Ethical leadership and social value with Aidan McQuade and Nicola Parkinson

Jacqueline Conway  00:00

The organisational peak is a perilous environment. It’s more complex and challenging than anything that’s gone before. And as a consequence, both executive tenure and corporate longevity are decreasing. To survive and thrive at the perilous peak, executive leaders need to balance their functional leadership or focus on execution with enterprise leadership, that is ensuring the organisation adapts and our new world. That’s what we’ll be exploring in the advanced executive leadership podcast. Welcome. I’m your host Jacqueline Conway. I’m the founder and managing director of Walden Croft, a consulting practice dedicated to helping executives and executive teams anticipate, navigate and lead at the paperless peak. What is business for? In 1970, Milton Friedman wrote his no famous dictum that the sole purpose of a business is to make a profit. And it has arguably been the most influential idea in business and capitalism since then. But we’re now realising that far from providing the blueprint for business. It was an idea that was morally bankrupt. Such a blinkered idea of what is and is not the responsibility of business has contributed to much of the corporate overreach that negatively impacted society and helped create the conditions for the myriad global challenges that we now face. I’ve become increasingly interested in this area, as the executive teams that I work with grapple with ever more narrowly, and consequential ethical issues. And it struck me that there’s very little preparation given for leaders in dealing with these sorts of issues. So I was keen to explore if there’s a third way, one where business can have an ethical core alongside a requirement to be profitable. And I have two great guests to help me unpack this. I’m joined by Adian McQuaid, who’s an authority on business ethics. Adian was CEO of anti slavery International, from 2006 to 2017. And prior to that, I worked extensively in development and humanitarian operations for for 13 years, including five years, leading the emergency responses to the brutal civil war, and Angola. And he’s recently published a superb book, ethical leadership, which I loved, even provides insights from his own practice. But his book focuses on theory on the theory of ethical leadership. And so I was also keen to see how is it done in practice. And for that, I turned to Nicola Parkinson, the Chief People Officer at the Eric Wright group, which is a fascinating case study, and holding a strong stance of ethics, in this case on social value, alongside a focus on profitability. Let’s get into it.

Aidan McQuade  03:21

Well, my name is Adain McQuaid. I come from South Arma in the north of Ireland, that started my career as a civil engineer. I was interested in civil engineering, principally because I wanted to work in humanitarian response. And civil engineering was a useful skill for that. So my first job after university, some work in the building sites in London, was in Ethiopia, working as a water engineer in southern Ethiopia, altogether with sherbert years in Ethiopia. And then I went to Angola where I was Country Director for Oxfam GB. And that was during the some of the worst parts of civil war there. And I suppose that’s where my interest in or Farmleigh trust and ethics beat really began. Because it was interesting there. There was a lot of people working for oil companies working for Diamond companies there whenever I was there. And one of the things I understood well was that oil and diamonds were the things that were driving the war and causing all the untold hardship and charts across the country. And it was wondering how people from comparable backgrounds to myself could decide actually, when they looked at in colour, the thing that they wanted to go there for was the oil and the diamonds and the money that accrued from that, irrespective of the cost that it delivered, as opposed to wishing to engage and shopping leg humanitary response or poverty alleviation, some of the other compelling needs, which country had and so whatever I finished in Angola, I went to Strathclyde did an MBA did okay and that they offered me a PhD and the question What I wanted to look at at that stage was why question mark? Why do good people do bad things? And after a little bit of reading, I discovered that that was a question which actually did very well answered training the 1960s, particularly, but this social psychologists in the United States among others, like Milgram, and suborder, 100, researchers like that Stan, so became interested in a narrower question, or a slightly different question was way too good people do good things. Why do some people resist the pressures to do popular things, pressures to do the profitable thing, because they’re finding it unethical. And that was something which that I talked to my research on. It struck me that certainly from my background, in working with Angola, working with humanitarian response to development there, there was some very difficult ethical choices came up during that time. And I’d never had any professional preparation for dealing with the people who do seem to have some ethical prepper preparation for dealing with these issues are people like doctors, because they’re dealing with these issues day in and day out? You know, but most professionals in other spheres will come across major ethical issues. They’re perhaps rarer, but they’re often more consequential, they affect brain many more people. And they will have similarly little preparation for how they deal with them, how they think about them, and how they’re, what are the bases of choice that they use for making those decisions? That that’s essentially what I wanted to research and find out to cut a long story short, there seem to be three principal reasons why people will resist the pressures to do a popular thing, the the popular unethical thing, whenever whenever they are faced with that moment of truth, it’s either because but it’s simply the love of another person, what would my wife, what will my family think of me if I did this, or it’s because of some belief in or realisation that you’ve done something wrong in the past, and the guilt and regret from fat has helped you define what your moral principles are, are the rarest of all, is the idea that somebody has actually worked out what their principles are, before they’ve come into contact with the situation, which poses the choice to them. So either drawing from religion or philosophy or art or some other basis, which is bigger than themselves, they’ve decided these are the lanes that I’m not going to cross this idea very clearly in their mind. And those that seem to be the three principal reasons why people will resist pressures in the end.

