Professional Skills Series
Professions & Cultures
An interactive introduction
Running time: approx. 30 minutes
Use the scroll button to navigate through each screen
Introduction
This is a piece of interactive learning about
organisational cultures and professional cultures, and the way these can influence each
other.
Being a member of a profession means several things. It means having specialist knowledge
and skills
which allow you to do a job to a high standard. It means having a set of ethical
responsibilities,
including responsibilities to your clients and to the public. It means earning the trust of
clients and
the public: trust that you will be competent and diligent, and trust that you will act
ethically and
have their interests at heart.
In this resource, we are concerned with another aspect of professionalism. As a member of a profession, you are likely to be in an unusual position in that you are a member of two different organisations, one your employer and the other the profession itself, in the form of the professional body. Each of these has its own culture and so you, and your fellow professionals, live and work at the interface of two cultures.
You can explore the interactive introduction by scrolling/swiping up and down the page or clicking the arrow to discover: -
- Questions for your consideration - Helping you explore the concepts with regards to your role or company
- Case study illustrations - Short videos in which the principles might come into play
- Links to other relevant resources - Links on the IFoA website where these are available, e.g. Further reading, articles, guidance notes
You can explore these materials in any order and you can come back to them at any time. The emphasis throughout should be your interpretation, application and judgment, since the resource deliberately doesn't give prescriptive interpretations of the content.
What is culture?
This is a difficult question with a complex answer, but one way of thinking of culture is as ‘the way we do things around here.’ There is, perhaps, a ‘way we do things’ within your employing organisation and a ‘way we do things’ within your profession, and you may find each of these influencing your decisions. Often the two cultures will be aligned well with each other, but sometimes there may be areas of tension and conflict.
How you and your fellow professionals navigate these tensions is important for your own work, but can also influence others.
In a 2010 speech, Philip Mawer, the Chair of the IFoA’s Professional Regulation Executive Committee (now Regulation Board) at that time, stated that,
‘Initial training and CPD need to be seen, not just as being about the acquisition of skills but as being about the shaping of members in the culture of a profession. We [the IFoA] are no in the business simply of training but of formation of members in the values and expectations of the profession of which they seek to be, then are, a proud part.’
Having undergone this formation, members are well-equipped, not just to do their job to a high standard, but also to be an ambassador for professional standards within their organisation and their industry more broadly.
This resource, which draws on academic research, including research from philosophy and psychology, is a way for you to explore what this means in practice.
There are five sections. You can explore them in any order you like.
The Individual: an alternative lens
Being a member of a profession means you have an ‘alternative lens’ through which to view your work.
Please start by watching the following video.
Did you see the gorilla?
If you did, it might be because you knew about the experiment, and were looking for the gorilla.
If you didn’t see the gorilla (or the curtains changing colour, or the player leaving) this is because your attention was on something else.
It is remarkable how being told to direct our attention towards one thing can make us miss something else, even if that thing is completely obvious once we have been told it is there.
Psychologists call this a ‘priming effect’.
You can experience similar effects in ordinary life, too.
Imagine you have just found out that you are going to have a baby. Suddenly you see babies everywhere: in the park, on the bus, on billboards or TV adverts.
It’s not that the babies weren’t there before – you just weren’t paying attention to them.
In this case, the priming is likely to be even more effective, because it concerns something that is emotionally important to you.
Our emotions (even when we aren’t directly aware of them) are important influences on what we do or do not pay attention to.
The key word here is salience, which is defined as ‘the quality of being particularly noticeable or important; prominence’ by the Oxford English Dictionary.
The examples show how being primed, either emotionally or by being given a task to carry out, can make certain things more salient to us, and other things less salient.
It is not hard to see how salience can affect our decisions, too. If we don’t notice things, they can’t influence our decisions. Conversely, if something is grabbing our attention, it is likely to have an exaggerated influence on what we decide to do.
How could being a member of a profession make things more salient?
