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300 million pounds is a lot of money, even for a bank. People are dying as a result of boards making bad decisions.
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Don't think about the money, think about people losing their lives. Workplaces, organizations are systems.
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They're complex human social groups. No one person is responsible on their own.
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Lots of people knew what was going on, but couldn't be heard. And my goodness,
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I hadn't thought about it like that. Is that how it's going to play out? The
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letter of last resort is written by every British Prime Minister [music] the moment after they enter 10 Downing
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Street. It is only opened in the event that Britain's been attacked by nuclear
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weapons and there are there is no communication from government. What do you do? And you
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can't think of a bigger question because we're in the middle of a nuclear
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exchange. Welcome to Grit in the Boardroom, the podcast that takes you behind closed
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doors to unpack the pivotal decisions that shaped organizations for better or worse.
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I'm Erica Elias and Norris and each week [music] I sit down with a senior leader
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who stood at the edge of a defining moment. A crisis, a turning point, a challenge where the stakes were high and
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the outcomes uncertain. These are the conversations you won't find in annual reports. Honest,
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strategic, and grounded in lived experience. Because governance isn't about theory,
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it's about pressure, people, and making the call. My guest today is Professor Roger Steer,
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known internationally as the corporate philosopher. His journey began in unexpected places.
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The son of a preacher man, he studied Western philosophy under Conrad Russell and chose a safe career as a banker in
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1979. In 1981, he became a residential social worker with children in care from inner
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London boroughs where he learned a lot about the best and worst of humanity. Since then, Roger has advised some of
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the world's largest corporations: BP, HSBC, [music] Barclays, and Nationwide.
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He brings deep experience working with CEOs and their teams, boards, and executives.
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Welcome to Grit in the Boardroom, Roger. Let's get into it. It's lovely to be
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here. What's one moment you've seen where moral clarity made all the difference in
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a boardroom decision? Yeah, it's a question of which one, I guess, but um I think the one one of the early ones I
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was involved in supporting. And it was one of those things where a lot of people had to be involved in the
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decision. Was one that actually had a big price ticket on it. So, I was working with one
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of the major UK banks at around the time of the financial crisis. And they had a big moral issue around some
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employees enjoying a direct benefit pension scheme, which was expensive to the employer and
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very lucrative for the people who were retiring. And others, all the new employees, as
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you know, would have come in on a direct contribution pension scheme. So, people Some people doing the same
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job on the same salary were going to get very different pensions. And the CEO, in particular, was very
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concerned that this was not fair. And the board agreed. The board was also interested in the fact that there was a
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lot of money at stake, and 300 million pounds is a lot of money, even for a bank. So, my intervention was
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to uh not only to talk to them about a moral reasoning framework, uh which I wrote written up it in the
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book Ethicability, but more crucially, to help them create an environment where all the people
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involved who had to be involved felt that they were going to be part of that decision
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and became part of that decision. So, we're talking about a workforce of I think at the time
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70,000, something like that. So, my crazy idea was to involve the trade unions and
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other employee groups, staff groups in an open negotiation and discovery with the board and the CEO and the finance
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team. And for some reason they trusted me and and went with this. And they had an open book conversation
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where they laid out all the numbers. And then laid out this unfair moral dilemma with people doing
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the same job, getting the same salary going to benefit from very different pension schemes. Is that approach
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something that you felt that they would have done without you being there? No. It was very clear that that was unlikely
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because the history of those negotiations was one of confrontation with employee groups.
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We're not very good at that in this country. They're much better in Germany
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where of course they have works councils by law, uh but we do not have in the UK a legal
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requirement for employees to be represented at board level. So, in order to do this
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we had to make something up, which was create this informal process. >> Mhm.
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And behind the scenes I was uh you know, coaching the senior leaders around you know, how to be open, how to be talk
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how to talk about the moral values that were critical here. And the core moral value here was one of fairness,
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justice as fairness. And after 6 months they came with an agreed recommendation to all the employees. It was put to a
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vote. There was an overwhelming majority, a super majority in favor of the adjustments to the pension scheme so
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there was greater fairness and obviously the bank and the shareholders were able to continue to
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fund both pension schemes in a way that was economically sustainable. And that I think is the one that's
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always stuck in my mind and the CEO still talks about it today even though he's not no longer leading that company.
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And what sort of things does he talk about with you when he recalls that? I think really it's a combination of
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having a moral reasoning framework. Having clarity and a discussion about what values like fairness actually
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means. So fairness for example is not about equality, it's about equity. So fairness means
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um at a moral level each according to their needs, not each according to their wants and not each
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everybody, you know, it's not about everybody getting the same. Um and we live in a society where, you
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know, families have children, some of those children are perfectly healthy mentally and physically, others not.
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But our society currently although it's difficult, does decide to spend more money supporting those
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children with greater needs. Hm. Do you think that some of your values come from your earlier career
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around being a social worker? Yes. And also from my father who was a builder during the week
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um but on a Sunday he was a Methodist preacher in the pulpit. So, you know, literally a Protestant work ethic
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from him but also from Bertrand Russell Um the great British philosopher, his son. So, I'm not that old that I studied
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history of Western philosophy with Bertrand Russell, although I had to critique his book.
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But I studied it with his son Conrad Russell. And then, after a couple of years in banking, I decided I wanted to
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do something with more meaning in life for me. That's not to say that many bankers
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don't find meaning in their work. But for me, it was really working with uh children in care from inner London
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boroughs who were too challenging for children's homes to handle. So, I worked in a community home with
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education in Sussex. So, we took the kids out of London and put them in the country.
