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Ethics and values:

A blueprint for the future?

by Simon Longstaff

I believe that it was Malcolm Muggeridge who, at the height of the Cold War, argued that the Liberal Democracies of the West would not be defeated by Communism so much as by the fact that they would be undermined from within and eventually cave in on themselves. You may be surprised to know the name of the enemy that Muggeridge supposed to be lurking unnoticed within the precincts of the ‘free world’.

Instead of naming any of those traditionally thought to be subversive, such as: a 'fifth column' of communist sympathisers or, a rabid and cynical press or, disaffected minorities claiming a better share of the spoils of capitalism, Muggeridge identified the culprit as being our own chronic inability to cope with our freedom. Rather than growing strong and straight under skies clear of the shadows of totalitarianism (whatever its hue), the vision that he entertained was of a wasted people stooped low under the burden of choice. The problem of freedom is an ancient one which, in its modern form, runs on through the writings of Sartre to the present.

I want to invoke this spectre and parade it before you this morning. For, as I understand it, your movement is confronted by a period of substantial change during which new freedoms will be accorded to you. And with these freedoms will come the burden of choice.

So my question to you this morning is this, "How will you choose?".

Some will be inclined to choose fidelity to the past - to maintain traditions and to stick close to tried and tested solutions that have stood the passage of time.

Others will choose to work through the present - conscious of the pressing needs of our own time and concentrating on the challenges that are before us.

Still others will choose to place their allegiance with the future - knowing that the decisions of today must find maturity in a time beyond our present.

Then again, there will be many (perhaps a majority) who will realise that these options are not mutually exclusive. One can choose fidelity to the past and an allegiance to the future while working through the present. It is this alternative which I hope to explore with you today.

But before going on to look at some of the key issues which I believe are before you and in advance of offering some practical suggestions for you to consider, I should like to outline the context in which this discussion must be placed.

Part one

As with virtually every period from the past, we are experiencing a time of fundamental and rapid change. Some features of this change appear as cracks in the old firmament of international certainties.

Who is to know what to make of the 'new world order'? As newly formed economic and political associations begin to take shape, it is anyone's guess as to whether or not their formation will lead to a greater realisation of the inter-dependence of the world's people or, alternatively, to the creation of further gulfs which might grow to separate us. And in the wake of these changes, what of international justice? I mention these matters, because they clearly impact upon the work of the world-wide credit union movement. But it will not be possible to do justice to these matters here. My brief necessarily bids me concentrate on issues which are closer to home.

So I turn to other features of change as they register within our own domestic environment. In a sense, my standing here before you today is both an effect of change and, I hope, an example of it.

Let me explain. Few people would want to disagree that, for many, the decade of the 1980s was a period of unrestrained and selfish gratification. I'm not saying that everybody engaged in the excesses of a dozen or so well-publicised individuals. Rather, I am suggesting that the actions of the most prominent individuals would not have been possible without the active participation of what Henry Bosch, former Director of the National Companies and Securities Commission, has aptly named, a ‘cast of thousands’.

And Mr Bosch is correct. The rise of a handful of robber-barons to the status of national heroes was achieved on the back of a wave of popular adulation. It is an interesting exercise for the individual to listen to the words of those who have survived to be wise after the event and wonder whether they expressed the same sentiments at the time the ill fated deeds were being done. Indeed, some have been so cynical as to suggest that the parlous reputation of some of our ex-tycoons arises not so much from out of a condemnation of misdeeds as from a rejection of their failure to succeed.

None of this is to suggest that there wasn't a number of people who knew what was going on and who also had the moral courage to condemn it. I am certain that many people acted with consistency and integrity. And for them and because of them we should be both proud and grateful. And in all sincerity, I suspect that a number of these people could easily have belonged to your movement.

But for many others without either the internal desire (or I suppose external limits) to restrain their ambitions, imitation became the sincerest form of flattery. And with this in mind they celebrated the acquistions of their antipodean Caesars and, as a nation, over-borrowed with the best of them.

As we have all come to realise, the bigger the binge, the worse the morning after. Most people are prepared to suffer a little as the necessary price to be paid for a small measure of over-indulgence. And many are prepared to test their limits because of their faith in the fact that the person at the bar will stay sober in order to mix the drinks properly, and that there will be a sensible taxi driver to ferry the revellers to the safety of their homes.