When you undergo a process of professional formation, you spend a lot of time looking at cases and interrogating them for particular features which are relevant to the professional work you are becoming skilled in.
These features then become more salient to you over time, so that when you see a new case, they are immediately apparent to you in a way that they would not have been before you entered the profession.
As well as becoming more attuned to certain concepts through sheer repetition, you will also be applying concepts of which you were previously unaware, or of which you were aware but lacked detailed knowledge.
For example, you may not have known what a with-profits policy was before starting your actuarial training, but, having completed it, you will be aware of certain features of with-profits policies and will be on the lookout for them in cases in which such policies feature.
The same goes for ethical concepts, too.
If you have spent time thinking about and discussing case studies in ethical terms, applying concepts such as the public interest, the client’s best interests, impartiality, integrity or confidentiality, you will be more attuned to these concepts when you make decisions in real life.
Of course, it’s not that a non-professional doesn’t know (for example) what impartiality is!
Rather, 1) professionals will be more likely to recognise that impartiality is relevant in a given case and 2) having recognised this, they will be in a better position to see what impartiality requires in the case.
(Of course, plenty of non-professionals will be good at this too! The point is that professional formation is one way of developing these skills, not necessarily the only way.)
Why would an alternative lens be useful to organisations?
One answer to this question is simply that having a variety of different viewpoints means that things are less likely to be missed.
Organisational cultures can be homogeneous: people tend to see things in the same way. Having employees with a range of different educational backgrounds can help mitigate this tendency.
However, there are specific considerations to which professionals are attuned that can help organisations avoid ethical pitfalls.
Employees who are deeply embedded in the culture of an organisation are likely to be focused on the organisation’s central aims. In private companies, the primary focus is, quite rightly, likely to be on commercial concerns.
However, as an employee of such a company you might be focused on financial considerations (like the basketball players wearing white) at the expense of looming ethical gorillas!
Think about the big ethical scandals in the news.
The specific cases you are aware of may depend on where you are based, but some examples include the Payment Protection Insurance (PPI) mis-selling scandal in the UK, the Volkswagen emissions scandal in Germany (and worldwide), and the Nomura insider trading scandal in Japan.
In many of these cases, it seems unlikely that the unethical activity could be kept completely secret. More likely, many employees could see the activity in question, but it may not have been salient to them in comparison to other considerations such as profit, the desire to get on in the firm, or simply the desire for a quiet life.
It is interesting to consider whether the possibility for professionalism to provide an ‘alterative lens’ might play a role in avoiding the great scandals of the future.
This video shows two different perspectives on the payment protection insurance (PPI) mis-selling scandal.
This video explores the scandal in a little more depth:
That concludes this section of the website
QUESTIONS FOR YOUR CONSIDERATION
1. What factors were salient to the bankers involved in PPI mis-selling?
2. What factors, which were not salient, should have been salient?
3. How could these factors have been made more salient?
4. Who was responsible for what went wrong?
Click the link below for further resources on this topic or the arrow button below to move onto the next section.
Upholding standards
The collective: a community of practice
Forming a ‘community of practice’ that includes employing organisations is one way in which professions might be able to have a positive impact on organisational culture.
One way in which professions can have a positive impact on organisational cultures is through forming a community of practice which includes those organisations.
What is a community of practice?
According to Wenger (2005), ‘Communities of practice are formed by people who engage in a process of collective learning in a shared domain of human endeavour.’
This sounds a lot like a profession.
Professions are indeed an example of a community of practice, but communities of practice can include all sorts of other groups, which need not be formalised in the way that a profession is.
Here are some other examples of communities of practice:
1. The members of an artistic movement, meeting in a few cafes in an area of the city where they live, to discuss techniques and compare paintings.
2. Enthusiasts of a particular video game, meeting on a Reddit discussion board to discuss techniques for successful play, share information about hidden elements of the game (‘Easter eggs’), and arrange collaborative online gaming sessions.
3. A network of antique clock restorers, who all read the same trade magazine, and correspond with each other either through its letters page or directly with each other by email, sharing techniques, sources of quality materials, etc.