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And uh helped to instill in them a sense of decency and a sense of safety that they could then grow and develop
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and try and get over all the traumas that they they had experienced. So, those, yes, from a personal point of
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view, I think that combination of uh deep thought about what it means to be human
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plus the experience of moving from a um what I would call as a reasonably privileged privileged middle-class
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background, but to then do what I call my practical MBA in life with kids who had very little and had
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been traumatized were very shaping experiences for me. And uh when people say to me, and I'm sure
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they say to you, I've had a bad day at work, um they may have done, but when you're
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dealing with a child who's high on drugs and is smashing the place up and is
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deeply, deeply traumatized, and you try and keep them safe and at the same time protect them, but also protect others
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from them, that's a bad day at work or a tough day at work. Mhm. And bringing that back to the the kind
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of boardroom decisions and the kind of crises, those sorts of moments, no doubt, play
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play on kind of your experiences, your values. And have there been times where you've
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felt that boards have been tested and pushed? And what what does that look like? And how do you see that coming out
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in the behaviors and the way that people act in those situations? >> I think that's a really important
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question. And the my answer, and it's always my answer, and it's the technique that I
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ask them to practice, which philosophers call the golden rule. Put yourself in their shoes.
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Role-play if necessary. So, let's say first of all, you know, most people, certainly on
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corporate boards, are privileged. They've got enough money, more than enough money.
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They don't need to go to a food bank to feed themselves. Um but many of their customers are
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struggling. So, in order to get some clarity, I invite them to get their head off their
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iPad, out of their 100, 200, 300 page decks, and stop and think about what it must be
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like to be living hand to mouth as a customer or often as a colleague, an employee,
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and say, "Right, when you're making this decision, put yourself in those people's shoes.
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And decide what is right, not for you, but for them. Because they ultimately are your
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shareholders. It may not look like it, but they are. And they're the key stakeholders in your
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business. And there are, you know, in the UK 60 million of them, 70 million nearly.
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Worldwide, approaching 9 billion fellow human beings. We need to get real when we're making
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these decisions and remember that outside of this bubble called the board meeting in a boardroom
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with fine food and wine before or after you know, life isn't like this. Mhm.
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Do you think that it comes from people's lived experiences that they behave and understand the world like
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this? Or do you think that it comes from something else? Partly from their lived experience.
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And a lot of the people that we've worked with, you and I have worked with have have striven to um
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uh improve themselves and to perhaps, you know, move from, you know, my own background which was lower middle
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class. Um to something different. I like to think of it as a sideways move. So, yes, I it's nice to have enough
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money. But I think people and this is true for individuals and for organizations, if we can
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anthropomorphize them for a second to answer the question, you know, how much is enough?
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And a wise person once said, um you only know that you're we're that you're truly wealthy when you
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know you've had enough. And unfortunately, many people in boardrooms, many of the people we
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work with and many of the organizations do not know the answer to that question. It's
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always J. D. Rockefeller's answer, just a little more. And that creates, I think, a real
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challenge, a fundamental moral purpose challenge for all boards. Doesn't matter
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what sector, private public, third sector, social enterprises. We are facing poly crises as
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um as a species because we are hooked on we're we're off our faces on more.
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And we have a philosophy of want not need. And wants are by definition infinite.
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So, I think it's a a very complex answer. So, partly lived experience. Uh so, that's the past. I think people
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in the present actually need to look to the future and ask themselves the questions. I mean, most board members
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that you and I work with are parents of teenagers, sometimes grandparents. I often ask them the
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questions, "What sort of world do you want your your teenage children and if they're
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older your grandchildren to grow up in?" Because if we carry on like this, if we're not asking fundamental purpose
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questions about how are we actually how we how are we and our organization helping to create a sustainable
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environment for Homo sapiens on Earth, then um it doesn't matter what decision you
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make, you're going to get it wrong if you haven't asked that fundamental
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purpose question. What role did fear or politics kind of play in the experiences that you had of boardrooms
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and those gritty decisions that CEOs and teams have had to make? So, I think that's a that's a great question and I
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have to answer it in two parts. So, fear first of all, fear is a really important
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driver for us. It enables us to survive in a hostile world. But unfortunately, the workplace and
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includes boardrooms is primarily driven by fear. And that that fear comes in various
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guises. Um the principal one in business for leaders and managers and directors and
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NEDs and SEDs and chairs and CEOs is status anxiety. How am I going to be remembered? Am I
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going to make such a catastrophic mistake that I might lose my knighthood or I'll lose all self-respect.
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Um another fear is um perhaps uh you know, not having enough. Another fear is being shown perhaps
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asking stupid questions which are not stupid. They're really smart, but they sound stupid because they're
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not often asked in the boardroom. And one of the things that boards I still think need to engage in is much
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greater um diversity of thought. So there's a lot of work done on gender and
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diversity, ethnic diversity, and so on. But where are the people who like me are
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neurodivergent? Um and see things differently and experience things differently.
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Um and so there's a real fear of speaking up. There's a real fear of speaking the truth.
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Um you and I have both experienced board papers being prepared and they go through umpteen committees
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in the organizations and they're sanitized by the time they get to the board
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because no one wants to ask the real question. No one wants to dis- declare the real truths behind
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uh the question, the decision that needs to be made because no one people, you know, don't
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like to bring bad news. People don't like to bring real options to the board. They like to bring a
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recommendation. And that's already closed down at least half the discussion that needs to be had.