That is, people only tend to let go when they believe that it is safe to do so and that they can trust others not to take advantage of them.

So it is that if we wake to find that the people we trusted either mixed us a Mickey Finn or drove us to another bar, then the shock of it all and their subsequent rejection is especially strong.

There are still practices at work within our society that cause us to question whether or not trust should be maintained with regard to some of our fundamental institutions. I can tell you, frankly, that it worries me when the community is given reason to doubt the integrity of segments (I repeat, segments) of our legal, political, commercial and financial systems. To have reason to doubt even one of those systems is a cause for instability. What are we to do when all four systems seem to totter on the brink of impropriety?

People no longer feel that they can assume that things are what they seem to be. This brooding sense of disenchantment would seem to be widespread and thus, is all the more disturbing. This is not to suggest that all of the criticism is deserved. I suspect that some of it is grist to the mill in the manufacture of that which sells newspapers and the like. However, no matter how much one discounts the actual incidence of unethical behaviour, it would be difficult to feel comfortable among the ranks of the complacent.

In times such as these there are always people ready to put their pen to paper. Here are just two examples of what has been written:

... the profiteers insolently and covertly attack the public welfare ... They charge exorbitant prices for merchandise, not just fourfold or eightfold, but on such a scale that human speech cannot find words to characterise their profit and practices

Or again,

... those I abhor are the unprincipled men who ... use unethical means to obtain undue profits ... they hoard currency or commodities to force the value up ... I will have nothing to do with such people.

I suspect that for most of us the language is vaguely familiar. Yet, each of these pieces is drawn from the fourth century AD. The first extract forms part of the Roman Emperor Diocletian's decree of AD 301. The second extract is from the pen of the Chinese scholar, Ko Hung, who wrote those works in the first half of the fourth century.

Closer to us in time lies the period of catastrophic social convulsions known as the fourteenth century. In a brilliant depiction of that time, Barbara Tuchman, summarises an age.

... economic chaos, social unrest, high prices, profiteering, depraved morals, lack of production, industrial indolence, frenetic gaiety, wild expenditure, luxury, debauchery, social and religious hysteria, greed, avarice, maladministration, decay of manners.

No wonder she entitled her book A Distant Mirror. As Voltaire noted, "history never repeats itself, man always does".

Now my reason for drawing attention to these observations of, and from, the past is a simple and, I hope, a reassuring one.

One of the benefits of the past is that we can look at where we have been, recognise the footprints that lead to our own time, and know that we too can survive it all, perhaps to be the object of study of an unknown generation of future historians.

Whilst I would not want to suggest that we should return to a position of complacent optimism concerning the prospect of humankind's ultimate perfection, I do want to suggest that we have reason to believe that the cycle of history allows for periods of consolidation and correction.

Governments have a role to play in this period of consolidation and correction. As a rule they need little encouragement to expand their range of activities. And for the most part, I believe that their agenda is driven by a genuine concern to govern well. However, at times when confidence is low, the community looks to government to do something to correct imbalances in the system. In almost every case the government will respond by introducing new legislation leading to an expansion in the regulation of the system.

One can see some classic examples of this in Australia.

The Australian Securities Commission has burgeoned forth with a panoply of new legislative and regulatory measures. Concern about tax evasion and social welfare fraud has seen the creation of a massive data collection and manipulation system. The wide use of the tax file number of Australians has achieved all that was intended for the ill-fated Australia Card.

Legislation, regulation and surveillance all come at a cost. They cost time and money to those who are subject to these measures and, ultimately, this cost is passed on to consumers. Consumers are charged a second time in the form of taxes needed to pay for the level of bureaucracy required to administer the new systems.

But it is not just the financial cost that should be borne in mind. Of equal or greater significance is the fact that the imposition of systems of external control has a significant impact on the quality of life in a society. I do not mean to suggest that there will be a deterioration in the material standard of living. Rather, there is a reduction in the privacy that we can enjoy as citizens. And this in turn has an impact on the sense of our freedom and autonomy.

Then again, some do find that the prospect of external control is an easier option than that of exercising self-discipline.