Communities of practice share at least the following three features:
1. A shared domain of interest and practice.
A community of practice has ‘an identity defined by a shared domain of interest. Membership
therefore implies a commitment to the domain, and therefore a shared competence that distinguishes members
from other people.’ (Wenger p1). In each of the examples above, the community is defined by the shared
interest and practice of its members, and in each example one would expect members of the community to have
knowledge and skills which are not typically shared by those outside the community.
2. A network of interaction.
The
cafes, the Reddit forum and the magazine and email network provide a means through which members of the
community can identify each other, develop relationships and communicate about their area of interest.
Through these they are able to share knowledge, ideas and resources and achieve things collectively that
they would not be able to achieve individually.
3. Shared goals.
The artists have a set of
goals which might include producing revolutionary paintings which have a broader influence within the art
world generally. The gamers want to enjoy playing their game and unlock its secrets. The clock restorers
want to produce well restored clocks. But notice that the benefits of a community of practice extend beyond
these technical or intrinsic goals. In each case, much of the benefit to members of the community is likely
to come out of the pleasure of communicating with people who share a common interest, the forging of
relationships, and the joy of developing one’s skills and knowledge in tandem with like-minded people.
Professions also have each of the features above.
A profession is defined by a shared area of interest and practice, which is the professional work itself.
It also has various networks of interaction, which might be provided by industry publications, training or networking events organised by the professional body, or online forums.
As well as being a community of practice taken as a whole, however, a profession might have a number of smaller communities within it, formed by members who work in a particular technical area, say, or who have an interest in a particular area of regulation and want to understand it better.
How might professions understood as communities of practice have a positive effect on the culture of organisations?
One obvious way is that organisations benefit from the skills and knowledge which individuals are able to develop by working collaboratively with other individuals as part of a community of practice, in this case the profession.
However, it is also interesting to consider whether organisations themselves might form part of a community of practice which includes the profession.
How might this work in terms of the three features outlined above?
For an organisation to have a shared domain of interest and practice with the profession, its area of work would need to be broadly similar to the area of work of the profession in question.
For example, the work of a law firm is the practice of law, which is the same as that of the legal profession as a whole. The same goes for accountancy firms and the accountancy profession. A bank, however, might have a less tightly defined area of work, given the variety of activities which are performed in a modern bank, and so bankers might be less likely to see themselves as part of an area of professional practice in the same way.
It is easy to see how an employing organisation, where a significant number of its employees are members of the same profession, can provide networks of interaction among those members which are conducive to the sharing of knowledge, skills and resources. Organisations provide a setting for many such interactions, from the formal (e.g. meetings) to the informal (e.g. lunchtime chats).
What about shared goals?
This is perhaps the most interesting area to consider. Can we say that an employing organisation has the same goals as a profession? Again, this is perhaps clearer in the case of professional firms. In non-professional organisations, considerations such as acting in the client’s best interests, or serving the public interest, might sometimes seem peripheral to the central goal of making money. But the difference is perhaps not so great as all that: professional firms have clear commercial imperatives too, and it is open to any business to think of itself as having a social purpose as well as being a money-making enterprise.
It is in considering this area that we can see another way in which being part of a community of practice can have a positive effect on organisational culture. Perhaps the more employers see themselves as part of a community of practice alongside the professions, the more seriously they are likely to take ethical considerations such as those noted above, thus forming a more robust and resilient ethical culture.
The Institute and Faculty of Actuaries’ Quality Assurance Scheme (QAS) is a voluntary accreditation scheme for organisations (or identifiable parts of an organisation) employing members of the IFoA. To join the scheme, organisations must demonstrate their commitment to assurance of the quality of actuarial work and comply with standard APS QA1.
Click the video below:
Other professional bodies also operate similar schemes, which can be seen as a way of strengthening the status of organisations as members of a community of practice with the profession.
