“Building an Ethical Culture – A Leadership Imperative in the Repositioning Process”

1. “Building an Ethical Culture – A Leadership Imperative in the Repositioning Process” Presentation to THE CARIBBEAN ASSOCIATION OF INDIGNEOUS BANKS (CAIB) 37th Annual General Meeting & Conference November 10, 2010. The Hyatt Regency, Port of Spain, Trinidad.

2. Presented By: Lennox Sealy (PhD, MBA) of Lennox H. Sealy & Associates Organization Development Consultants CAIB 2010 THEME Repositioning the Region: The Role of the Financial Services Industry

3. To Revisit the Concept of Ethics and Ethical Corporate Behaviour • Some How-to’s on Building an Ethical Culture • Defining the Leadership Imperative in the Repositioning Process– “To Be & To Build” THE PRESENTATION OBJECTIVES

4. PRESENTATION FLOW Let’s Start with….. 1.0 The End Continue with… 2.0 The Beginning Finish with… 3.0 The Continuation

5. 1.0 The End 1.0 The Leadership Imperative – As Key Players in the Financial Services Industry The Repositioning Challenge can be articulated as “To Be and to Build” To be true to self by being Ethical and To Build an Ethical Culture

6. CLOSING THOUGHT Peter Drucker “There is only one ethics … One true set of rules of morality … One code - That of proper individual behavior in which the same rules apply to everyone alike.” 6

7. Demonstrating that indeed as indigenous institutions we know our customers best by continuously researching their future needs • Taking advantage of our size by reducing the cycle time for the introduction of new products • Riding the waves of new technologies faster than the bigger guys AN ACTION AGENDA FOR LEADERSHIP 7

8. Actively bringing back into our customers’ minds the two magic words – confidence & trust • Gains confidence but • Builds trust • Ensuring a desired outcome that can represent competitive advantage – A region known for “Leadership in Ethical Banking” "Never let a serious crisis go to waste. What I mean by that is - it's an opportunity to do things you couldn't do before” White House Chief of Staff Rahm Emanuel AN ACTION AGENDA FOR LEADERSHIP 8

9. 2.0 The Beginning How did we get here ? “A global banking crisis was last night threatening to spiral out of control, and frantic US officials were locked in talks to save one of the world's biggest insurance companies just a day after they let one of its most powerful investment banks go to the wall” The Independent - 16th September 2008

10. A Post –Lehman World?

11. 2.1 The Etymology of Ethics • Origin of the Word Ethics • Definitions of Ethics • Ethics and Values • Personal or Professional Ethics ?

12. Origin – From the Greek word – ethos (accustomed place, habitat of horses) made popular by Aristotle Ethics represent codes of morality:  A system of moral principles which defines the appropriate conduct for a person or group www.bing.com ORIGIN OF THE WORD ETHICS

13. The recognized rules of conduct in respect to a particular class of human actions or a particular group, discipline, culture e.g. Medical ethics; Christian ethics. dictionary.com ETHICS – WHAT IS IT? DEFINITION 2

14. Values are also principles or standards but they differ from person to person, and are more subject to change and variation over time. They are however the principles that guide individual behaviour even when no one is looking. ETHICS vs. VALUES

15. Ethics are anchor points that keep us as groups of persons or organizations from being drawn in by relativity and therefore they help us re-examine and accept/reject changes as cultural norms and individual values change. ETHICS – NOT QUITE THE SAME AS VALUES!

16. BUSINESS CULTURE The shared values, behaviors and norms of a group. It includes the patterns of activities and symbols that give it significance and meaning. Basically, culture in a business setting is “how we do things.” Culture is shaped by the ethical standards of an organization whether written or unwritten.

17. An ethical dilemmais a complex situation that will often involve an apparent conflict between moralimperatives, in which to obey one would result in transgressing another. ETHICAL DILEMMA S

18. T. S. Eliot wrote, "The general ethos of the people they have to govern determines the behavior of politicians” “Your personal values determine how you resolve dilemmas” RESOLVING THE ETHICAL DILEMMA / PARADOX?

19. 2.2 The Great Divorce – The Past A Separation of Personal Values & Organizational Ethics – “ How we got unethical in business”

21. Originally, life was work and work was life and one ethical standard applied. “The time of business - does not with me - differ from the time of prayer and in the noise and clatter of my kitchen I posses God in as great a tranquillity as if I were on my knees” Early Monk in the Monastery of St Benedict's ORIGINAL THOUGHTS ON WORK AND LIFE

22. The values of "accumulation of wealth" and the associated evils reared their heads in European society in the fifteenth century • The famous Martin Luther (1483-1546) moved to preserve that medieval relationship between life and work, and sanctified the accumulation of wealth and serving God as “a marriage”. THE MERCENTILE CAPITALIST PERIOD – THE MARRIAGE

23. John Calvin, a native of the bustling financial centre of Geneva, sought further to encompass “business” in his theology and did so through the doctrine of “the elect.” Calvin’s doctrine was taught as “God’s favour could be seen in one’s degree of success i.e. whether you were one of the elect. JOHN CALVIN'S ( 1509 – 1564) THOUGHTS – THE SEEDS OF DIVORCE

