Ethical Leadership and Culture in Finance: A Call to Action

An organisation’s culture functions like an ecosystem, capable of fostering positive behaviours or enabling harmful ones. The FCA has pointed to weaknesses in areas like whistleblowing and disciplinary measures, suggesting that gaps in oversight and guidance can allow misconduct to thrive. Leadership plays a pivotal role in shaping these environments. Without committed leadership, policies and initiatives will remain ineffective. Leaders must lead with integrity, ensuring that actions align with words, and create spaces where employees feel empowered to speak up.

To cultivate a culture of integrity, finance leaders need to move beyond compliance and embed ethics into the DNA of their organisations. This requires a proactive and deliberate approach:

1. Consistency in Leadership

Leaders set the tone for their organisations. Ethical behaviour should not be treated as a box-ticking exercise but as a core principle that guides decision-making. Leaders must model the values they wish to see in their teams, turning abstract principles into concrete actions. Employees are more likely to adopt values when they see them consistently demonstrated by leadership.

Consistency also involves aligning policies and practices with organisational values. For instance, reward systems should recognise ethical behaviour, not just results. When employees see that integrity is valued as highly as performance, they are more likely to embrace ethical practices.

2. Creating a Speak-Up Culture

Fear of retaliation or a belief that raising concerns will lead to no meaningful change often deters employees from reporting issues. Leaders must address these barriers by: 

• Ensuring confidentiality for those who come forward 
• Sharing the outcomes of investigations where appropriate, to demonstrate that concerns lead to tangible actions 
• Simplifying and clarifying reporting processes to remove ambiguity

​​​​​​​3. Balancing Performance and Integrity

Pressure to meet targets can lead even well-intentioned employees to take shortcuts. Leaders must strike a balance between achieving ambitious goals and maintaining fairness. Rewarding outcomes that are achieved ethically reinforces the importance of integrity.

Performance metrics should reflect not only financial results but also adherence to ethical standards. For example, incorporating non-financial KPIs, such as employee satisfaction and customer trust, can help align organisational priorities with ethical values. This holistic approach ensures that success is measured in a way that promotes long-term sustainability.

4. Using Benchmarking Data Effectively

With the FCA’s annual survey offering insights into non-financial misconduct, finance leaders have a valuable tool for cultural assessment. Benchmarking data can help identify trends, analyse patterns, and measure employee confidence in reporting issues. Turning this data into actionable insights allows leaders to address problem areas and monitor progress.

The Institute of Business Ethics (IBE) has worked with organisations to develop benchmarks that highlight areas of strength and weakness. By leveraging this data, leaders can create targeted action plans that address specific challenges. Regularly revisiting these benchmarks ensures continuous improvement and demonstrates a commitment to ethical excellence. 

Culture is deeply intertwined with an organisation’s purpose and values. A clearly defined purpose provides direction, while values such as integrity and fairness offer a framework for decision-making. These should not remain as mere words on a page, but should be reflected in everyday actions and interactions across the organisation.

Purpose-driven organisations are better equipped to navigate challenges and adapt to change. When employees understand how their roles contribute to the organisation's broader mission, they are more likely to act in ways that align with its values. Leaders should communicate this purpose clearly and frequently, reinforcing its relevance to day-to-day operations. 

Finance leaders have an opportunity to foster environments where trust, collaboration, and innovation can thrive. By prioritising ethical leadership, they can:

• Serve as role models for ethical decision-making 
• Build trust through transparency and accountability 
• Balance ambition with fairness to promote sustainable success 
• Align organisational values with cultural priorities
  

​​​​​​​Ethical leadership goes beyond avoiding misconduct. It creates workplaces where integrity and collaboration form the foundation for long-term, sustainable success. Finance leaders must seize this opportunity to lead with purpose, ensuring that their organisations become exemplars of ethical practice in an increasingly scrutinised industry. 

The Institute of Business Ethics provides advice, education, networks and advocacy for ethical business practice and culture focused on leadership, ethical culture and values-based decision-making.