Six snapshots on conduct you need to consider now
Ready to be a role model?
When it comes to conduct, all organisations are now under the spotlight. A company’s brand and public perception are all front and centre stage – with no room for anything to fly under the reputation radar.
- #1 Transparency and trust
- #2 Disruptors disrupt the notion of conduct
- #3 Conduct: the heartbeat of the economy
- #4 The rise of regulation with bite
- #5 Emerging antidotes: innovation to the rescue
The increased conduct-related scrutiny that company boards and directors, and senior executives, find themselves under is exponentially increasing. This is further bolstered by community concerns, cultural sentiments and the expectation that an organisation – across all levels – behaves, acts and conducts itself appropriately, at all times.
Are you up to speed on what conduct encompasses? Six key elements you need to consider now:
#1 – Transparency and trust: the dynamic duo
Think you’ve got a robust reputation? Well, you can no longer be too careful. The pervasiveness of social, ongoing media scrutiny and ever increasing expectations and requirements around transparency means that it truly does only take a single moment to destroy hard-earned trust.
Trust and confidence are the essence of a sustainable business – it is imperative for organisations, government and indeed entire economies, to cultivate and protect trust and confidence with core constituencies.
What’s your organisation’s purpose? Consumers and stakeholders today increasingly expect the highest standards of businesses, tied to a purpose that they connect with, if they are to build trust – it is no longer acceptable for organisations to merely do the right thing and only when it suits them. Whether things go right or wrong, it is critical that organisations are transparent in how they deal with customers and do so in a way that is fair and consistent.
Organisation standards and behaviours are being brought to life through themes around purpose and trust – that sit under the umbrella term of conduct. There is enormous potential and upside for organisations willing the embrace the right purpose, principles, standards, systems, processes and behaviours – to drive profitability, productivity, confidence and creativity.
#2 - Disruptors disrupt the notion of conduct
With disruption everywhere, the landscape that constitutes best practice conduct is evolving. Many brands that have been hailed as disruptors exhibit the common characteristic of good conduct – always putting the customer first. This becomes central to their business model and acts as the foundation for all their activities and conduct protocols.
These new business models are generally centred on platforms that facilitate transparency and the building of trust, compared to incumbent models that are more opaque and ‘one sided’ in terms of knowledge and information. Good conduct is rapidly becoming a must to compete – not just an option – both for businesses and for Australia as a nation.
#3 – Conduct: the heartbeat of the economy
Our economy is heavily reliant on exports – traditionally commodities but increasingly services. A key advantage for Australia in our export markets, across agribusiness, education, tourism and financial services, has been the inherent trust in the system – that we deliver, that we have fair work practices and that we generally operate free from corruption.
This trust and conduct forms the basis for our integrity and ability to provide what we say we will provide. However, when that trust is eroded through poor conduct, we see immediate effects.
For example, recent mis-selling of government loan-backed education places by some providers to overseas students has created significant trust and brand challenges for the sector as a whole. Conversely, the deep trust in our ability to safely deliver baby milk powder, vitamins and raw produce has created a boom for our exporting producers in that market.
Businesses must now look at the entire trust ecosystem to understand and protect brand and reputation. Failure to do so will mean that trust in our products and services, our conduct and our economic landscape could be at risk.
#4 – The rise of regulation with bite
When conduct goes awry, regulators are moving faster and more intrusively. This is in line with increased expectations of regulator effectiveness and speed to act, from governments, the media and, most importantly, the people.
As regulatory oversight around perceived conduct problems intensifies, those outside that scrutiny –the ‘unwatched’ – can proliferate. And at a cost to every player.
Take for example the impact of investigations into financial planning at major financial institutions. The efficient regulatory operating model has meant a focus on the largest players covering ~80 percent of the market, but the remaining 20 percent has received less overt scrutiny. Yet the impact of poor advice for any customer, regardless of who has provided that service, remains the same, and negative outcomes for customers can adversely impact the sector as a whole.
Organisations that can position themselves as scrupulous in terms of conduct in an industry under pressure have a lot to gain. Industries that take responsibility for owning ‘good conduct’ will be judged better, be less exposed to media and regulatory scrutiny because of the actions of others, and also benefit in the eyes of the consumer. And it is the larger players who have most to gain from leading their respective industries.
#5 – Emerging antidotes: innovation to the rescue
Innovation is coming to the fore as a potent force when it comes to building trust and best practice conduct – with recent examples being Blockchain technologies and platform business models.
Organisations that have relied on the opaqueness of information, and in fact traded on this, will find themselves readily exposed by the transparency that open-source platforms and ‘distributed ledgers’ such as Blockchain proffer.
Other innovations will arise from data-driven business models. One of the causal factors in many conduct issues is the lack of oversight, surveillance or predictive capabilities of an organisation and, therefore, its ability to quickly identify and address issues before they become systemic. Those who can build smart data and enterprise information models will be better equipped in a conduct intensive operating environment.
#6 – Competitive environment set to increase
Good conduct dictates that we all think and review what we are doing and whether it is in line with protocols, processes and best practice, not just now but for the higher standards that will apply in many years’ time.
The imperative to focus on eliminating the perceived ‘unjust’ in whatever element of a service – pricing, product, sales methods etc – will accelerate as disruptors and innovators tackle these head on.
Calibrating the business model and the inherent systems, processes and organisational constructs to deliver outstanding customer outcomes is a fundamental to trust and transparency. In today’s society, great conduct is achieved through a combination of putting the customer first, great culture and organisational calibration and is one of the keys to driving competitive advantage.