Written by General Manager, Risk Consulting, Malka Bakes.
Scenario based exercises are commonly built on events that are measured as high probability, high impact, such as cyber and natural disasters. More recently, RiskLogic has been changing the theme to consider more difficult conversations, that of cultural and moral responsibility.
We’re reinvigorating these scenarios not only to provide diversity in our training, but to consider culture crises like icare and the developing stories coming out of organisations like Rio Tinto and Ansell.
Noncompliance to modern day slavery, abuse in the workforce, racism, sexual harassment, and discriminative workplaces have been concurrent events smouldering under the blanket of the pandemic.
It’s becoming clear that leadership teams need to continue to work as hard on managing culture as they do the pandemic.
Recently, the Uyghur people have allegedly found themselves in modern-day slavery, working in factories supporting companies such as Adidas, BMW, and Amazon. The investigative reports by the Australian Strategic Policy Institute (ASPI) uncovered and published 83 businesses associated with employing Uyghur people. As a result, thousands of employees around the world have now begun speaking up or against their own employers.
Online discussions like the #MeToo movement began exposing unfair and unjust organisations. The “Great Resignation” allowed more employees to negotiate better working arrangements.
And in a rare show of bipartisanship, the US Senate passed legislation prohibiting companies like Facebook and Google from requiring employees to resolve sexual harassment and assault cases through arbitration.
The board of Rio Tinto will be continuing to conduct many reviews of their work culture off the back of a recently commissioned external review by former Australian Sex Discrimination Commissioner Elizabeth Broderick.
The investigation uncovered systemic bullying and sexism across Rio Tinto worksites. Almost half of the staff experienced a form of bullying, 28.2% of women and 6.7% of men had experienced sexual harassment at work, 21 women reported actual or attempted rape or sexual assault, and racism being common across several areas with 39.8% of men, and 31.8% of women who identify as Aboriginal or Torres Strait Islander in Australia experiencing racism.
Think outside the box: RiskLogic’s approach
In the last twelve months, RiskLogic has been challenging our clients to think outside of the box on what constitutes a crisis and areas that require training.
Over the last two years, we have empowered over 400 clients to prepare, respond, and successfully recover from minor to critical disruptions while operating in an unprecedented pandemic world.
Our most exercised scenarios have ranged across cyber, reputational, loss of life, site accessibility and supply chain crises.
However, threaded through all the simulated exercises worked with our clients, we have continuously brought clarity to a key outcome that was hidden behind the layers of risk and resilience management practices, the correlation between their existing corporate culture and their crisis management readiness, response, and recovery plans.
Every scenario has shown a direct impact to an organisation’s external brand and reputation whilst often showing internal cracks in the organisation’s issues management practices, incidents review, assessment and reporting controls that could lead to having a significant effect on the organisation’s culture.
From our reviews, we see an organisational trend is to distance oneself from controversial partnerships or third-party suppliers. This may have worked during an age without the internet, but today simply breaking partnerships does not fix the underlying issues.
Australian protective and medical grade glove manufacturer, Ansell saw their share price drop 35% in a day after the US Department of Homeland Security banned importation of their products to the country and said it had “information that reasonably indicates the use of forced labour” out of their Malaysian partnership channels.
Ansell chairman, Glenn Barnes says the company is investigating allegations one of its major Malaysian suppliers is abusing worker rights and will dump any supplier it finds is exploiting workers.
But, has the damage already been done?
A trillion-dollar responsibility
Simply dumping suppliers and firing offending employees does not fix the fact that there was a problem there to begin with.
Apple continues to increase its lead as the most profitable company of all time, but it should credit a lot of its success to China and its substantial workforce.
Apple’s CEO, Tim Cook understands the moral responsibility of the commercial partnership with China. He makes a valid point on how large organisations should deal with offending third-party suppliers by demonstrating that simply leaving does not always fix the issue.
In the reigns of Steve Jobs, Apple rarely paid much attention to the alarming number of suicides and human rights violations being reported out of their Chinese manufacturing plants.
But as the brand grew, so too did the investigations and information on how Apple produced its high-selling products.
The manufacturing of iPhones, Macbooks and AirPods have been outsourced for over a decade to the Chinese manufacturer, Foxcoon out of Shenzhen province. Today, the number of workers involved in the manufacturing lines is north of 150,000 people. A community so large, full townships have been built around the factories to accommodate them.
Cook recognises that simply leaving this partnership would be catastrophic to the workforce and their families.
Apple is now working to fix the issues of their partnerships, rather than simply ignoring them. They have dedicated full-time teams based in the factories monitoring and supporting the well-being and working rights of the staff.
In Rio Tinto’s case, the company had two choices; aim to keep their crisis internal and try to fix it in confidence, or publicly acknowledge the issues and their steps to address them.
They took the latter (and correct) option of publicly announcing their strategy by releasing the report on their website.
Rio Tinto’s former CEO (and the man who built the Diversion & Inclusion Strategy), Harry Kenyon-Slaney took the findings of the report head on.
“If this culture is now widespread, then either I did not ask the right questions in my engagement and listening efforts, or the environment was not sufficiently safe for women to raise their concerns…”
Elizabeth Broderick said, “This report is not a reason for reduced confidence in Rio Tinto. By proactively commissioning this study, one of the largest of its kind within the resources industry, it demonstrates a very clear commitment to increased transparency, accountability, and action.
In my interactions with the Rio Tinto leadership team, I have observed a strong desire for transformational change, as well as to make positive contributions to the societal shifts that we need to see. There is clear recognition, however, new approaches are needed to solve these issues.”
How we challenge our clients
As we return to a post pandemic existence, it is prudent for organisations to reintroduce to Board discussions and organisational strategy setting agendas the what if questions such as, “what if such a crisis was to happen to us”? “What if our culture is behind the eight ball”?
When preparing our clients for testing their crisis management plans and capabilities, we challenge the stakeholders ranging from the board executives to the operational management teams with the most uncomfortable events. Because experience has shown us when one is faced with a crisis, the mindset at the time will shape the outcome.
Our crisis management program is based on three key phases. Throughout these phases we objectively test internal processes and critical controls performance including communications for effective response and recovery management.
We objectively test internal processes and critical controls performance including communications for effective response and recovery management. Whistle-blower, anti-corruption and bribery and workplace conduct policies, processes and associated controls are those foundationally tested when dealing with cultural and moral crises. How these are designed, embedded, and practiced at all levels within the organisation plays a vital role towards culture.
Leadership actions points
What is clear as we begin to see the tail end of the pandemic is that leadership teams need to ask better questions. The difficult and confronting questions; the black swan.
Can you confidently say that your people feel safe enough to report concerns and cultural violations?
We need to consider the scenarios we’re training and exercising, and how we’re responding to them. By practising this now, you may be asking questions you know are not being answered internally but should be.
Through simulated exercising of cultural and moral types of scenarios you can strengthen your organisational resilience maturity and risk avoidance plans whilst testing you and your team’s crisis management capabilities in a safe to fail environment.
Because, as we’re seeing with Ansell, Rio Tinto and icare, if there are issues simmering deep in the fabric of your organisation’s culture, they will be found and become a fire very hard to control.