24. There was a continual movement from the idea of faithfulness in work as the path to salvation, to one of observable, measurable success in work as a mark of salvation THE SEPERATION

25. John Wesley's (1703 – 1791) Famous words sought to rationalize the continuing drift - “Gain all you can, save all you can, give all you can". • Seminal thinkers like Adam Smith (1723 – 1790) and John Locke (1632 – 1704) eventually helped move the mind set from vocation in the name of salvation to wealth accumulation, individual freedoms and material success as the benchmarks of the new capitalism THE WESLEY RATIONALIZATION

26. This new 'ethic" created a new kind of workforce: Self-motivated, dedicated to the task at hand focused on material gain. • The accumulation of wealth eventually became an end unto itself and work was no longer a means of serving God. The divorce was official and complete. THE DIVORCE

27. 3.0 The Return to an Ethical Culture – The Continuation Challenges & Solutions of the Remarriage

29. 3.1 The Continuation • Definitions of an Ethical Culture • The Challenges • The Ethical Process Map & its Elements

30. AN ETHICAL CULTURE A set of attitudes, and values that an organization subscribes to that helps in making decisions that are in the best interest of the organization, its stakeholders and the society

31. The Banker’s role is one of stewardship based on trust. • He/She is trusted to look after people’s money and has a duty to manage that money responsibly. The context of all fiduciary responsibility therefore goes beyond legal to the ethical. Is it not then obvious that ethical behaviour is a prerequisite for a banker? ETHICS & THE BANKER

32. CHALLENGES OF DEVELOPING AN ETHICAL CULTURE –THE SELF Ethical behaviour comes from • A firm commitment to adhere to sound moral principles and values • A second commitment to verify that the resultant behaviours are congruent with ones principles • A third commitment to continuously improve • These commitments are manifested Spiritually, Mentally and Emotionally in our dealings with our colleagues and how we preside over the financial transactions of our institutions 32

33. Implementing governance processes that demand ethical conduct • Recruitment of employees who are already committed to morally sound behaviours • Taking clear action when behaviours border on the unethical • Willingness to lose “business” by not dealing with those who are unethical CHALLENGES OF DEVELOPING AN ETHICAL CULTURE – ORGANIZATIONAL

34. Societal norms focused on the “quick” accumulation of wealth • Country norms that accept bribes as part of business • Poor examples set by societal leaders • Opportunities presented by technology to engage in fraud • Stakeholders who do not have ethical standards CHALLENGES OF DEVELOPING AN ETHICAL CULTURE – THE EXTERNAL

35. Map the organization’s vision, governance structures and its code of ethics • Identify where the organization is doing a good job in managing risks and encouraging and maintaining ethical behavior? • Where is it falling short? • Take corrective action using your process map DEVELOPING AN ETHICAL CULTURE

36. Clarify Vision &Values Model Values Package Values as Code of Ethics Openly Discuss Difficult Ethical Cases • Do Compliance: • Audits • Enforce • Discipline Adopt Code of Ethics as an Anchor Point Continuous Monitoring of Behaviors A Defined Governance System is Imperative Revisit Code of Ethics Regularly Process for Implementing a Culture of Ethics Adapted from Kirk O. Hanson

37. Statement of values and Code of conduct • Examples for senior executives • Training and repeated communication of values, standards & Company Code of Ethics • Systems which embody the values • Continuous evaluation of behaviors Process Elements for Ethical Culture Development

38. Process Elements for Ethical Culture Development (Cont’d) • Effective hotline system – Whistle blowing • Clear mechanism for resolving tough cases • Compliance enforcement system • Periodic renewal process for values and standards • Overall governance system for ethics and values

40. 4.0 The Leadership Imperative – Remarriage and Repositioning

41. "Never let a serious crisis go to waste. What I mean by that is - it's an opportunity to do things you couldn't do before” White House Chief of Staff Rahm Emanuel

42. “Better to have an approximate answer to the right question, than an exact answer to the wrong question.”Statistician - John W. Tucker Asking the Right Questions? 42

43. Am I seen as an ethical leader? • Does my corporate governance policies effectively state our ethical position? • Do I have the processes in place to deal with ethical dilemmas? • Are my people acting in an ethical manner on a day-to-day basis? FOUR RIGHT QUESTIONS 43

44. THE NEED FOR SELF-EXAMINATION – An issue of credibility Credibility refers to believability of a person, source or message. Leadership credibility therefore has context: Today that context has to be an ETHICAL one and leadership must build an ethical culture that defines the conduct of the business 44

45. Demonstrating that indeed we know our customers best by researching their future needs • Taking advantage of our size by reducing the cycle time for the introduction of new products and riding the waves of new technologies faster than the bigger guys AN ACTION AGENDA FOR LEADERSHIP 45

46. Actively bringing back into our customers’ minds the two magic words – confidence & trust • Gains confidence but • Builds trust • The desired outcome – Leadership in Ethical Banking AN ACTION AGENDA FOR LEADERSHIP 46

47. CONTINUING QUOTE “Divorced from ethics, leadership is reduced to management and politics to mere technique.” James MacGregor Burns 47

48. THANK YOU FOR YOUR ATTENTIONPLEASE CONTINUE YOUR IMPROVEMENT PROCESSES 48