Jacqueline Conway  07:50

When i work with corporate leaders theme is, I mean, two things that resonate with the things you’ve said, as is one that they come in to an executive position by, dint of having been a strong functional leader. So they’re good operations, or they’re good at HR. And and then when they make this leap into the C suite, the are the the howl of dissent decisions that are deeply consequential, and which they perhaps haven’t, to your point had any training in how the, how they make those decisions. And I guess, two things I noticed. One is that they’ve not had any training. And so the they’re not, they’re not able to draw into your third point, you know, sort of principle or model of ethics that they can see this violates it, and this doesn’t. So there’s a kind of case by case nature of the way that they do things. That’s that’s the first. The second is that very often, when I’m in the room with the executive team, they’re talking about ethical issues, but they’re not framing it as if it’s an ethical issue. They’re talking about it, but they’re not seeing this is about a line that we are either crossing or not crossing as an executive team. I mean, do you recognise that?

Aidan McQuade  09:11

Yeah, I mean, to be quite honest, that was my own background, and then moving up into a leadership position. First time round was unchecking time right, actually, as well, was coming from a functional background of of having been a water engineer and in a development programme. And again, though, no beer says no preparation for that. And I suppose the professional training which most leaders get if they’re lucky, would be often than NBA. And the NBA or studied as well did not include any ethical component to it and to jokes always made ethics as optional, as an option in the in the course very often, but it’s also an option in the regard as options, a lot of businesses too, and, and public sector organisations as well. So I think that’s problem article for all because, you know, the principle research that I did when I was doing my PhD was amongst doctors and medical professionals. And if a doctor gets an ethical choice wrong, I mean that can have catastrophic consequent consequences for an individual. But if a business leader if a government leader if a public sector leader gets some unethical choice wrong that can devastate societies and communities. You know, there’s McKellar wrong, wrote a book a few years ago called I returned, eat about corruption in Kenya. And one of the things that she identified in that was just the the vast collaboration between Western business interest and the crop sectors in the Kenyan government, which literally devastated the society literally reduced or increased child mortality and morbidity through those decades that she wrote about. And this, these are the sorts of things that ethical choices, problematic ethical choices, which are made by business leaders can have those sorts of devastating consequences. I saw that year in year out in Angola as well, whenever I was teaching for a little bit whenever I was doing my PhD, and I posed the question to a class of students once, which which I read about in the book as well, which was that and this is based on a real kiss story. So you know, you’re a diamond buyer for a diamond company, and you end up in Zambia, and you have an option of buying at a very good price a lot of diamonds. Now, if you know anything about diamonds, you know that Zambia doesn’t produce any diamonds, though, if you’re getting diamonds are almost certainly coming from Angola. And if they’re coming from Angola, the people who are producing daemons and Angola or or do we sell them in Zambia are generally UNITA who were wreaking havoc on the civilian population that I call it the times. So what do you do? Do you fund the war machine? If you need to pay bang the diamonds? Or do you say no, no, this is a bridge too far, we’re not going to do this. And the class split right down the middle on that choice. So a lot of them are we’re buying into this idea, our only responsibility is to make profits for shareholders. And main, that’s a charter Strophic idea to think that that’s your only responsibility and a society which is as interconnected and complex as the one in which we live in a globalising world where, you know, I mean, I’m sitting drinking a cup of coffee as I speak to you so of coffee from Ethiopia, and a mug from the south of England and headphones, which are made in in China, probably, you know, we’re in such an interconnected world to think that that’s the only moral guidance that you need to negotiate. It’s just beyond ludicrous. Consequently, then, the choices which are being made by a lot of professional leaders in the world, are catastrophic. And we’re seeing that increasingly, as, as the years go by, with the failure to confront the climate crisis with failure to address some of the endemic human rights problems in the world with a failure to address some of the broader questions of poverty in the world as well. We’re just utterly failing, because people are saying, This isn’t my problem. My only problem is to make profits for shareholders and bit buying into that narrative and calculating that narrative amongst amongst decision makers, and that’s deeply problematic.