Having said all of this, it is as well to remember that there are one or two powerful countervailing forces that make government hesitate in the face of the opportunity to regulate. Firstly, governments realise that if they put on the mantle of the regulator then they too will be held accountable for any scandals should they emerge. I suspect, a number of State Governments are quite relieved at the prospect of making credit unions more responsible for their own activities.

Secondly, many citizens prefer to look for alternatives to an extension of government powers. This provides a strong impetus to revive informal frameworks in which trust can be developed anew. Hence the renewal of interest in business and professional ethics. People can remember a time when certain standards prevailed and they look to those who lead business and the professions to re-state their commitment to a set of values which, once in place, will allow the community to drop its guard. Caveat Emptor is fine in principle, but it can be a debilitating maxim when allowed to dominate our practice.

I keep coming back to the point that trust is a valuable and essential feature of any mature society.

I am very conscious of the fact that I have sketched a somewhat sombre picture of how things stand at the moment. Yet, I have also been trying to suggest that the legacies of the '80s is not all bad. For example, there is a renewed interest in the question of values. This has led people to realise that a sole concern with selfish acquisitiveness represents too narrow a construct of self-interest. People have become more concerned about how their actions impact upon the social and physical environment. People are willing to experiment with new ideas whilst re-evaluating long standing traditions.

It may be that we have entered one of those periods of transition between one stage in our history to the next. All of this speaks of opportunity. But is also speaks of choice.

So my question to you this morning is this, "How will you choose?"

Part two

I turn now to the more specific question of how this changing environment may affect the credit union movement. As I noted a moment or two ago, the State governments are preparing to ease their control over what you do. Providing only that you meet prudential requirements, there will be an opportunity for you to make the key decisions which will affect your future development.

I want to offer the analogy of a fleet of ships setting sail on a voyage of discovery. Having ridden at anchor in a fairly safe harbour, you are now being set forth on an ocean of opportunity. Being on a journey of discovery, there are no clear maps which can tell you the exact route to be travelled. The most that you can know is something of the general direction. This much is known from the accounts of those who have set off before you, sometimes from different ports.

Imagine now that you have broached the headland and that the horizon is clear. Where will you steer? How will you choose your course?

One alternative is to let the fleet drift, prey to the prevailing winds. The perils of adopting this approach should be evident. Another option would be to grit one's teeth and strike out in whichever direction takes the fancy, or one could look to the operation of chance - throw dice, follow in the wake of an albatross.

Any of these alternatives would get you moving, but without a map or even the semblance of a plan, how would you achieve any sense of progress? Movement yes, but progress? I doubt it.

Then again, someone might seek to consult the records of the ancient mariners who charted unfamiliar shores. These records could be overlain with the use and advantage of the ship's log and compass. And finally, a set of objectives could be agreed upon, which if met, would indicate progress. For without progress - you might as well have stayed in port!

The direction in which I am moving should be fairly clear. So I will leave the analogy aside - returning to it from time to time as a point of reference.

What I have been moving towards is the suggestion that it is essential for you, as a movement (and the connotation of that word should not be lost to us) to develop some guiding principles that will hold in good stead as you take responsibility for your future development.

Now, some of you might be feeling a little insulted at this point. How can this person come here and talk about philosophy and principles without conceding that we already have a tried and tested system of values and beliefs? Let me tell you that I am very much aware of the principles that informed the foundation and growth of this movement. They represent values that I, for one, am prepared to endorse. Principles of:

• equality
• equity
• mutual self-help, and
• the concept of human development

I will return to them, in due course. However, I am also concerned that there are certain dangers that need to be guarded against in the defence of principles such as these.

Firstly, it is possible that people can grow tired and somewhat complacent. Most movements pass through three phases. To begin with, there is enthusiasm and activity as each participant seeks to ensure the survival of the fledgling activity.

Then comes a period of consolidation and growth. Along with success comes the need to employ professional managers who have a distinctive role to play. I am sure that some people believe that the worst thing that can happen to a social movement is for it to succeed. High ideals, enthusiasm, hardship and danger often lead to achieving a goal, but sometimes arterial sclerosis sets in with bureaucratic symptoms and technological obsessions.

Finally, there can be a crisis of conscience. Why are we here? What do we stand for? Where to now?

At such times, movements can grow tired and sometimes a little cynical. It becomes easy to mouth words about principles and philosophy, not realising that once living ideals have lost some of their initial vigor. Whereas living principles can uplift us, with their death they become a burden.

