders and 2,200 HR professionals worldwide.

"Our research suggests that far too many business and HR leaders continue to be focused on the short-term at the expense of the long-term interests of the organisation and its people," said the CIPD's chief executive, Peter Cheese.

"This risks unintended consequences when people try to cut corners or maximise short-term returns without thinking about the consequences of their actions on all their stakeholders."

He noted that the recent VW scandal is a "stark reminder" that large and complex organisations "need to think carefully about how they create organisational culture and how they increase the chance that people at all levels of the organisation will make ethically sound decisions".

Continued Cheese: "The shockwaves are considerable and can significantly damage even the biggest brands."

The CIPD research explored ethical decision-making in business and the principles and values that influence corporate behaviour.

Up to 9 in 10 claimed they would protect the firm's long-term health and reputation when given a choice of pursuing expedient or sustainable decisions.

But, when tasked with increasing organisational performance, 30 per cent of business leaders said they would continue rewarding high-performing individuals regardless of the values they demonstrated.

When asked to choose, 37 per cent of business leaders and 43 per cent of HR practitioners said their organisation's decisions were justified as long they followed the laws of the countries they operate in.

The research suggests that many business leaders and HR professionals are forced to sacrifice their own core values and principles at work.

Twenty-nine per cent of business leaders (compared with 34 per cent of HR practitioners) said they have to compromise their principles to meet current business needs.

Just over a fifth of business leaders and HR practitioners said they have to compromise on their principles because they affect their ability to succeed in their organisation.

Less than half (48 per cent) of the business leaders and HR practitioners surveyed believe their core values cannot be compromised whatever the context.

The research suggests that organisational profit should not be an end in itself, but that businesses should pursue the long-term interests of people, economies and societies.

Just under a quarter of business leaders and HR practitioners said they are 'always' prepared to make short-term sacrifices for the long-term interests of people, organisations and society.

Nearly two thirds (63 per cent) of leaders and 57 per cent of HR practitioners believe their organisation should take account of the moral responsibility it has for employees.

However, three-quarters of business leaders describe employees' ability to influence decisions that affect them as either 'nice to have but not imperative' or as 'applying but can be compromised'.

The results of the research are published in From best to good practice HR: developing principles for the profession.





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