Click the button below for further information onthe Quality Assurance Scheme
That concludes this section of the website
QUESTIONS FOR YOUR CONSIDERATION
1. Do you consider your organisation to be part of a community of practice with your profession?
2. Does your organisation have any shared aims with your profession? If so, what are they?
3. In what ways do the aims of your organisation differ from those of your profession?
4. In your opinion, can only professional firms be part of a professional community of practice, or can other types of organisation be part of such a community as well?
Click the link below for further resources on this topic or the arrow button below to move onto the next section.
Upholding standards
Rules and Responsibilities
The work of professionals is governed by a bewildering range of rules and
responsibilities.
What knowledge and skills do professionals need to have if they are going to follow these consistently?
A profession is defined by a shared area of interest and practice, which is the professional work itself.
How many different sets of rules and responsibilities govern your work?
As a quick exercise, try to make a list. When you’re ready, select the arrow to continue.
Here are some possible answers:
1. The Law
Everyone’s conduct is, of course, governed by law, and your working life is no exception.
2. Regulations
What regulations you are subject to will depend on where you are based; in the UK the most relevant regulators to actuaries are the Financial Reporting Council (FRC), the Financial Conduct Authority (FCA), the Prudential Regulatory Authority (PRA), a division of the Bank of England. Actuarial work itself is regulated by the IFoA, with oversight by the FRC. Relevant regulations include Technical Actuarial Standards (TASs), Actuarial Profession Standards (APSs), Guidance Notes (GNs) which impose additional requirements in some cases and, of course, the Actuaries’ Code. However, not everything actuaries do is ‘actuarial work’ as such, and so other regulations are also likely to apply.
3. Rules set by your employing organisation,
which might take the form of policies and procedures, and possibly also a code of conduct.
4. Ethical responsibilities that are not codified in any way.
Many of the responsibilities we have are nothing to do with any list of rules. This applies in work too. For example, you have a responsibility to turn up on time to meetings, unless you have a valid excuse! This is true whether or not there is a rule anywhere that says so.
With so many different sets of rules and responsibilities to follow, two questions are worth considering:
1. How can you know enough about all of these rules to follow them consistently?
Bear in mind that when assessing culpability for failure to follow rules (if you were referred for investigation under the brought in front of an IFoA disciplinary panel, for example), ignorance of the rules would not be considered an excuse. In other words, you would be expected to know the rules well enough to follow them. But how is this possible when there are so many rules to know?
In other words, you would be expected to know the rules well enough to follow them. But how is this possible when there are so many rules to know?
2. What happens if rules and responsibilities conflict?
Given that there are so many different sets of rules and responsibilities, and that the different sets are governed and overseen by different organisations, is it plausible to think that they will never conflict?
If you are in a situation where two different rules recommend acting in different ways, or when you have a responsibility to act in one way but there is a rule that says you should act in another, conflicting way, how should you act?
1. How can you know enough about all of these rules to follow them consistently?
Clearly, it is an impossible task to try to learn by heart all of the different rules which might have a bearing on your work. However, fortunately, this is not actually what is demanded of you. The fact is, the relevant rules are those that have a bearing on the work you are engaged in at a given time. This means that, to the extent that your work stays within fairly clear parameters, the rules that matter are the rules that govern the types of work you typically do. However, the more varied your work becomes, the more likely you are to stray into areas where different rules and responsibilities apply. What does this mean in terms of the knowledge and skills you will need in order to ensure that you are following the relevant rules, and discharging your responsibilities, successfully?
Firstly, you will clearly need to have a good working knowledge of the rules and responsibilities governing the types of work you regularly do.
Secondly, you will need to be good at understanding and interpreting rules and responsibilities generally, because there may be a variety of different areas you’ll get into, and you may need to absorb a new set of rules and responsibilities at short notice.
Thirdly, you will need to have a good general ethical sense. You will need to be able to recognise ethical issues, and understand why they are issues. This puts you one step ahead of the formal rules and regulations: you will be applying ethical standards to your work already, and so it is unlikely to stray outside of what is acceptable according to the rules. The rules will just give formal back-up to what you are doing already.