Jacqueline Conway  13:35

And of course, it was Milton Friedman, wasn’t it in 1970, who first kind of espouse the stick to the only responsibility of our businesses to make a profit. And so you’re talking about how catastrophic it is. And yet that has been the guiding principle for business for 50 years. And, and in some places it is changing. And in others, you can see that it hasn’t changed at all.

Aidan McQuade  14:02

Yeah, I mean, Friedman’s to be fair to Friedman, that I don’t like to be fair to Freeman. But if you’re going to be fair to him, he said, make profit within the law. But that’s again, a disingenuous point. Because, you know, businesses will also lobby about what the shape of the law should be. And, and frankly, I’ve had dealings with governments trying to get the law changed in other areas, and the only time that there’s any real interest is if business joins you in agreeing with your position. So for example, the transparency and supply chain clause of the 2015 modern slavery act in the UK, it was only put there because business went to government that said we want that in our government wouldn’t have put it in government wouldn’t have listened to any non governmental or third sector organisations saying this should be there. It was only because other business said that that is in the law so fairplay to business on thought, but your business will talk to government about or talk to governments about tax policy. They’ll talk to governments about economic strategy, they need to talk to governments also about environment and human rights.

Jacqueline Conway  15:18

How do we balance a kind of ethical perspective when we’re coming? You know, the sense of as being of good, good leadership, or good ethics, or a kind of normative set of values that we can all get behind is so contested now. I mean, how do we, how do we operate in that environment?

Aidan McQuade  15:40

That’s a very good question, I probably don’t have a very good answer to it, other than to say that leadership is also about choice. I think that’s, that’s something which you don’t necessarily grasp. When you’re growing up. The only thing that you learn leadership from is the movies, for example, or from an MBA very often, very often you you won’t know if your decision is right or wrong until a year, six months, two years down the line. I think it’s important to recognise that doubt is a virtue, being uncertain is a virtue, because it helps you keep questioning, it helps you learn, and it helps you remain humble. And if you have a certitude about something, be this and life at the moment, people are certain that this is the right thing to do. And no amount of evidence is ever going to convince them otherwise, because they have their certainty is actually a prejudice on their whole that prejudice very close to their heart, and will not let any facts which upset her up and that prejudice ever come close, who had because they’re so in love, prejudice, but uncertainty and untight heartbreak that down. Because you make a choice, you make a judgement. And you’re aware that it might be wrong, oh, you keep thinking about I keep monitoring it, you may be then can change course more rapidly, whenever you see how it’s shifting hurts affecting the outcomes. And you maybe also then are able to learn better from the experience of having made a decision, which turns out in the end to being unsatisfactory, there’s always going to be this tension between, you know, for that if an economic entity is not making profit, then it’s going to go out of business. But if one just says that’s the only responsibility that you have, then one opens up a whole enormous can of worms, because you’re essentially giving licence, do whatever you want. So that needs to sit in tension with responsibilities of business towards other stakeholders, including workers.