The solution to all of this would seem to be simple to discover and implement. Surely, all can be righted by re-founding these same principles and having done so, by re-invigorating them with the breath of life.

There is much to be said for this approach and I will return to it in some detail in a moment. But before doing so, I want to alert you to a dangerous paradox which is capable of confounding the entire process.

One needs to be careful to avoid falling into the trap which can open when organisations become preoccupied with their internal condition to the detriment of the organic whole.

In heavy seas, each person in the crew may look to himself and thereby imperil the whole ship.

In saying this there is, at least, a tacit acknowledgement that people will find it relatively easy to co-operate when re-defining the values within individual credit unions. However, my concern is that this process should be conducted with an eye on what is happening in the wider movement as it consolidates its position within Australian society. This is to recognise something that has always been in the forefront of the credit union movement's thinking. Namely, that we are all inter-connected and that this necessitates the development of what can be called a community of values.

Let me summarise. I have suggested that the time has arrived when you must take responsibility for deciding all of the key questions affecting the quality and direction of your movement's development. You do so when society is looking for some measure of reassurance that there are currents of trust and integrity to be found at work in the commercial world.

Along with this, I have suggested that there is a need to take an active approach to reviewing and refounding the philosophy of your movement. Apart from rediscovering tried and tested principles, it will be necessary to assess their relevance to the new context. That is, the principles will have to be examined in the light of changes to both the external environment in which you operate, and also the internal environment which has evolved as you have grown.

Finally, I have drawn attention to the need to commence this period of examination with an eye on the wider framework of your movement. This is merely to realise that if you wish to emerge with a truly national identity, then that objective should be kept before you.

Have you ever noticed how we humans tend to look either down or straight ahead. We find it more difficult to take in objects on the periphery of our vision. And as for looking up...!

Mention of the emerging national identity leads me to put in place the final plank of the support structure that I have been seeking to erect as the platform upon which to make some observations about principle and practice. To talk of the growth of a national movement is to raise, in the minds of some people, the fear of an emergence of some kind of Big Brother. This concern can become especially acute in those who are used to operating within defined communities or groups and amongst those who are justifiably proud of their own traditions and identity.

As you may have gathered from my comments about regulation and surveillance by the state, I too fear certain types of centralisation. Yet, I have also come to understand that individuals acting alone can only achieve so much. There are times when it is in our interest to authorise others to help bring about that which we, by ourselves, could not hope to accomplish.

In all of this there is a tension between maintaining our autonomy and at the same time securing the benefits of participation as part of a wider community. I now want to turn to a discussion of how this tension can be resolved.

One of the terrible mistakes that people make is to believe that harmony can be imposed from above. You might achieve conformity by using this approach, but the goal of securing harmony will almost certainly elude you. People can be boxed in, but to do so carries a grave risk that the whole structure will buckle under the pressure. And that is to leave fundamental goals unrealised as your competition drives through the cracks in your defence.

Another approach is to build a framework from the ground up. In doing so it is possible to use a variety of materials drawn from the rich collection of existing resources. It may not end up being the most handsome of structures. But what it loses in uniformity will be compensated for in character and strength. If people can be involved in the process of design and building then they will feel a sense of ownership of that which is eventually produced.

The other benefit to flow from this approach is that it tends to engender an expectation of commitment on the part of those who helped to erect the framework. Rather than being able to turn away and shun or ignore the work of other hands, people who have been involved will have a prima facie duty to remain faithful to the fruits of their labour.

A further effect is that in combining the various elements that go to make up the final package, something is created which is greater and other than the simple sum of its parts. In the absence of domination by any one group it becomes possible for everyone to adopt the whole as something of their own.

There is nothing especially novel in this approach. Various philosophers have advocated it as being an exemplary model for the development of communities in which a range of authentic commitments are combined to form a stable and integrated unit.

Mind you, this approach has its costs. It takes time and patience and the allocation of resources. Furthermore, such a process is never really completed. If you are serious about bringing life to your values then they must be engaged with as part of a continuous process of review and development. At the very least, this ensures that no party is left feeling ignored and therefore inclined to move outside the framework. It is therefore NOT for those who merely wish to play at being ethical.