Finally, as well as being a set of regulations, it is worth noting that the Actuaries’ Code is principles-based and expressed at a high level. This means it can give you a useful general framework for assessing your work. Bearing in mind the provisions of the Actuaries’ Code is likely to be a good first step towards complying with other rules and regulations. (Note that the Actuaries’ Code is currently under review with a revised version to be published in May 2018 and effective a year later).
It is worth bearing these points in mind when deciding what CPD to do in the area of ethics and compliance. While part of this might consist of gaining familiarity with the rules that directly govern your work, this is unlikely to be enough on its own. In addition, you will need to spend some time gaining the broader ethical skills outlined above. This can be done by discussing ethical issues with colleagues, for instance, or considering cases in the light of the relevant rules and regulations.
2. What happens when the rules and responsibilities conflict?
This is an interesting and difficult question, not only in its own right, but also in the way it reflects on the central themes of this resource: organisational and professional cultures and the position of the professional at the interface of the two. If the standards set by the organisation, and those set by the profession, are in conflict, what should the professional do? The professional’s actions will have a bearing on the ethical direction taken by both the employing organisation and the profession. It is reasonable to think that the employing organisation has the right to determine its own ethical direction, and so too for the profession.
So what to do when these conflict? Firstly, it is worth noting that a genuine conflict is likely to be very rare. Nonetheless there are real tensions between responsibilities. For example, a duty to communicate openly might be in tension with a duty of confidentiality.
If you do find yourself in a position of genuine conflict, here are a few suggestions which might help:
- Be transparent, and keep a record of decisions you have made and your reasons for making them.
- Seek advice, both from your employer and from the IFoA (for example through the Professional Support Service).
- If you can, try to resolve the conflict. For example, are the responsibilities that are in conflict genuine responsibilities? Are you sure you are interpreting them correctly? Is there any reason to think one or the other should take precedence in this case? For example, duties to act in the client’s best interest are not absolute duties. If the only way to act in the client’s best interests is to do something that is otherwise unethical, the duty to act in the client’s best interests does not provide a justification. One thing to look out for is the possibility that you might be deliberately interpreting a responsibility in such a way that it gives you an excuse to do something which you would like to do but which you suspect is unethical!
In closing, it is worth drawing attention here to the idea that professions and employers can form a community of practice, with close links between the employer and the professional body. If this happens, there is likely to be better coordination between the standards set by the two organisations and hence less probability of conflict.
Look at the Professional Skills Training video
A Walk on the Wild Side
Then consider the following questions:
1. What is the origin of the conflict experienced by the actuaries in the video?
2. To what extent are these conflicts a genuine clash of responsibilities?
3. How should the actuaries resolve their conflicts?
That concludes this section of the website
QUESTIONS FOR YOUR CONSIDERATION
1. In what ways does your organisation set out formal rules and responsibilities?
2. Are you aware of any areas where these are in tension with your professional responsibilities?
3. How can you resolve this tension?
Click the link below for further resources on this topic or the arrow button below to move onto the next section.
IFoA Professional Support Service
Cultures and incentives
It is often said that unethical action in organisations is a result of bad incentives. What do good incentives look like, and what role can professions play in providing good incentives?
What is the best way to motivate people in your organisation to act ethically?
A good way to start answering this question is to ask yourself what motivates you to act ethically.
If you can get a clear answer to this question, and always assuming others have similar motivations, it might be possible to translate this into organisational initiatives that will be effective in motivating employees.
If you can get a clear answer to this question, and always assuming others have similar motivations, it might be possible to translate this into organisational initiatives that will be effective in motivating employees.
In fact, there are probably a number of factors that motivate you to act ethically.
One factor might be that you are worried about what will happen if you get caught. You might face disciplinary action or, in an extreme case, you might lose your job. This will obviously be bad, particularly if you have financial commitments.
Short of this, however, there are also more subtle social cues which can be powerful motivators against unethical action, such as the disapproval of colleagues, which can be expressed in a variety of ways, most of them unpleasant.