Jacqueline Conway  17:54

One company that’s facing into these tension that Eden is talking about is that Eric rate group, which has companies in multiple sectors of the construction industry in the Northwest, and it has an innovative and progressive structure, and actively links its corporate strategy, with social progress, and a virtuous cycle of reinvestment. It’s based on the founder and no Chairman’s long held belief that the role of business in society is not to create wealth for the few, but instead is fundamental to the building of a strong community. So I asked their chief people officer Nicola Parkinson, to join me to talk about the unusual way that the Eric Wright group is structured, and a bit about what they call a philosophy of social integration that goes beyond corporate social responsibility.

Nicola Parkinson  18:51

I’m Nicola Parkinson I’m the group head of people at theory right group. I’ve been in the people space for probably about 2025 years now through various guises, predominately starting off in HR and then evolving into more of the OD areas our strapline, I suppose if you want to start off as we’re a commercially focused business with a social purpose, what that actually means is we’ve got an inspirational leader, Mr. Wright himself, right, who is obviously the founder of the business and still our chairman, has a real social value, ethos on how he wanted to fund the business from very early on. And actually, what he did was put 100% of his shares into The Wright charitable trust. So we are as a group wholly owned by the charitable trust. That means as a business, each of our divisions will actually run generate profits as commercial businesses but those profits then are either reinvested back into our business or into the charitable trusts and you know, we give significant amounts to that every year. The Charitable Trust is independent so it although we’re owned by it is run independently He has its own board of trustees, etc. And they do a lot of charitable work, help and support smaller charities in the local communities where we work. And they will work with the likes of mental health charities, older persons, charities, family charities, there’s a whole host of charities that they focus on in terms of purpose. So they work with the youth youth zones, you know, places like that rarely. And it’s not just about funding those opportunities. We also have within the trust, we have the area right Learning Foundation. So we partner with persons college and local colleges to provide opportunities for young people to go to, or experience practical skills.

Jacqueline Conway  20:41

We hear a lot about social value, ESG, CSR, all of these sorts of things. But I mean, right to the core of the way that the whole governance structure and the whole way that the organisation is set up, seems to be focused on that in your organisation. And I guess, I mean, my first question is, why is that do you think, for what made Eric Wright say this is the way that I want to do it.

Nicola Parkinson  21:12

So I think, before getting into that, I think, although we’ve got the right choice for trust, and all that work, we don’t rest on our laurels. So as a business, we also have our own ESG, or social value strategy. So we do more work within the business also, as our commitment. So for example, we have four pillars of that strategy, which is around people, planet place, performance, so it’s around our governance structures, it’s around, you know, using local labour where, where possible, it’s around growing jobs in the community. So you know, each of our sites may have an apprentice opportunity on there, for example, it’s around the environment. So the types of materials or products we use types of builds, how do we support that biodiversity or the circular economy, etc. And the people area that I spoke about before was around kind of health and wellbeing, not just of our own people, but also also contractors, etc, all the people working with us. So as a business, we take it really, really seriously in that respect. Why was it set up this way? I mean, Mr. Wright is truly exceptional person, anyway, really inspirational. And he just really wholeheartedly believed in doing good for all rather than the few. It was something that was really close to his heart. And He prides himself on supporting people where possible, and that’s really interesting, because as a business, what we then tend to do is that that kind of weaves into our decision making into our thought process into our strategies. So you know, when we’re thinking about, for example, on a basic level, if you’ve got an employee who’s maybe not performing at their best, we need to understand why that is, give them the right support. And we will always give somebody a chance, probably far more chances than other companies may give, you know, before we get to the stage where we may have to do something different. And that’s because we believe in the good in people.

Jacqueline Conway  22:59

That’s a really important aspect of it, isn’t it? Because I do think that there’s a sense in some industries, and in some ways that organisations are set up, that it would be all, it’s all well, and good to see these sorts of things around social value, or our ESG or CSR, but in actual fact, the primary responsibility of the organisation is to make a profit. And those things are secondary. And it sounds like what you’re seeing is that it’s not secondary, but neither is the profit ignored. So, you know, I noticed in you when you talked about that, that kind of mission statement that you know, it’s that you are, you do see upfront that you are a commercial organisation, right at the beginning, and yet, you seem to be able to hold these two things in balance in a way that other organisations, it’s maybe not quite as balanced as that.