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So fear operates in a number of ways. Politics is deeply linked to that. And politics is is a real challenge because
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it's about the use and abuse of power. Um one of the things I've said uh is that
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compliance is a false god. Because compliance only works because people are afraid of consequences. So,
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they're afraid of um if you like, those in power saying, "You broke the rules. You didn't follow
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process. Therefore, you're at fault." And compliance has now become a an inadequate substitute for conscience.
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So, politics and the use and abuse of power in the boardroom and throughout organizations
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is quite toxic and really dangerous. And so, by having people who are willing to stand up and say, and there's a a
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technique that I teach them for this, so it's safer. Um I really don't think that's right
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because of X, Y, and Z. Now, if they're coming outside of this socioeconomic
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educated class of of a board of executive non-executive directors um that's really hard to say, but
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when they put themselves in the shoes of a customer or a colleague or a regulator or the
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taxman it's amazing. That gives you a suit of armor, so you can actually challenge
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um you know, with with impunity, if you like. And and the technique is very simple. You just say as a NED
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um "If I was a customer, I might be thinking this about this discussion or um you know, if I was a shareholder and
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I I'm not saying a big institutional shareholder, I'm talking about grannies
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and granddads who rely on us. The retail shareholders who are ultimately behind all this.
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Who are looking at their their pension, their occupational pension and it's shrinking in value
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as inflation rises and so on. Um are we thinking of them? Who's speaking up for them?
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And so you don't have to say it's me saying this. What you say is and obviously that's where the devil's
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advocate comes from. And um I often have had to play that part. Unfortunately, sometimes it means that
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my consulting contract has not been renewed or terminated because I've been too awkward.
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But I'm always glad I've done it. I've never regretted speaking the truth from
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another person's perspective. And if that means that my work with that board or with that organization
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terminates, then so be it. There are others. Yeah. Do you think that that fear and
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politics then, if we're saying that it's it happens at all kind of decision-making stages, by the time it
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gets to the board, things could easily have been sanitized to such an extent because if the person at the let's say
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the bottom of the food chain is sanitizing what they are saying to the next person up, fear of or politics of,
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and then by the time it gets to the board, there could be a a lot of information missing for one or a lot of
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misinformation or sanitized reports. What sort of impact does that have because we've seen that in we've seen
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that in corporate scandals right in collapse and that's the we didn't know,
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the board were not aware. How do we how do we address that sort of thing? >> [clears throat]
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>> So you're absolutely right and it's so sanitized by the time it gets to board
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because everybody's scared of their boss um thing. You you can't say that.
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They'll freak out. Um >> that's true? I do. I know I've seen it.
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Okay. I've seen it. And I And I've often said, "I'll take it."
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I'll take it. They can shoot me. I don't care. Because it's too important.
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And what reaction did did those sorts of things have in the boardroom? Ultimately, they were grateful. But too
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often, um as you'll know from my background, I've been pulled in after it's after the bad
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things have happened. So, financial scandals. So, yes, it does get sanitized. And the solution is boards need to get
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out of the boardroom. Get out of their board packs. Get out off diligent. Get out of their board packs and
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actually go around the business. Go and visit retail outlets. Go and visit contact centers.
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Go and meet customers. Find out what's really going on. Talk to employees. Talk to colleagues.
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Now, when I've done cultural audits, um I do it as an anthropologist would do
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it. I don't sort of have a focus group with pre-prepared vanilla questions that
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people are prepared to, you know, are willing to ask, but not the difficult ones. I create an
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environment where it's normally one-to-one or one-to-a-few. We have a chat. And for some reason, people trust
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me and they open up. And that's true also for leadership teams. When I'm in the room,
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they very quickly realize because I I talk truths. I speak truth to them. And it's almost like an unburdening
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where they just come out with the truth. It's like a ah. And that's where you feel you find out
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what's going wrong. And the trick, certainly for non-executive directors, is to create that that safety to get out
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of that comfort zone, to get out of the sanitized story that they've been given
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and actually go and really see what's going on and hear what's going on. Mhm.
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Um I've been in situations though where we have I've been in organizations where we've
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done exactly that. But the questions and the people to talk to have been sanitized.
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>> Mhm. Which is another is another challenge of itself because then there's
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only certain answers that come back and we don't talk to that person over there
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on that production line because there are a variety of different answers. They don't speak English. They
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don't understand what's going on. But actually they may actually just speak
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the truth to power and actually that's too challenging. How do How would a non-exec director
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kind of identify those sorts of things cuz that's very challenging, right? I
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think they have to insist that they they choose who they're going to talk to.
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Yeah. And do it using random. You know, random system. Just get a random number generator to
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spew out employee numbers. Um and don't let anyone massage and micromanage the process.
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Uh you know, when you see that happening, you know there's a problem. So when you
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see that process of sanitization and micromanagement, you know that the organization is
00:24:24
designed to hide things. Which is why we get all the scandals we're dealing with my with now. Royal
00:24:29
Mail, Thames Water, all the water companies. A lot of the utilities, a lot of the things that we can go back over
00:24:36
the last 20 years or longer and see all these scandals. PPI misselling, we've
00:24:40
now got car finance misselling. These are multi-billion pound scandals, but crucially people are
00:24:47
dying as a result of boards making bad decisions. So the other thing I'd say is if you want
00:24:53
to really find a reason for doing your job properly is don't think about the
00:24:59
money, think about people losing their lives. Because ultimately that's what it is.
00:25:05
How many postmasters committed suicide as a result of wrongful prosecutions? Allegedly, um and so on. So, you know,
00:25:15
I think there is a moral obligation for board members, particularly the non-executive directors, to get out
00:25:22
there and see it for themselves without having this, you know, massaged vanilla stuff that they're presented with. And
00:25:31
if it does look like that, then smell a rat. Mhm. As such, make it human. It's
00:25:36
about people. >> It's make it it's messy. Humanity is messy, but it's joyful. And not only do
00:25:42
you see and hear the pain, you also see and hear genuine fun and joy in the organizations.
