Trust, Service

& Accountability

Behaving Ethically

Leaders and Culture

The NSW Commission of Audit (2012) Interim Report, the Ethics Stocktake of the NSW government sector prepared for the Public Service Commission in 2012, and independent studies (such as that undertaken by the Australian School of Business) note the important role of leaders in culture change. 

With effective leadership, it is possible to establish that organisations have one, or a mix of, three positive types of culture. These are:

  • Innovation-focussed cultures: Leaders introduce and support a culture of change and innovation
  • People-focussed cultures: Leaders care for their employees and foster collaboration
  • Results-focussed cultures: Leaders encourage all employees to focus on delivering results and achieving goals (such as quality services to customers and clients). 

Organisations with these cultures typically have higher employee performance, better customer service, more innovation and higher productivity. 

The Commission of Audit Interim Report found a fourth culture that is “systemic” in the NSW government sector: “a culture of risk aversion, insularity, adherence to procedure and powerlessness, even defeatism that has built up over time.” Typically, organisations with these cultural values have lower employee performance, poorer customer service, less innovation and lower productivity. 

Whether conscious or not, the behaviour of all leaders directly affects the culture of their organisations.  Leaders are seen by employees as role models, and employees learn what is acceptable workplace behaviour by watching (or hearing about) what their leader does, how he or she treats their colleagues within the agency, and the way they treat others (such as customers, other agencies and the public). 

These behavioural cues are interpreted by employees, establishing beliefs about what is important, and what behaviours are acceptable in the workplace. The actual behaviour of leaders – rather than formal policies and procedures that describe what should be done – becomes accepted by all other employees as “how we are to do business around here” and employees, in turn, reproduce those values and behaviour in their own conduct. 

The impact of what leaders do is very influential, particularly when they “practice what they preach”. Ethical behaviour by leaders is associated with higher employee motivation and commitment, greater willingness to report problems to management, lower rates of sick leave, higher work satisfaction and higher productivity.  Discrepancies between leadership practices and formal agency values and codes of conduct create cynicism and employee dissatisfaction, and contribute to employees themselves acting unethically.

An implication of the Government Sector Employment Act 2013 is that leaders need to consciously model the objective, values and principles of the Ethical Framework for the government sector, so their employees see the desired values and behaviours being practised, if their agencies are to exhibit one, or a mix of, the three productive cultures.