However, what if you could guarantee that no-one would know that you had performed an unethical act. Would you do it then?
Perhaps it might depend on how unethical the act is.
But assuming there are at least some acts which you would not perform regardless of whether you would get found out, there must be something else at work other than the threat of sanctions or the disapproval of colleagues.
One way to frame this is through the idea of a conscience.
Our conscience is the ‘inner voice’ which nags at us if we consider doing something that we feel to be wrong. But we don’t need to conceive of our ethical motivation as a kind of censorious inner parent, ‘telling us off’ for thinking about doing something that we secretly want to do, but know is wrong, to explain why we don’t do those things.
The fact is, most of us simply do not want to harm people, or do things that are unfair or unjust.
More positively, we want to help people, to act fairly, and to prevent harm if we can. Ethical action is always ethical, and unethical action is always unethical, because of certain features of the action itself. Often, we don’t need to look further than these ‘right-making features’ or ‘wrong-making features’ for an explanation of why people tend to act ethically.
Now, try a thought experiment.
Imagine you are doing some work, and there is a way that you could act unethically to your own advantage or that of your employer. Say you could deliberately distort the results of an actuarial calculation in order to give a favourable, but misleading result, to your employer.
Now imagine while you are pondering this someone stands behind you and looks over your shoulder.
‘Ah,’ he says, ‘I can see what you’re thinking. But I want to make sure you do the right thing, so here, if you write up the results accurately, I’ll give you some money.’
How would this make you feel? Would you be more motivated than usual to do the right thing? Or would you feel insulted, that your integrity had been brought into question? What if this person was employed by your company to ‘bribe’ its employees to act ethically. Would this make you see your company differently?
Would this make you see your company differently?
How should organisational leaders approach incentive setting?
If you are an organisational leader trying to work out how to motivate your employees to do the right thing, the obvious answer might be to set material incentives so that people are incentivised to do the right thing. If people are doing the wrong thing, you might think, they are probably being incentivised wrongly (think about the sales person who can achieve their annual bonus but only by selling products to customers that are not in their interests).
So the thing to do is to realign incentives with the desired – ethical – outcome and ethical action will naturally follow.
But what if this approach is misguided?
The American legal scholar, Lynn
Stout, argues that too much emphasis on financial and other material incentives gives the
wrong message and can be counter-productive, because ‘incentive schemes frame social context in a
fashion that encourages people to conclude purely selfish behaviour is both appropriate and expected. As a
result, pay-for-performance rules "crowd out" concern for others' welfare and for ethical rules, making the
assumption of selfish opportunism a self-fulfilling prophecy.’
In other words, if you
assume that people will only do the right thing if you pay them (or give them other material benefits) to do
the right thing, and you set up your whole organisational environment based on this assumption, then that is
indeed how people will behave. But because no incentive system is perfect, there will inevitably be cases in
which employees will be materially advantaged, or at least will have an easier life, if they do the wrong
thing. Most people, in typical social environments, are concerned about the right-making and wrong-making
features of their actions.
The worry is that by putting too much emphasis on material incentives, even if you set these incentives so that they favour ethical action, you distort the social environment, and you produce employees who have internalised the message that they should be motivated by material benefits. They are then more likely to be motivated in this way, whether you want them to or not.
Instead, Stout recommends incentives that are:
- Relatively modest
- Non-financial (e.g. valued employee awards, non-financial benefits, etc.)
- Ex-post rather than ex-ante (i.e. awarded after the fact, rather than agreed before the fact)
In our earlier thought experiment, someone tried to buy your ethical action by paying you in advance to do the right thing. Imagine instead that, after you have submitted your report, someone from the company came to your desk and said, ‘we noticed that you did a really good job on that report, and that you always act with integrity in your work. As a token of our appreciation, here is a small present on behalf of the company.’ Would this make you feel differently about your company? Perhaps it would make you feel valued, and that the company had the right attitude to ethics and integrity. If so, this might be a more effective form of incentive.