Nicola Parkinson  23:57

Yes. I think the codependence definitely, you know, if we weren’t able to be commercial, you know, a successful commercial organisation, we wouldn’t have the funds to be able to do the things that we want to do. So, you know, and our because our mission and our ethos is is to do that work. You know, it gives us even more importance on getting the work commercially. Right. So that then funds obviously the work that we do so they are absolutely interlinked codependence and one doesn’t work without the other. But when we are making decisions, yes, commerciality absolutely needs to work, but we also have that, okay, so one, what does that then mean? What is the impact if we’re making this decision? Now, you know, what is the impact on the social value aims that we’ve got? So there’s always that kind of golden thread, if you like, right through to make sure that it doesn’t get lost. You know, it’s not part of single sighted.

Jacqueline Conway  24:53

Yeah, because you can imagine scenarios where a commercial decision might I have the potential to cut across one of your social value commitments. And you talked about decision making, and what is it about your decision? You know, if you’re confronted with those sorts of conundrums? What is the way that you make decisions that is that allows you to be able to grapple with those things? Well

Nicola Parkinson  25:21

So it depends on what it is, obviously, each of our divisions have got their own leadership teams. And we’ve also got a board of directors as well. So depending on what the decisions are, depends on obviously, who would be involved in making that I can give you a good example of where we’re currently refurbishing our offices, head office. And obviously, there’s a cost to that. So commercially, is the discussions around that where, yes, it’s the right thing to do. Yes, we do need to invest. However, how can we meet some of our social social value aims through that. So we’ve been able to, you know, engage with people to repurpose the furniture that we are discarding. So it doesn’t go into landfill, for example. It’s not just about recycling, it’s about repurposing, you know, we’ve looked at you know, we put LED lighting in so that’s obviously, you know, more economical, etc. So, these are all the things where it might cost us a little bit more to do it. But it’s the right thing to do. But there does come a time where actually, you might need to say, actually, we can’t go that far at the moment, because it’s not a, you know, an open chequebook. So we do have to make those reports, decisions, but it’s about making them openly with all the information and having visibility of what we’re trying to achieve overall.

Jacqueline Conway  26:30

What do you think it is about your industry, that means that you are, I mean, in some ways, you could say, sort of, quite surprisingly, ahead of the game, in terms of all of these things,

Nicola Parkinson  26:44

I think that there’s a couple of things, obviously, we’ve got our own things within this business here. But when we’re contracting with big, big organisations to be to build certain buildings, so it might be with local authorities, for example, or the NHS, you know, part of that tendering and bid process usually requires have a social value element to it. So all of the industry will have to submit what they do for social value to be able to win bids and tenders. So firstly and foremost, to win work, it’s important. So that’s the first thing. But it’s not just a tick box exercise, because a lot of the bids and tenders that you do complete, are looking for evidence of what we are doing. So it’s not just the case of what’s nice to have, and what do we say we do, they’re actually looking for evidence of what we actually do. And that’s why we feel as it’s important that we have a social value strategy within the group itself.

Jacqueline Conway  27:39

So you’re creating places, that’s, you know, you’re, that’s part of what you do, but also where you’re liquid catered the geography of that, and being embedded in that sort of community feels like it’s actually a really important part of who you are. And for what you do.

Nicola Parkinson  27:58

We consciously work in the areas where we’ve got a footprint already, you know, it doesn’t mean that we won’t expand further, but we know we’ve got the skills and knowledge experience the workforce to be able to deliver fantastic services in those areas. And again, we’ve got such diverse businesses as well. So you know, you know what, what happens in construction, for example, might be different to our civil engineering team, which might be different to our facilities management teams. So you know, we weren’t where we, we know that we can do the best work that we can. But in those areas where we work, we try and do the best we can for our communities. So whether that is, you know, offering local jobs, you know, engaging with local supply chains, it could be around volunteering at a local school, for example, local charity, to dig up the garden, build a path, whatever, wherever that may look like, you know, we do try to leave our mark, really.

