A world gone mad…

Posted on May 22, 2015 by

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Our latest blog from Julie McDonald, Director of Assessment and Development.

madIn discussion with some of our clients recently, several have said they had all witnessed interesting patterns of behaviour emerging. These testing times seem to bring out both the best and the worst of human behaviours. As the novelist Samuel Richardson wrote in the 1700’s, “Calamity is the test of integrity”.

The stress of dealing with uncertainty and the worry about a future which now looks bleaker than it may have done a few years ago, can seem to drive even the kindest and most generous of people into self–preservation mode in order to ensure their “survival”.

Perhaps they feel cornered into a difficult place? This, in turn can lead to the “fight” response…”I’m taking care of myself and to hell with everyone else…”

So, ethics and integrity can be compromised; all those core values and corporate behaviours you have worked so hard to embed may seem to fly out of the window at the very time you need them most.

Interestingly, an article on Forbes.com, “Courts Rule For Ethics And Honesty In Contracting” (Kate Visatek, 11th May 2015) notes, “ … courts across the globe are beginning to champion the concept of bringing ethics into contracting practices through relational contracts.

In the United Kingdom, Justice Leggatt offered some advice in his 2013 High Court ruling in Yam Seng Pte Ltd v International Trade Corp Ltd . The case involved an agreement that Justice Leggatt referred to as a “relational contract.”

Leggatt ruled that relational contracts “require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties’ understanding and necessary to give business efficacy to the arrangements.”

He also stated that commercial partners have a duty to observe “generally accepted” standards of commercial dealings that are indicative of a relational contract. Specifically, he argued that “values and norms of behaviour,” including an “expectation of honesty,” should be part of a commercial agreement. Ultimately, the UK court found that ITC was in breach of the contract due to a violation of relational norms.”

So, it’s clear that in a world of $50 – $60 oil, we have some big challenges on our hands. We need to embed the notion that ethics and integrity are equal partners to the legalities of contracts and to ensure they are placed at the heart of our businesses and in our daily working lives.

We also need to create organisational cultures which truly value ethics and integrity and which continue to hold people accountable for their behaviour…even during a calamity.