What role can professions play?
What does this have to do with being a member of a profession? One connection might be that professional training tends to emphasise the right-making and wrong-making features of actions as important in themselves. In good ethical training you are taught to look at the role of ethical values in case studies.
What does impartiality demand in a particular case, for example, or fairness? In this way, good professional training emphasises the intrinsic importance of doing the right thing, rather than any external material reward that might accrue.
Another connection is the kind of motivation you are expected to feel, as a professional, to do the right thing.
This comes from a positive sense of pride in being a good professional, exercising good judgment and making good decisions.
While membership of a profession does carry significant material benefits, these apply to the job as a whole, rather than to individual decisions. Given the worries outlined above about short-term financial incentives, we might expect professional pride to be a more effective long-term motivator of ethical action.
In 2016, the US Bank Wells Fargo was found to have defrauded millions of customers by creating fake accounts which were then used to charge customers.
The bank was fined $185 million as a result. In September 2016, it fired 5,300 employees who had allegedly been involved in the fraudulent activity. In the wake of the scandal, many commentators blamed a perverse incentive structure and intense pressure on employees to increase sales volumes for what went wrong
This article in the Washington Post outlines Wells Fargo’s attempt to rectify matters by transforming its pay structure and incentive plan. The measures include making bonuses a lower percentage of overall pay and linking bonuses to team performance rather than individual performance.
That concludes this section of the website
QUESTIONS FOR YOUR CONSIDERATION
1. How effective do you think the measures taken by Wells Fargo will be in changing its corporate culture?
2. What motivates you: a. to come to work : b. to do a good job; and c.to act ethically (assuming you do!)
3. In each of the above, to what extent does your motivation originate in: a. your employing organisation : b. your profession? : c. somewhere else?
Click the link below for further resources on this topic or the arrow button below to move onto the next section.
Upholding standards Wells Fargo article
International Cultures
Many professions, including the actuarial profession, are international, and many businesses operate internationally too. This international dimension introduces ethical challenges. But can membership of a profession actually help address some of these challenges?
This resource is about the intersection of different cultures; primarily the cultures of professions and the cultures of organisations.
But culture is often a term used in relation to different countries too. If culture is ‘the way we do things around here’, well, people do things differently in different countries.
But many professions, including the actuarial profession, are international, and many businesses operate internationally?
This adds an extra layer of complication. Does this just introduce more difficulties, or can professions help address some of the challenges that come from doing international work? It is perhaps helpful to begin by making a few distinctions.
It is often said that ‘ethics is different in different countries’, but there are a number of things that could be meant by this.
Firstly, the idea could simply be that practices are different in different countries.
Let us suppose that in country A, it is relatively rare for a business to make payments to officials in order to access official processes, whereas in country B this is relatively common.
This is purely a descriptive claim: it says nothing about the ethical status of such payments, just that they are more prevalent in one country than another. It is undeniably true that many claims of this kind are true.
Secondly, the idea could be that accepted ethical norms are different in countries.
So, it could be that in country A, payments of the kind described above are called bribes, and are generally considered to be ethically unacceptable, whereas in country B they are not called bribes, but ‘facilitation payments’, and are considered an acceptable part of doing business. It is also no doubt true that differences in accepted norms like this exist between many countries. However, one must be careful to distinguish between something’s being considered acceptable and its merely being accepted, or tolerated, because people can’t see a way of stopping it.
Thirdly, the idea could be that the ethical status of actions is different in different countries.
This would mean that, not only are ‘facilitation payments’ generally thought acceptable in country B but, perhaps because they are thought acceptable, there is in fact nothing ethically wrong with them. This view amounts to full-blown ethical relativism.
There are in fact a number of reasons to doubt the third view. There is not space to go into them here, but this paper by David Enoch gives a very good introduction.
It is worth pointing out, however, at least the following: there is nothing about either the first or second ideas which automatically implies the third idea.