00:25:50
And And that makes people feel good. So, you know, my whole approach to life is that
00:25:55
life is a is a contradiction. Life is and work working life and life is um you know, a lot of moments of not
00:26:04
much happening, but there are moments of joy and there are moments of deep sadness and pain. That's what life is
00:26:11
about. That's what working life is about. If If we try and massage that view and
00:26:17
present to ourselves and to our shareholders, our our stakeholders this massaged, you know, and we haven't
00:26:26
talked about annual reports yet. You know, um people you know, when they really see it
00:26:32
as it is and you can often see this actually in other investors. So, in in terms of private equity, they in a way
00:26:38
are much more attuned to this because they have to get in and out pretty quickly. They can't afford to wait for
00:26:44
10 years for something to roll out. They're only at it for three. Um and smart, you know, when they do
00:26:50
their due diligence, they're not just looking at the numbers. They're doing a
00:26:53
deep dive on this the organizational psyche and what's really going on. And they employ psychologists
00:27:02
and sociologists and anthropologists and occasionally philosophers to do it as well.
00:27:08
Yeah, big questions. You've studied how leaders think about right and wrong.
00:27:15
What does good moral judgment look like in practice at board level? Can you go into some more detail? Yeah, absolutely.
00:27:22
So, um within the Ethicability framework, which is 20 steps, it's one statement and then
00:27:28
19 questions. Yeah, this is this is your book, right? Indeed, thank you. And, um
00:27:35
uh ins- inside it is what I call the right framework. So, the acronym is r i g h t.
00:27:42
Um and that's the short version. So, the letter R stands for rules. So, when we're starting to make a moral
00:27:50
decision, you start off with the fact that most or every workplace has a set of rules and laws and processes that have
00:27:58
to be followed. Not slavishly, which is the interesting thing, but the first thing you say is
00:28:05
what must we do and what must we not do in terms of the rules. But, that will not tell you what's right. That's the
00:28:13
compliance trap. And I've seen so many scandals caused by people simply following orders.
00:28:21
Mhm. And following the rules. So, the next one you go to is what if you feel that the rules don't cover this
00:28:28
situation or the rules are in contradiction, which they often are? And so, for example, you might have a
00:28:36
company policy, which actually you discover is at odds with um human rights. Or, um you know, either at your UK,
00:28:46
European, or at international level. So, the I, the letter I, is the first letter of the word integrity.
00:28:55
And integrity is the values word. So, there's a lot of debates amongst moral
00:29:01
philosophers about what the word integrity means. But, the different definition I share is
00:29:06
integrity is the word that summarizes all the moral values we believe in, and people
00:29:13
can see those moral values through our actions and behaviors. So, in that sense, the word integrity
00:29:19
is, if you like, the basket within which our moral values sit. But, it's not just sitting there. It has
00:29:25
to be a set of lived values. And what's challenging here with moral values is that most organizational
00:29:34
values aren't moral values. They're things that the community or the group
00:29:40
values, but they're not moral values. So, moral values are quite limiting quite limited. So, the top three are
00:29:47
love, or compassion, or kindness, number one. So, that's our humanity, our care for
00:29:53
others. People might call it empathy, weak word, compassion is the strong word. The next one is fairness. And we've
00:30:02
talked about fairness and the importance of each according to their needs. And then the third one is wisdom.
00:30:12
And wisdom is the thing that's lacking when you can't trust the facts that's be
00:30:18
that are being shared with you in your board packs. You can't be wise if you don't have the
00:30:25
truth. So, that's one of the questions in in the wider ethical ability framework, of
00:30:32
what are the facts? So, that's the I for integrity. G is for good, H is for harm. So, I'm
00:30:40
going to take them together because when we're making a moral decision, we are
00:30:44
going to see winners and losers. People where the outcome is good and people where the outcome is harmed, and
00:30:51
that's life. What we have to do is to maximize the good and minimize the harms.
00:30:59
It's not a perfect world. Whenever we're making choices, there are going to be
00:31:03
plusses and minuses. What we have to do is to see that those people who might be
00:31:09
harmed, we minimize it and we compensate for it in some way. And we, crucially, point we made earlier, we discussed
00:31:18
earlier, was get them involved in the decision because they're grown-ups and they have a right to talk about
00:31:24
that. So, that's G and H. The final one is T for truth. And when I was constructing
00:31:29
this acronym, I thought, "What's the word I need for for T?" And it is the word truth.
00:31:37
So, the word truth is what a lot of your listeners will know as the front front page. That's the
00:31:44
the headline test in news media. And I've I've run um moral reasoning sessions with a
00:31:52
journalist who is there at the back of room. So, they're making a moral decision
00:31:57
about a, you know, about a a big a big issue they're facing. And the journalist is listening
00:32:06
to the teams presenting their particular decision. And he's typing a headline live. I mean,
00:32:11
it's not going live, but it's there on the big screen. And it's hilarious because what the
00:32:17
journalist is able to do is to get the essence of the insanity or the awfulness of the decisions that
00:32:24
being proposed in a way that's safe and it's fun because, you know, people say, "Oh my
00:32:30
goodness, I hadn't thought about it like that. Is that how it's going to play
00:32:34
out?" And I'll say to to boards and and leadership teams making decisions,
00:32:41
imagine that I want one of you to play the journalist, an undercover journalist.
