Business expert Jane Arnott on New Zealand’s leaky buildings scandal and the power of empathy as an ethical standard...
We hear little about the reasons why people choose to speak up.
What makes someone want to raise their hand up and reveal injustice, exploitation, deceit or lies, or any other form of behavior that leads to harm?
While a Google search will reveal countless articles on why people don’t speak up (fear of retaliation, not believing it is any of their business, doubting corrective action will be taken), the same is not true in the reverse.
It can be argued however that recognizing bad behaviour is different from understanding – empathizing even – with the impact bad behavior can have on people’s lives, business and society in general.
It is this difference, and the intensity with which it is felt, that sets whistleblowers apart.
The potential for a disconnect – between what we see and what might occur – is a potent reminder that having a social conscience is important. A strong social conscience is a driver for doing the right thing. Fair play always means thinking beyond the individual or self.
The contention that the class action against building materials company James Hardie, currently unfolding in the High Court, reflects the strength of market forces in eroding social conscience has merit.
Concerns were raised. But the product was successful.
So, apparently time and time again, the mute button was pressed.
Just imagine how the 144 property owners, with their devastated lives and multi-million dollar claims for damages, would have felt if putting the customer first and ‘fessing up’ had outweighed the marketing claim that the Harditex product was fit for purpose.
The High Court has heard that a product manager had raised concerns with company management as early as 1990. The product manager wanted them to communicate to the market issues relating to weather tightness, that were exacerbated by being directly applied to untreated kiln-dried framing.
Regardless, the marketing of the product continued and, with a big budget, demand was generated.
While it’s possible that the different departments operated as silos and concern just couldn’t gather momentum, it’s more likely that the link between a product with dubious properties and desperate and deceived homeowners losing their life savings was never made.
In reading about the class action two factors stand out.
- James Hardie employees, it appears, only ever had recourse to an internal reporting system. Internal reporting systems rarely allow for effective intervention. Action on the scale required to remedy loss and prevent further damage was already, due to strong product demand and quite possibly shareholder pressure, unthinkable.
Internal reporting can be shut down, unless there is a direct line between the Board and an extremely committed or visionary employee, by any management level that sees a complaint as a threat to their position (or bonus).
On this basis, boards of directors with their values intact, have much to gain if they enable direct reporting through an external mechanism such as independent New Zealand-based Report it Now. Further, if industry reporting is regulated and enabled as a safeguard against a company becoming corrupted from the top, then the market is better protected.
- Empathy and social conscience were absent. If NZ was a village where everybody knows everybody, James Hardie was a fortress and the drawbridge was up.
Choosing the honourable decision to front up and face the music rather than dance amongst it starts with empathy towards others. Speaking up is emboldened through meaningful connection with people, families, and, in this case, homeowners.
In fact, in James Hardie’s case, one could argue that quitting the dance hall altogether would have been the right thing to do.
It’s evident however that empathy and social conscience can be ruthlessly tested when a winner-takes-all approach is fostered, and how the winning occurred is overlooked.
In thinking of others, we bring new pressure to bear on everything, from supply chains and the environment to the internal dynamics of company culture.
The James Hardie Class Action in the High Court case is being vehemently defended. To understand how disconnected the company, its management, and many employees really were, the verdict must rule in favour of the plaintiffs and the class action.
Ultimately it will be how the company reacts to the findings that will lead to the last dance.