It is perfectly possible to believe that practices in countries A and B are different, and also that accepted norms are different, but that the accepted norms in either country A or country B are incorrect, and that these kinds of payments are either ethically permissible, everywhere and for everyone, or they are not.
How can professions help?
Now, let us assume that countries A and B both have people living in them who are members of the same professional body.
How might membership of the professional body help its members in working out their ethical responsibilities in cases of the type under discussion?
Firstly, membership of a profession gives its members a forum in which they can discuss ethical issues and their approaches to those issues.
Professional A (who lives and works in country A) and professional B (who lives and works in country B) might find themselves taking part in an online discussion together, in which issues relating to bribery are raised.
Through discussion, it might be possible for one of the two professionals to persuade the other that the accepted practice in their country is in fact wrong.
Let us say, for example, that professional A convinces professional B that facilitation payments are against the public interest, and therefore should not be permitted.
It seems that progress has been made here: through the exchange of ideas, a change of view has been achieved, and one professional has come to see the issues in (what they consider to be) a better light. So professions can simply be a useful forum for the exchange of ideas across cultures.
Secondly, if we consider the guiding principles of a profession to be a reflection of the values of its members, it is possible for a professional body to articulate shared values on behalf of the whole profession, based on the kind of discussion we saw between professionals A and B above.
In this way the members of the profession, who may have been unsure of their ethical responsibilities before, can be guided in these responsibilities by the professional body, working through its code of ethics.
Finally, having articulated these shared principles, it is possible that the profession can support its members in applying these principles to their work.
For example, let us suppose that facilitation payments are outlawed by the code of ethics of our fictional profession.
Professional B is now in a position whereby she has a professional duty to refrain from making such payments. If asked to make one, she can point to her professional code as evidence that she cannot do so, and thereby resist pressure to do so.
The more people are in a position similar to that of professional B, the more prospect there is that accepted practice in country B will change.
Assuming the profession is right to articulate its principles the way it does, and assuming, for example, it is open to the exchange of ideas by its members, and is fair-minded in its assessment of the views coming from different cultures, we can see that professions can be a means by which different cultures can influence each other for the better.
The IFoA has a new set of principles, articulated in Actuarial Profession Standard APS X1.
These came into effect in July 2017, and set out how actuaries should decide which professional standards apply to them. This APS is particularly applicable to actuaries working in geographically complex situations or where they may be subject to competing standards.
In January 2017, Rolls Royce was found to have made illegal payments in six countries, including Indonesia, Russia, and China.
Commenting on the case, and the high court’s decision to defer prosecution, Robert Barrington of Transparency International lamented the fact that no mention had been made of ‘the victims of corruption’.
We do not know why the individuals involved in making the payments did what they did, or whether they thought the payments they made were ethically acceptable (despite apparently being illegal according to UK law). It is at least possible, however, that some form of ethical relativism may have played a part in their decisions. The point about the victims of corruption, however, highlights one reason why payments of this kind may be morally impermissible, anywhere and by anyone.
If such payments are harmful to individuals, lead to unfair procurement practices, or the circumventing of important official procedures, this may be enough for us to conclude that they are wrong, regardless of whether they are thought acceptable in a particular country.
That concludes this section of the website
QUESTIONS FOR YOUR CONSIDERATION
1. Can you think of any work-related actions that would be considered acceptable in your country, but not in some other countries? How do these relate to the principles in the Actuaries’ Code?
2. What arguments could be made either in favour of, or against, these actions being morally permissible?
3. Do you think it would be preferable for accepted norms with regard to these actions to change in your country, in other countries, or not at all?
Click the link below for further resources on this topic
APX X1 Rolls Royce apologises in court Paper by David Enoch
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With thanks to the author
Dr. Jim Baxter
Inter-Disciplinary
Ethics Applied Centre
Leeds University
The views and opinions expressed are the author’s own and do not necessarily reflect the opinion or view of, or imply any endorsement by, the IFoA and/or its members.
Institute and Faculty of Actuaries