00:32:45
And I want you to realize it's not just your decision, it's the reasoning behind
00:32:49
your decision that actually counts and matters. And in fact, you can make a mistake.
00:32:55
You can make the wrong decision because you don't know enough of the facts. But
00:32:59
if you make that decision with integrity, then people will forgive you for it cuz
00:33:04
we all make mistakes. We all make We all fail from time to time. But if we with integrity,
00:33:12
then we're forgiven. And then we put it right. I talk about that part of it quite a
00:33:18
lot, particularly when it comes to good governance, which I don't see as bureaucracy. I see that as as you say,
00:33:24
that moral framework around how you make the decisions and the guardrails, let's
00:33:28
say, so people know where they're where they're going. But I think that that's
00:33:33
so vitally important because as you say, if you do things and the organization, the
00:33:40
people are known for doing the right thing, then that forgiveness level and sometimes that bounce back from failure
00:33:49
or a trip or a stumble or whatever you want to call it, can actually increase their reputational value afterwards cuz
00:33:55
they think, you know what? They owned it. They accepted what happened. They're
00:34:00
doing something about it and they genuinely want to do something about it. It's not just lip service. It's not just
00:34:04
because oh dear, it's hit the front page and now we have to do something. And
00:34:08
those bits actually build, I think, on some of those people's careers and actually the defining moments for them
00:34:15
and for their organization. Absolutely right and if Neds talk to complaints teams and see
00:34:21
the power of a good resolution, you're turning a disgruntled customer into an advocate overnight by
00:34:29
by saying, we messed up, we're really sorry and I'll tell you how sorry we are. We're actually going to
00:34:35
compensate you for this." So, for example, uh John Lewis partnership used to have a situation. I don't know if
00:34:43
they have it anymore. I might be wrong. But, if you bought something, you know, uh a vegetable which which is actually
00:34:49
off, they'd give you a replacement item and your money back. And that level of, if you like, um
00:35:00
confession, forgiveness and contrition, which many religions have, is something that most
00:35:08
organizational cultures don't have. Because the system, the organizational system,
00:35:17
tends to want to identify someone who can carry the blame as long as it's not
00:35:21
me. And therefore, there's no learnings. There's one sector where this is doesn't
00:35:27
happen because lives are at stake, and that's civil aviation. And the uh when there's a near miss or
00:35:33
an accident, the civil aviation authority in the UK, I think it's true across the world, have a no-blame
00:35:39
investigation. They do not assume any blame. They just want to get to the facts.
00:35:44
Then if someone has acted recklessly, then there's an accounting for it. But, if you start any investigation with
00:35:52
with the intent that I just need to understand what we all did wrong, because workplaces, organizations are systems.
00:36:02
They're complex human social groups. No one person is is or it's very rare
00:36:09
that one person is responsible on their own. And you and I will have heard conversations, have seen investigations,
00:36:18
where someone somewhere in the organization, in fact, lots of people knew what was going on,
00:36:23
but couldn't be heard, or, you know, by the people who needed to hear that. And some of this, you know, the
00:36:30
scandals, ongoing scandals and historic scandals, once the inquiry is finished, hundreds, sometimes thousands of people
00:36:38
knew what was going on, but their voices were stifled because the system does not allow for
00:36:44
truth to come out in a way that is healthy. Mhm. And how do you think that organizations
00:36:53
can help build that? Because it comes from culture, right? It comes from those people at the top. I know from my own
00:37:00
experiences as a leader, I when things go wrong, which they do, you I have that open conversation with
00:37:08
somebody and and also I think it's really important to amongst those people to admit your own part in in the
00:37:16
downfall of whatever that is and say, "Actually, if I had done this or if I'd
00:37:20
asked that question, then we wouldn't be here, but everyone else, let's also open
00:37:24
up and say what is in that and that allows for learning and for growth. And I think that's one of the biggest
00:37:30
things. That's what humans are all about, right? Right from as soon as we're born, that that is it. We learn
00:37:36
from our mistakes and hopefully we improve and we get better and we progress. I think I think the answer is is
00:37:42
embedded in in your question and that um it doesn't matter how seen senior you
00:37:49
are in the organization, how much power you're seen to have. In fact, the more
00:37:53
power you have, the more you have to admit mistakes. And also admit you don't know. The don't
00:38:00
knows are important. I remember another situation where um a CEO uh at a time of serious cost cutting had
00:38:10
the team had done everything they thought they could. He went to see the group CEO and the
00:38:15
group CFO and he came back in the room and said, "We need to find another 50
00:38:20
million in savings. It's just not and I don't know where to begin. A CEO saying to his team, I don't know
00:38:29
where to be We've We've We've done it. And what happened? They didn't say stab
00:38:34
him in the front, let alone stab him in the front in the back. They all said, "Okay, let's let's go
00:38:40
again. Let's do it again. Let's get other people in the room. We've obviously missed stuff. We're bound to
00:38:45
have missed stuff. Let's do it again." So, so the answer to your question is
00:38:51
everyone in the organization in any position of leadership needs to model that behavior all the time.
00:38:59
And and say more often, I don't know or I messed up rather than um this narcissistic
00:39:07
uh dark traits that you see in too many um leaders in organizations. Less so, I would say the research says less so at
00:39:14
board level, by the way, because most NEDs are relaxed a bit and not trying to prove anything.
00:39:20
But um we might come back to that. But really just um uh I think modeling that behavior and
00:39:27
when I've been involved in culture transformation programs and I've been
00:39:31
involved in designing major culture transformation company programs, it's based on
00:39:38
moral values, moral purpose, moral reasoning, but it's actually based then executed
00:39:44
through leadership action. It's not what leaders say that people follow. It's what they do.
