Is anyone else feeling a little jaded by the findings of the Royal Commission into Crown Resorts?
If you’ve missed it – an independent inquiry led by Former Supreme Court judge Patricia Bergin deemed Crown Resorts unfit to run a new Sydney Casino at Barangaroo, alleging that failings in leadership at the board level had ultimately facilitated money laundering and corporate misconduct.
The failings of Crown Resorts were put down to “poor corporate governance, deficient risk management structures and processes and a poor corporate culture”.
While members of the board denied having knowledge of the illegal activity going on in their Melbourne and Perth casinos; their negligence to ask the right questions, take accountability, or even create an environment where it is safe to speak up, sits squarely on their shoulders.
The job of a board is to govern; to put in place a CEO; hold him or her accountable; and to maintain the safe, lawful operation of the business. On all counts, Bergin declared that the Crown Resorts board failed.
Poor leadership and governance at board level is the stem of a cascade of systemic and insidious behaviours that permeate organisations, resulting in toxic cultures where people behave in hostile ways. These behaviours manifest as hostility, resistance to new ideas, abruptness, controlling or dominating the air time, recklessness, exclusion, discrimination, blaming others for mistakes or outright criticism.
People in toxic cultures adopt these defence mechanisms in order to maintain status and control in what are highly competitive workplace environments. Competition can be a great motivator when it is focused externally on the marketplace. But it is destructive to cultures when focused internally, leading to fights for positional power, status or authority.
Professor Amy Edmondson, Harvard scholar and researcher would call a toxic culture an environment of low psychological safety – where people fear reporting something wrong or unsafe because of real interpersonal risk associated with speaking up. In these environments, people feel bullied and intimidated, fear losing their jobs or being excluded from their peer or social group.
So, instead, they keep quiet and ‘turn a blind eye’ a behaviour the one of the Crown Resort Directors, Helen Coonan, openly admitted was going on. Notably, Ms Coonan was the only Director of the board to admit there was wrong-doing and has subsequently stepped in as Executive Chairperson, replacing chief executive Ken Barton, while a new board and leadership team is established.
This latest example of corporate misconduct in a stream of Royal Commissions in recent years (think Aged Care, Disability Services, Banking and Financial Services) is a sombre reminder of the toxic nature and damaging impacts of a culture of hostility and fear.
Which begs the question, how far does this culture of fear extend? Does it extend to the regulators who fail to hold these industries in check? Does it extend to the governments who fail to put pressure on these bodies to enact real consequences – sanctions, fines, even incarcerations – to those who violate our laws and societal values?
The cost of fear-based workplace cultures is actually measurable, some tangible and some less tangible.
In the case of Crown Resorts, there is reputational cost to Mr James Packer and the members of his board. There is a cost to Crown in lost revenue from their newly minted tower in Barangaroo. There is a psychological cost to the staff working in an environment where it is not safe to speak up. There is a cost to the NSW Government who are now facing a potential shortfall (if not significant delay) in $400m of lost tax revenue over the next four years because the Sydney Casino licence has been denied. And there is ultimately a cost to the people of NSW who will now experience services halted, cut short or delayed because of this shortfall.
Crown Resorts has a long road back to redemption, but this doesn’t mean it’s impossible.
Toxic cultures can be transformed into inclusive and adaptive cultures.
But change starts from the top and must be embodied in the people entrusted to govern fearlessly, with integrity and humility.
This is as true for Crown as it is for any business.
A toxic culture is a systemic problem and one that every organisation is susceptible to – even those established to police against them! Managing your culture and weeding out toxic behaviours is THE key role of leaders in safeguarding the longevity and sustainability of a business.
If you want to converse with other CEOs and business leaders wrestling with some of these questions – come along to one of my events over the coming months.