[co-authors: Chris Megone and Judith Seddon]

The Fortieth Cambridge International Symposium on Economic Crime, held recently, was entirely focused on “Integrity”. This highlights the importance of integrity in organisational life (as well as in our private lives). However, nurturing integrity in financial services is not a simple matter. It demands a holistic approach The journey begins with understanding integrity’s nuanced dimensions and acknowledging its complexity. By integrating ethical principles into the core of organisational culture, financial institutions can bridge the integrity gap, fostering a culture where integrity isn’t just a buzzword but a way of life. Through genuine commitment and meaningful action, the financial services industry can lead the way, setting new standards for ethical excellence.

The Imperative for Integrity

In the intricate world of financial services, integrity stands as the bedrock upon which ethical excellence is built. Yet, defining this foundational concept proves to be as challenging as embodying it, with no common understanding or definition. There appears to be a conspicuous absence of awareness of the extensive literature on integrity in academic ethics and moral philosophy. Professional bodies often oversimplify integrity as trust and honesty, ignoring the intricate layers explored within academic realms.

Exploring the Essence of Integrity

Etymologically rooted in ‘integer,’ meaning ‘whole’ or ‘complete,’ integrity embodies the unification of values and actions. A person of integrity remains undivided, standing firm for their beliefs, even amidst conflicting values. However, integrity so understood, while admirable, can be misguided if one champions unethical values. Tyrannical dictators might have been staunch in upholding their values, but if integrity is a good thing would we wish to call them people of integrity?

So there must be more to integrity than simply upholding (or being honest and trustworthy about) values whatever those values are. It must be about being undivided and consistent in pursuit of a genuinely worthwhile set of values. In organisational terms this requires carefully thinking through the ethical values that are most important for the pursuit of that particular company’s/firm’s fundamental purpose. And ensuring those values receive undivided and consistent attention.

Financial Services should not just limit their focus to integrity in the conduct of financial activities narrowly construed, but include integrity of conduct in the workplace as a whole.

Measuring the Intangible

In the elusive realm of ethics, quantifying concepts like integrity poses a formidable challenge. However, even the immeasurable can be significant; indicators such as employees speaking up, the presence of ethical codes, and effective compliance programs serve as vital markers. While not reducible to numerical values, these qualitative indicators illuminate the organisational landscape guiding ethical navigation. And the degree to which they have been attained can be captured in ‘a traffic light’ measurement system, avoiding unhelpful/misleading numerical marking.

Beyond Legal Boundaries

Regulation, a double-edged sword, can either foster ethical growth or stunt it. While laws and regulations establish a baseline, an overreliance on legal frameworks may hinder genuine ethical introspection. Mere compliance with the law might create ethically undeveloped professionals, reminiscent of children following rules without understanding their moral essence.

Closing the Integrity Gap

Discrepancies in perceptions of organisational integrity between leadership and the general workforce, especially in smaller organisations, underscore the urgent need for transformation. Elevating integrity to a strategic priority demands more than eloquent policies; it necessitates a cultural shift. Time and resources are needed to be given to fostering it, just as they are given to other aspects of organisational life held to be important to organisational success. Integrity should be embedded in every facet of an organisation, from hiring criteria to daily operations. Defining integrity’s nuances, aligning incentives with ethical behaviour, and identifying individuals responsible for nurturing integrity are pivotal steps toward this transformation.

Nurturing integrity within the financial services industry demands a proactive and multifaceted approach. To bridge the integrity gap effectively, organisations should consider the following key takeaways:

• Elevate Ethical Conduct: Integrate ethical behaviour into staff reviews, evaluating not only what employees do but how they do it. By giving equal importance to ethical conduct, organisations reinforce the significance of integrity in every action.
• Embrace Integrity by Design: Ensure that integrity is not the responsibility of a single person or department but runs through the entire business operations. Cultivate a workplace culture where integrity becomes second nature to every employee, influencing decisions and interactions at all levels.
• Lead by Example: Leadership should exemplify integrity in their actions, going beyond verbal assertions of values. By living out the organisation’s ethical principles, leaders set a powerful example for others to follow, fostering a culture of integrity from the top down.
• Define and Measure Integrity Programmes: Develop a clear and tailored integrity programme for the organisation. Define what this programme looks like, aligning it with the organisation’s purpose, vision and goals. Underpin the programme with Key Performance Indicators (KPIs) specifically designed for senior leadership. These KPIs serve as measurable benchmarks, allowing organisations to track progress and success in embedding integrity.

Drawing from an extensive literature review, it becomes clear that bribery and misconduct is detrimental to a firm’s long-term performance. However, it is equally important to explore whether organisations upholding integrity reap additional benefits in terms of commercial success.

Whilst integrity should certainly be fostered for its intrinsic value, businesses equipped with robust integrity frameworks and stringent compliance systems also tend to reduce their exposure to unethical practices, thereby avoiding the financial ramifications associated with wrongdoing.

Comprehensive ethical guidelines, coupled with well-structured compliance programs and integrity systems serve as crucial tools. These encompass fundamental ethics training, policies governing gifts, whistleblowing hotlines, and sophisticated risk management protocols. These measures empower companies to proactively minimise the risk of systemic misconduct, helping to ensure that ethical standards infuse every aspect of their operations.

Integrity is, and should be seen as, equally important to an organisation as its financial performance. Indeed, integrity and financial success often go hand-in-hand, such that the efforts required to nurture integrity will, quite literally, pay off.

This article was co-authored with Chris Megone, Professor of Inter-Disciplinary Applied Ethics at the University of Leeds, and Judith Seddon ,Partner at Dechert LLP. We are grateful for their invaluable contributions to this article.

Click here to find out more about the MA in Applied and Professional Ethics with Chris Megone at the Inter-disciplinary Applied Ethics Centre at Leeds University. This online course, designed for working professionals, allows you to examine current issues, debates, and theories around the application of ethics in professional settings.