00:39:52
And when internal comms teams get that and when boards stop agonizing over words
00:40:00
and people actually say, "I'm watching my leader and she or he is behaving in a way that
00:40:08
inspires me." The engagement you get, the transformation in culture can be overnight. I'm not a believer that
00:40:15
cultural transformation takes years. it does because people don't understand it.
00:40:20
And And when people look at me and say, "Mhm, I don't think you're that's right,
00:40:24
Roger." I say, "Well, when you were working and your boss changed, so your old boss
00:40:31
left and a new boss came in and they were very different. How quickly did the culture in your team change or your
00:40:37
division or your function?" And the answer is virtually overnight. So, that tells us that culture changes
00:40:46
quickly through leadership action and behavior. And I think that's what boards need to take on board and
00:40:55
executive boards as well. Do you think So, looking beyond boards, do you think organizations
00:41:02
can grow morally over time? Do you think that the experiences that organization faces can change them or do you think it
00:41:09
always has to be, you know, a new face, a fresh person in, a new perspective? Uh, that's a really
00:41:18
good question. Um, there's two answers. Uh, the first answer is that you have to get
00:41:29
your design right. And by design, I mean the organization has to be a safe place
00:41:35
for people to work. I just I don't mean physical safety, that's a given, that's
00:41:39
that's a law. But actually, we don't have a health and safety law about people feeling safe
00:41:45
emotionally and mentally. And I've argued for it for a long time that only when
00:41:51
uh, managers can be prosecuted for health and safety violations, for bullying, and so on and so forth, will
00:41:58
that change. So, the organization needs to be designed as a safe community for people
00:42:06
to do their best. I mean, it's economically illiterate to assume that people will give of their best when
00:42:12
they're scared. When we're scared, our whole being is focused on self-preservation, minimize minimize
00:42:21
harm, minimize losing my job. The mental overload, the emotional overload means that the job you're
00:42:28
supposed to be doing doesn't get done very well. But when someone feels inspired and
00:42:34
safe, the productivity goes through the roof. I've seen it happen hundreds of
00:42:39
times. So you need to get the design of the organization right. But the second part
00:42:45
is, and this is something really important that I think a lot of work needs to be done,
00:42:51
is when people are hired, not just as um non-executive directors, but executive directors and all the way through as
00:42:59
leaders, they need to be assessed in terms of their moral character. And our research and other research
00:43:08
shows that too many leaders display what psychologists call dark traits, which are narcissism,
00:43:16
Machiavellianism, and psychopathy. So narcissism, narcissistic personality disorder is the major one.
00:43:26
So people tend to be what has been called business idiots. They're just doing and saying everything for the
00:43:33
look. They're not actually doing the job. They will manipulate and use their
00:43:38
Machiavellian skills to manipulate the the narrative. And they're just in it for themselves.
00:43:48
Um the the worst one obviously is the is the psychopathic trait. And these aren't
00:43:53
clinical psychopaths, these are subclinical psychopaths, who actually do cannot empathize with
00:44:00
the pain that colleagues are experiencing because of their behavior, um or the products that their customers
00:44:09
and the goods and services that customers are buying and is harming them. Um, and the research shows that for example,
00:44:17
15% of CEOs are sub-clinical psychopaths. So, what the hell are nominations committees doing or I should say not
00:44:27
doing in terms of screening out people with these dark traits? Organizational psychologists can do
00:44:33
this. You know, we can do this. I mean, airlines screen pilots, airline pilots for murder-suicide.
00:44:44
So, that they don't actually fly a plane into the side of the house. We know
00:44:47
that's happened once. If we can do it for airline pilots and bus drivers, surely we can hire people
00:44:54
who are people of good character first and then and there's a as a lovely saying, um,
00:45:02
the former chairman of Porsche cars, Peter Schutz, said, "Hire character, train skill."
00:45:08
What tends to happen in boards and in workplaces and in other leadership teams is people tend to hire skills and try
00:45:18
and train character. It's not going to work. By the time we're in our early 30s, our character is
00:45:23
pretty much set unless we suffer an extreme trauma. Mhm. So, there's two answers to your
00:45:30
question. One is, yes, you have to create a safe culture for people to be their best. The other thing is stop
00:45:36
hiring people with dark traits. Hire people of good character. And if you already have one of those
00:45:43
people in your midst, there's obviously there are options to move them on to all those sorts of
00:45:50
things. But if you can't, how how do you navigate that? Do you just make a decision that you just you have to step
00:45:57
away? Oh, if if don't have the power to remove them, well, if you're a board, you do.
00:46:03
Indeed. >> But if it's the chair, Mhm. then you've got a problem. If it's the CEO, you've
00:46:07
got a problem. If it's a CFO, you've got a problem. So, that's why the appointment of people
00:46:14
with the most power in the organizations have to be doubly screened. And that's down to the people with power
00:46:22
in the organization, which is down to the shareholders because corporations are plutocracies. In other words, power
00:46:29
comes from money. It doesn't come from uh personal identity. It's not a demos,
00:46:34
it's not a democracy. It comes from from money. And it's the people with money who have to say,
00:46:40
"Okay, if we don't do the right thing, money is simply a trust a promise we
00:46:46
trust. If we break our promises and we destroy trust, we've just destroyed the
00:46:50
value in our company. And that's ultimately where a corporate scandal will take you."