Let me expand a point I made a few moments ago. I am not suggesting that every individual has to participate in every step of the process. It is absolutely consistent with the model that I have been outlining that individuals and groups authorise others to act on their behalf. In essence, this is what distinguishes efficient democratic structures from others which are efficient but not democratic. The key difference is that authority for the conduct of the process ultimately resides in the hands of members, or in the case of a general structure for the movement, in the hands of individual credit unions.

Some of you might be thinking that this is fine for those who want to generate a warm glow of 'fellow feeling' but not so fine when trying to run a business in an efficient and professional manner. However, there is to be nothing 'woolly' about the process I am asking you to consider. Management should be involved in every aspect of the process. They have an interest in its outcome and are especially well equipped to help in the development of the process.

Many people forget that noble ends must be matched by appropriate means. There is a moral imperative to ensure good management just as there is to promote sound values. Indeed, the two go hand-in-hand. It is also advisable that the programme set before you be achievable within the limit of your resources. Naturally enough in matters of this kind I would be the first to encourage a bold approach. But a lack of realism can lead to frustration and can therefore end up being self-defeating.

I am going to pause in a moment so that Michael Cosby can outline the results of the survey conducted by your Values and Ethics Committee. But before pausing for breath, let me summarise some key points drawn from the last section.

Firstly, any attempt to impose a code of ethics is likely to prove to be counterproductive. Secondly, it is possible to develop a framework of ethics for your movement which, at the same time, allows members to keep their distinct personalities intact. Thirdly, that this process is something of value and importance in itself and that it should be conducted with a sense of rigor and purpose. Part of this will depend on there being a recognition that all levels of the movement have a contribution to make and that your management team has special skills that ought to be deployed. Lastly, that there will be costs to be borne in the conduct of a process that may have no final point of termination. Nevertheless, I submit that these costs will be worth bearing if they help you to define and sustain a credible movement.

Finally, I will have achieved little if all of this is still regarded as some sort of optional extra that can simply be bolted on to the old machine. A commitment to an ethical code will demand much more than lip-service. It will need to permeate every activity in which you engage.

If you aspire to achieve a reputation for the quality of your customer service, then putting it in a code will not be enough - especially if the code comes to serve no purpose other than to shield the incompetent. People see through hollow gestures and can be unforgiving when it comes to judging self-serving and hollow promises.

• Commitment
• Consent
• Authority, and
• Accountability

These ought to be your watch words in the conduct of this exercise. And let us not forget that other principle, without which idealism would not be possible. I refer to a capacity for realism.

Time to pause. The next session will outline some practical ways in which some of these processes can be implemented at the operational level, both within credit unions and throughout the movement as a whole.

Part Three

There is a temptation to think of ethics as something difficult or obscure that doesn't really touch on too much of our daily practice. Nothing could be further from the truth. Ethics is all about what we do and why we do it. This is not a matter for those who want to sit back and theorise.

The answers that you give to questions to do with ethics will inevitably determine how you go about your enterprises. It is about how we see our relationships with other people. It is about our most fundamental attitudes to ourselves and the society in which we live. At the heart of every answer about questions concerning what really matters to us will be found our understanding of what makes for the ‘good life’.

From that come the answers to the most fundamental question in ethics, "What ought one to do?". That is an intensely practical question. In passing, it is interesting to note that all of this is old lore. Aristotle places ethics and politics together as an extension, each of the other, and as examples of fields of endeavour in which there is a need for practical wisdom.

There are four conditions that have to be met in order adequately to address the question of ethics in an organisation. You will see that I have touched upon a number of these points already. They bear repeating in their proper context.

First is to have a commitment from the top. And that means from the board and senior managers. Not just a verbal nod, but a real commitment. Unless that happens people will be justified in asking questions about the level of sincerity lying behind the development of an organisation's ethics.

Second is to have something like a code of ethics which sets out the fundamental principles which people are going to hold to. Codes are very important documents - a bit like the Ten Commandments, in that they make sure that important principles are kept before us. The trouble is that items written in stone tend to become lifeless unless someone takes particular care to nurture their understanding.

And a dead code is virtually worthless. A code has to be something that is alive. It has to be "owned' by all the people who have to observe it. It is not enough that it be approved by management, or by the board. To be really effective an organisation's code should evolve in consultation with all the people it affects. They principally are all the people who belong to the organisation, and often those who have contact with the organisation - members, suppliers, the wider community in which the organisation is set, and so on. That's a living code of ethics.