Jacqueline Conway  28:49

Taking pride in the work that you do, giving something back to the community that you don’t just sort of parachute yourself into, do something and then come out of, but that people who work there live there and the children go to school there. And that aspect of it kind of feels that that feels quite important, doesn’t it that, that the sorts of decisions that we make, when it’s our community is different from the sorts of decisions that other organisations or other sectors might be making, when the community is a much more theoretical idea or the customer is feels quite distant from them.

Nicola Parkinson  29:29

Several areas of our business are very community focused as well. So if we think about our partnerships, division, they work with local health centres, for example. So they are doing, you know, managing, Building Management, maintenance, that type of thing. So they’re actually in the community centres in the health centres. We’re customers walking past and, you know, really ingrained into what’s happening in that community. They hold community events, you know, and support, the trust to be able to do that work as well, and our facilities management as well. You know, we work again, doing facilities management within, for example, assisted living, or independent living property. So you might have 300 community, you know, people who are in their own own homes, but in the communal side of it, we’re meant maintaining those boards. And so we’re interacting, you know, face to face with those customers on a, on an hourly, daily basis. So it’s even more important, you know, that we are doing the best work that we can do in those areas.

Jacqueline Conway  30:29

So let’s think then about leadership. Because, you know, I mean, our listeners are CEO’s and executive leaders, the HR leaders, I mean, do you have to be do you have to think differently, or, more carefully about who you bring into the organisation who the leaders are and what the fit is?

Nicola Parkinson  30:52

Yes, I would say so I think, you know, we definitely want leaders who are aligned to our ethos, as a business, who get the social purpose of what we’re trying to do, and who engage in that and actively, you know, encourage that within each of their areas. So definitely, that’s something that we do focus on. From a senior leader point of view, we’ve got a lot of our leaders who’ve been promoted from within as well. So they’ve grown up with the business as well. So they’ve got a lot of history, they’ve grown up with the ethos, you know, on what we’re trying to do. And I think that really shines, and the work that they do, and, you know, when they’re, you know, bringing new people into their, or their parts of their organisation to, you know, behaviours are really important, you know, it’s about decency word again, so you know, want people to be treated with fairness, kindness, yes, we can deal with problems. Yes, we can hold people to account, yes, we can challenge. But we also need to support, we need to make sure that we’ve got the right tools to do the job, and that we’re setting them up for success. Nationally, people may not know who we are, but in the areas that we work, people do know who we are as an employer, and in the industries that we work, I joined this business because of its values personally, you know, and and its ethos, it’s something that’s important to me in terms of the work that I do. And that’s something that kind of I’ve grown into, as I’ve gone throughout my career working for commercial organisations, and then finding my feet in an organisation which was a bit more socially focused. So that was in housing originally. And that opened my mind to a different way of approaching some of the people issues that we have. So the strategies that we have and the way that we manage. So that was kind of my first explanation into that. And it’s something that I felt was really important to me. So that’s one of the reasons I joined the business.

Jacqueline Conway  32:38

As I reflected on the conversations I’ve had with both Aidan and Nicola, on ethics and business, it seems that those four P’s of people, please performance and profit, that Nicola outlined, aren’t just buzzwords, they can come together to form a cornerstone of doing things differently. And in particular, we’ve heard about pleace, a great deal from Nicola. And it strikes me that when we’re producing something for our community that we’re located in, where we can see the people who use the services and or products it brings, or commitments and responsibilities to them closer to mind, than if they were an abstract customer that we never get to see. And this will, I feel sure, have an impact on the ability of that team to make decisions about them. That’s fairer and more equitable. Eaton said an interesting thing, when we spoke that when we make our decisions, we don’t always know what the consequences of those decisions will be. It’s only afterwards if we can observe it, that we gain insight and wisdom by being able to look at the consequences, intended or otherwise of our choices. And it seems to me that if we are located in place, then we’re much more likely to see the real impact of our work.