In the current climate, where business has almost become an ethics-free zone, Dr Philip Stiles, University Senior Lecturer in Corporate Governance at Cambridge Judge Business School, talks about his new research which looks at the negative emotion of shame and how he discovered that used properly, it can actually play a positive role in the workplace in helping both to motivate people and to encourage them to regulate their behaviour. He says, “Shame is always seen as a negative emotion. But in fact there are some positives for companies in using the mechanism of shame to help ensure that people do try and live up to the expectations we have of them.”
Business has almost become an ethics-free zone. There are the rules of business and the rules of morality generally, and the 2 do not always coincide. We could do with seeing a bit less pride and a bit more shame in business – particularly from the leaders and managers whose actions have brought huge disbenefits to many people.
So says Dr Philip Stiles, Director of Judge Business School’s Centre for International Human Resource Management, as the actions of executives in Britain’s crippled finance industry continue to come under fire. The governor of the Bank of England last week criticised the former system of remuneration to UK bankers that offered them “incentives to gamble” but did not leave them with any loss if things went wrong. Meanwhile, a row rumbles on over the £650,000 a year pension being collected by Sir Fred Goodwin, the former chief executive of stricken Royal Bank of Scotland – one of the biggest casualties of the global financial crisis. Last year RBS had to be bailed out by the Government through partial nationalisation; last week it announced a record annual loss of £24.1 billion, the biggest in UK corporate history. Sir Fred has so far refused requests to forego part of his pension, but faces continued pressure from the public and from the government – which says that “failure should not be rewarded” – to do so.
Dr Stiles is the author of new research which looks at the negative emotion of shame and discovers that used properly, it can actually play a positive role in the workplace in helping both to motivate people and to encourage them to regulate their behaviour. He says, “Shame is always seen as a negative emotion. But in fact there are some positives for companies in using the mechanism of shame to help ensure that people do try and live up to the expectations we have of them.”
As he says in his research paper, “The negative side of motivation: the role of shame”, “Shame is a useful emotion for organisations in motivating individuals to perform at a reasonable level. From the point of view of the organisation, the promoting of corporate goals and values, the encouragement of loyalty and engagement to the team and the organisation, and adherence to ethical codes of conduct can be made not only by a focus on promotion – but also by emphasising the costs of a failure to live up to these goals”.
The problem is, however, that over the last 30 years, the emotion of shame seems to have fallen out of fashion, in both business and politics. Dr Stiles says, “There’s a sense in which some of the individual business leaders now coming up for public scrutiny are really not being held strongly accountable enough for some of the problems that have happened.” At the House of Commons Treasury Select Committee meeting held in early February, where the bosses of HBOS and RBS appeared, the former bank chiefs apologised for what had happened. But they refused to take the blame, denied they had behaved recklessly and refuted suggestions that they had ignored warnings of problems ahead. “The meeting was well scripted,” says Dr Stiles, “but a brief apology seemed to be enough for them. One sensed no real feeling from them that there was any personal failing by them.”
And in political life, he says, the role of shame has been eroded so that it is rare nowadays for any minister to emulate Sir John Profumo. (The former Minister of War after first lying about his involvement in a sex-and-security scandal in the early 1960s, later publicly confessed his mistake, resigned, and devoted himself to charitable work for the rest of his life.) Dr Stiles, who is also a University Senior Lecturer in Corporate Governance, says “There seems to be a feeling now that one’s judgement and behaviour in a public setting does not affect one’s private standing. And that’s a difficult notion to uphold. There is a philosophical issue here about the difference between guilt – where the action is reprehensible, but one’s own self is not implicated – and shame, where one’s own self is held up for public scrutiny and disdain. We don’t see enough shame among public figures.”
Although it is a negative emotion Dr Stiles advocates that the threat of shame, “if not over-used, can be beneficial in motivating and regulating employees. Used properly it would prevent a lot of the excesses we have seen in business.” But in his research, which looks at the relationship between shame and goal-setting, he warns that as a mechanism for motivation and self-regulation, it has to be used carefully. “Most organisations don’t actively promote shame in the workplace, as it can be unhelpful if it makes workers doubt their own ability or worth. But at the same time, they do tend to promote the comparison between one employee and others – for example, encouraging competition between sales executives over who has earned the most commission that month. When that comparison is made, if you are the employee who falls below the standards, then a certain shame develops. The ideal is a certain, background-radiation level of shame, as it were, so that it encourages people to reach certain goals. But you don’t want it to be so overwhelming that it makes people withdraw from their tasks for fear of failure.”
Similarly, he warns, that while it is useful to use the mechanism of shame to motivate and regulate employees, sometimes companies go too far and humiliate or scapegoat individuals by sacking them very publicly when it is not entirely deserved. “There are examples of individuals who have been made to fall on their sword because it is seen as good for the organisation, even though the evidence subsequently shows it is not justified. That’s dangerous territory.”
However, one of the positive side-effects of the credit crunch is that shame may be coming back onto the agenda, along with greater accountability and transparency in business. Dr Stiles says, “It’s probably too much to describe it as a seismic shift in attitudes, but over the last 18 months, things have been changing a lot in public perceptions of how businesses should be regulated and how transparent they should be. The model of ‘heroic leadership’ is now pretty much dead in the water, and the idea that you can have an elite set of individuals running businesses without any apparent fetters no longer seems to work. I also think that the transparency rules under which organisations have to operate will be intensified – as they are in industries like private equity. And there will be much less tolerance of individuals in business or politics who are seen to slip from their perch. If they have been appointed to a high moral position, you will see a much greater for demand for them to be accountable. In all, there’s a distinct possibility that shame may be making a comeback.”