Thirdly, there also needs to be a commitment to review the code continually. Does it still make sense for this organisation?

Fourthly, the organisation has to be aware of what blocks there are to prevent all of this commitment and goodwill from actually working. It is pointless having a code and a commitment from management and staff if something in the management systems or practices of the organisation prevents the development of this ethos.

When these conditions exist, you can then say to your staff and the people outside the organisation: This is what we are. This is what we stand for.

But what will you do? How will your practice change? There are at least seven areas where one would expect to see the code having an effect. These are interrelated and do not exhaust the range of activities where I would expect to see a difference. They are:

1. In the recruitment and selection of staff and directors
2. The induction of staff and members
3. Training and development
4. Promotion procedures
5. Performance review and assessment
6. Customer relations
7. Community commitments

To take them each separately:

1. Recruitment and Selection

One of the things that a movement such as yours must rely on, in an absolute sense, is the quality of the people you work with. As I have come to understand, one of the most distinctive features of the credit union movement is its concern to take into account the character of people, and not just their capacities. I believe that this principle even informs some of your lending practices. Virtually no other contemporary financial institution places so much emphasis on the value of a person's character.

And this is not just a matter of the character of individuals, either employees or members. It also extends to the character of the credit union itself. I doubt if anyone really wants to encounter an undifferentiated range of efficient but featureless clones. Speaking for myself, I cherish contact with institutions that allow themselves to retain their original, if occasionally eccentric, character.

However, the capacity to maintain a focus on character must be sustained by a consistent commitment to the credit union's values. And this means that you may have to make difficult judgements when it comes to the point of recruiting new personnel - whatever their capacity.

This is not to suggest that you should frame an identikit of the ideal person and screen out all those who don't match the criteria. Rather, I am suggesting that, amongst other things, an assessment needs to be made concerning the ability and inclination of the individual to contribute to the maintenance and development of your ethos. Not every person will be able to offer a constructive approach. But most will.

This also puts an obligation on you to be quite clear about who you are, and what values you subscribe to. Those whom you would involve in your work should come in with their eyes open. This is not so far from current examples of best practice. Its difference is to make explicit the value component in the credit union's approach.

2. The Induction of Staff and Members

Virtually all of this applies to the process of inducting staff and members. However, there is a change in emphasis when it comes to the issue of training and development.

3. Training and Development

For a start, let me suggest that a review of ethics should be an integral part of all programmes of training and development. Or should I have said integrated? There is little to be gained by treating ethics as a separate matter to be considered in isolation. The discussion of ethics must be related to the conditions of daily practice. That is, it should not only be that ethical questions are accepted when considering options, it should be expected. Again and again, it must be reinforced that the code be linked to practice.

The reasons for this are two-fold. Firstly, it will help to ensure that an understanding of the code develops alongside a knowledge of it. But more importantly, such an approach will help to identify the realities of practice or current systems, which conspire against a critical application of the code. No one is looking for bland acceptance. A constructively critical approach must be maintained.

This has much to do with ensuring that the code does not lose its life along with any sense of ownership by those who are called upon to apply it.

4. Promotion Procedures

Performance review and assessment

Promotion procedures and performance review and assessment can be linked for the reason that they jointly provide a means by which all can see that the code is something more than window dressing. It is possible that some people will only be interested in ethics to the extent that adherence to them leads to their advancement. It would be unrealistic of me not to accept this.

However, I would hope that some of the steps outlined above might work to minimise the number of people who were motivated by this concern alone. There is an unfortunate view that regards any link between virtue and reward as being somehow illicit. I want to be so bold as to suggest that this represents 'muddle-headed' thinking.

One really needs to look at the motivation that a person has for performing some action. If it is done because of an authentic commitment to a virtuous course of action, then it is of only secondary relevance that a measure of reward is attached to the performance of that action. A noble deed is noble even if it leads to one's benefit, just as an ignoble deed remains so - even as it impoverishes the perpetrator. It takes a wise person to uncover a person's real motivation. I would never want to confound virtue by denouncing fair reward.