00:46:54
Mhm. And what sort of um interrogations, you touched on it lightly, what sort of interrogations
00:47:01
should boards be making of these particular leadership roles when they come in as part of their onboarding
00:47:07
process or even before then, screening during interview before they even have an offer on the table? Yeah, well, it's
00:47:13
it's it doesn't come through interviews. In fact, interviews are pretty bad at at
00:47:17
selecting the right people. You need to employ forensic psychologists who will then screen people. They'll go through a
00:47:23
whole battery of tests. So, I know that happens. You know, they uh boards do employ psychologists.
00:47:30
Um to but they're tending to see if someone can read a balance sheet, profit and
00:47:35
loss account, can write a report. Well, you know, that's a lot less important
00:47:40
than having someone who's a fully paid-up member of the human race and is someone we can trust
00:47:46
and someone who gives a damn about anything other than themselves. You can screen for that. And if you find
00:47:53
someone who's got observable dark traits, then you don't you they don't go any
00:47:59
further. That's it. That's if you like the blackball situation. They will not be part of our
00:48:05
community. And do you think those people can ever change? Um yes, they can unless they're a
00:48:11
clinical psychopath. So there is no way of treating clinical psychopaths, which is why they're
00:48:18
they're normally jailed for life in a an appropriate institution. In the UK, it's
00:48:23
Broadmoor. Serial killers. >> And hopefully they are not part of your leadership team.
00:48:29
>> No, but subclinical can be changed, but it requires a huge investment in
00:48:35
time and money, and most organizations just aren't equipped to do it. So if you've made a mistake, then you need to
00:48:42
manage them out in a in a in the right way, I should add. Yeah, absolutely. Can you take us inside a moment when a
00:48:53
boardroom was truly tested, and what shifted the conversation of that fear to courage? It's difficult for me to talk
00:49:01
about individual moments because most of my work is as an educator rather than a coach.
00:49:09
So there's lots of I've run lots of laboratory workshops where I've given
00:49:15
them difficult decisions to practice on, but I'm not someone who sits in a boardroom
00:49:22
and is there as the court jester. Um What do you think is some of the hardest decisions then? If you've given
00:49:29
them examples, what are some of those hard ones that people humans just generally find very tricky, even the
00:49:36
best? And in a way these safe hypothetical ones are the best because people relax a bit.
00:49:44
>> Mhm. And and what's interesting for anyone for them to reflect on themselves,
00:49:51
so as part of this education process, so I I I teach them how to make a good decision, the right decision.
00:49:59
Then they start practicing on some safe hypothetical dile- dilemmas. And then I get them to critique themselves.
00:50:07
I normally break them up into two or three or four groups. Which is a great way of making
00:50:13
decisions. So, boards normally are too big to have a a single conversation that has meaning.
00:50:19
So, I I break them up into threes and fours. The same question, and it's funny how
00:50:23
they'll come up with slightly different answers. And you bring them together at
00:50:26
the end. Anyway. So, [snorts] the dilemma that is the most powerful that you that I get them to write is
00:50:34
what's called the letter of last resort. Okay. >> Now, the letter of last resort is
00:50:39
written by every British Prime Minister the moment after they enter 10 Downing Street.
00:50:46
So, they have say hello to the cabinet secretary, all the staff. Then the cabinet secretary takes them into the
00:50:52
cabinet room, sits them down with a plain paper and a fountain pen or a Sharpie pen or whatever.
00:51:00
And the first job is to write the letter of last resort. Three copies are made, four copies are
00:51:07
made, and they go to each of our nuclear-powered Trident submarines, our Vanguard class
00:51:14
submarines, which hold our nuclear deterrent. And the letter of last resort is only
00:51:21
opened by the commander of that boat in the event that Britain's been attacked by nuclear weapons, and there
00:51:29
are there is no communication from government. Basically, Britain's a pile of rubble
00:51:36
and smoking ash. And you've got a Vanguard class submarine in the middle of the Atlantic
00:51:42
Ocean running silent. What do you do? So, they they It's a big question. >> And you can't think of a bigger question
00:51:50
because we're in the middle of a nuclear exchange. And there are a number of options which
00:51:58
we believe people consider. One is retaliate. Second, don't retaliate. Uh third, put your
00:52:06
your boat under the command of an allied nation that's still functioning. Or
00:52:11
four, do something else. Mhm. Work it out for yourself. Can you imagine the level of moral
00:52:19
argument and outrage and certainty that comes from that? And what happens is a large minority of
00:52:28
people want to act out of revenge. Because it's natural. You know, my family
00:52:38
at home has just been destroyed. All my friends, all my family. I I want to get back. Well, first of
00:52:43
all, you need to know who's attacked. You may not know. There are more than one possible
00:52:51
enemies here. So, assuming you do know, then um how is the world going to be a better place if you land uh you know,
00:53:01
the nuclear arsenal on this on the Vanguard class submarine is very, very destructive. It would knock out every
00:53:08
city in Russia. You know, 100 million people plus would die. For what? What purpose?
00:53:19
Mhm. You know, killing everyone in the you know, in the family who's killed your family is not going to bring
00:53:25
them back. And you've just perpetuated it. And forget the fact that we've now created a
00:53:30
nuclear winter that very few people are going to survive. So that option is often very quickly
00:53:38
dismissed. No retaliation is um uh the I think the least least popular. Putting yourself under
00:53:49
the command of an allied country does get a lot of votes. Do something else gets a lot of votes as well, but it's it
00:53:57
actually doesn't matter because it's a game. It's a big game and it's got huge outcomes.
00:54:05
But what I'm interested in what the participants love to see is actually how
00:54:11
they all navigate that the biggest ever moral dilemma we've got. And it's actually happening right now,
00:54:19
not in terms of a nuclear exchange but if you look at climate change, the amount of energy we're putting into the
00:54:25
atmosphere is a slow nuclear explosion, a slow nuclear winter or holocaust or whatever it is.
00:54:33
But because it's happening in slow motion, most people don't see and feel
00:54:36
it until they go to Italy and it's 50° C to grade and their holiday's ruined.
00:54:42
But it's the quality of that discussion that I think is the biggest learning
00:54:47
thing. The moral decision-making framework or whatever framework you use is less important than actually having
00:54:55
that conversation and seeing how your colleagues react and people I never I never knew you'd think that.
00:55:04
It's actually amazing. And you know, can you imagine what it's like over a board
00:55:09
dinner when I set that as a discussion? And it's uh certainly when a few glasses
00:55:15
of wine have been flowing, it gets quite gritty. I bet it does. Quite quickly. But that's but I think it's that, you
00:55:24
know, I I don't want to emphasize yes, you we need a moral reasoning framework.
00:55:28
We need to be critical thinkers. We need to be systems thinkers. But crucially, we need to know how to debate and argue
00:55:36
with each other about things that matter without fear or favor. Does that make sense?
00:55:42
>> It does. And I guess that allows in this scenario boards to have those discussions about something that in
00:55:50
principle doesn't matter. There is no right or wrong, but they can just stand
00:55:53
by what they believe in and what's in their hearts. >> Totally. And it's also something which is quite a
00:55:59
good interview question. I can imagine. Especially when you've got, you know, I
00:56:03
mean, we know that group interviews are much more effective than one-on-one interviews. Not that that happens at
00:56:08
board board level. Can you imagine a group interview between a three potential NED candidates, shortlisted
00:56:15
candidates? That could be fun. Does that ever happen? No, that never happens. It
00:56:18
would be more like some TV show, I guess. >> I know. Maybe it should, Erica. Wouldn't
00:56:23
that be fun? It would definitely be interesting. What is one habit um that listeners could adopt this week that
00:56:31
would strengthen their moral compass? I think the one habit that your listeners should practice
00:56:40
is the golden rule. Put yourself in other people's shoes. Imagine what it's like
00:56:47
to be your colleague across the board table. Get to know your colleagues really well. Get to know what's driving
00:56:53
them. Get to know the narrative, the story of their lives. It happens at all levels.
00:56:59
When we know that a colleague who may be having who's got an elderly relative who's who's dying,
00:57:06
when we know that, the way we interact with them becomes different and better and more caring.
00:57:14
When we can imagine what it's like to be an employee on the factory floor in a
00:57:18
contact center, uh that's helpful. Crucially, what it's like to be a customer or a client or a patient
00:57:28
or, you know, just an ordinary member of the public, get out of your privileged bubble
00:57:34
and not just imagine it, go and experience it. So, put yourself in other people's shoes
00:57:42
is for me consistent with this definition of of morality, which is um compassion is the basis for morality.
00:57:54
Understanding how someone is feeling and then doing something about it is the root of morality.
00:58:02
So, I think there were a number of elements that kind of came out of the interview
00:58:07
with Roger. Um I think that fear in politics and the impact that has on decision-making
00:58:13
across everyone in an organization is big. We obviously spoke about the impact that
00:58:20
that could potentially have on decisions getting to the boardroom in the first place and also those decisions in the
00:58:26
boardroom being heard for the true nature of which they are being brought. Um we also unpacked a number of different
00:58:36
things around Roger's background and I think it's always really interesting
00:58:40
when you find out more about somebody how his lived experience of having been a social worker in boroughs in London
00:58:48
brings through the humanity that he then uses as part of his advisory. Um because the conversations that he has
00:58:57
with boards, particularly with regards to the pension um decisions that he was discussing, the
00:59:04
300 million, that does come down [music] to humanity and listening to people and understanding
00:59:14
other people's perspectives and being able to put yourself in someone else's
00:59:17
shoes when you are making those decisions and I think one of the key things that Roger said for board members
00:59:24
to do is to consider the impact that the decision that they're about to make
00:59:29
would have on all the various different people and either role play or put yourself in that position of what would
00:59:36
that person say to whatever the decision is that's being reached and that's a good way of
00:59:43
assessing whether or not you've considered these stakeholders and key people as part of the decision-making
00:59:48
process. The fear factor is an interesting one and the politics. He spoke about the two
00:59:57
together of saying that these influence decision-making in the way that things can play out, the amount of information
01:00:04
gets through to people, etc. And from my own experience, I would say that those two things, the politics and the fear,
01:00:13
are key factors in whether or not an organization has the ability to thrive and the type of culture that it creates
01:00:22
and the type of individuals that want to work there. I know that Roger touched on
01:00:27
a number of different personality traits within CEOs and leaders that would be red flags with regards to
01:00:37
important decision-making and how those people might approach that important decision-making. I think the more boards
01:00:42
that can understand that their interview processes and that C-suite level people
01:00:48
need to be properly assessed before they are allowed into that particular role and it's not just a matter of
01:00:55
they were the ex-CEO [music] of whatever company that might be. I think that that's is really important because
01:01:03
it will allow for better decision-making moving forwards and just better outcomes
01:01:07
for every stakeholder that touches that organization, whether [music] they work internally or externally. That's it for
01:01:13
this episode of Grit in the Boardroom. Thanks to Roger for sharing his story with honesty and insight and thank you
01:01:19
for listening. If you found this conversation [music] valuable, please follow the show and share it with
01:01:24
someone who leads through complexity. Until next time, stay thoughtful, stay brave, and stay in the room.
01:01:43
>> [music]