So, it is important that people come to see that adherence to the code can lead to collateral advantage, in addition to the satisfaction that it should bring in itself. To incorporate such considerations in the process of review of promotion and assessment will have one other valuable effect. Observers will see that justice is done in accordance with the organisation's stated principles.

6. Customer Relations

Last, but not least, I come to the matter of customer relations. It may be suggested that I should have started here. However, when I relate to you the results of some very interesting research, then it may be that you will understand my choice of order.

Some of you may be familiar with the work of Hugh Mackay. I think it fair to say that he is one of, if not the best regarded social researcher in Australia. In the The Mackay Report of March 1990 entitled "Corporate Ethics" (1), it was reported that:

Because it is so hard for people to make confident judgements about corporate morality on any other criteria, they frequently resort to the proposition that "the only way you can tell how ethical they are is how they treat the people they deal with.

You may be interested in a selection of some of the quotations drawn from people interviewed:

Today if you go into the bank and there is a queue a mile long and there are four tellers on duty, three of them will walk off to lunch as soon as the clock strikes twelve. They wouldn't dream of staying there another ten minutes to help the customer out.

or,

The banks are the worst. Service has gone down the drain - you are just a number. What does that tell you about their ethics?

I'm sure that comments likes these would never be made about credit unions! By the way, you may be interested to learn that, apparently, the two groups least liked for their service and, by extension, their ethics are lawyers and dentists!

This research shows quite clearly that people assess the ethics of an organisation in terms of the way the organisation treats them AND by the way it treats its own people. The credit unions are reputed to have learned that lesson a long time ago. It can be summarised in the following maxim: start with the people and not the project. I wish that I could take credit for thinking of that - it came from a member of your movement.

7. Community Commitments

All of these things will have an impact on how you are perceived by the communities to which you belong. However, there is a danger that in concentrating on the internal operations of the credit union (including customer relations), the benefits flowing to the wider community will end up by being regarded as some kind of optional extra. To arrive at this destination would be to have missed the point entirely.

Credit unions are not and, as far as I can tell, have never been self-serving institutions. It is important that the changes which have been outlined be seen as practical and valuable in their own right. However, this need not lead to the conclusion that a healthy movement can be achieved without a commitment, a serious commitment to the community. Unless the community is encouraged to grow along with the movement, the two will become estranged.

This, in turn, may require that the movement have as one of its goals the establishment of a programme to ensure that the least advantaged members of the community benefit from the activities of your movement. This means looking out for the interests of those who are, often-times, the least visible (and even invisible) of our citizens.

Balancing this concern should be a regard for the little things that can be done to make for a better community. People don't always expect or rely on the performance of grand gesture. It is frequently the case that a little imagination can be applied to generate cost effective responses to the community's needs. Helping out the local scout troop, assisting in the provision of safe street-lighting, assisting in the establishment of waste re-cycling programmes, sponsoring a multi-cultural event and so on. Whatever it is that you choose to do, people will look to evaluate the sense of commitment that it portrays.

There is much more that I could say on these matters. I am not too concerned that I am going to leave them at this point because I am confident that experience and your own good sense of direction will achieve far more than can be elicited by me. And so I turn to my conclusion.

Conclusion

I hope that it has become clear that values and ethics apply across the board. They not only affect the internal operation of your credit unions but also have an impact on your relationships with members, with the community, with governments and with other credit unions. I know that this is how many of you already see the matter.

A prime objective of this convention must be to consider how you will respond to the challenge of de-regulation. I hope that you will include plans to develop a blueprint for the architecture of your movement's values. This does not mean throwing the baby out with the bath water. At the very beginning of this address, I referred to the following possibility; namely, that one can choose fidelity to the past and an allegiance to the future while working through the present. The kind of process which I have sketched for you allows for this possibility.

In drawing on the strong traditions that have guided your movement, you can build upon a tried and tested foundation. I hope that as part of this process of building, a number of you will come to enjoy a new role in the movement. The urge to contribute to something like the credit union movement can be very strong. However, there is a natural evolution in the type of participation that people should expect to enjoy.

Having established credit unions and moved through a succession of positions, many of the original participants will look back with fondness to a time when they organised loans for members. There must be something immensely satisfying about being able to help people take the first steps in the fulfilment of their personal projects. It so happens that as organisations such as credit unions grow, they need to draw on the skills of professionals who, as employees, appear to take on the role most valued by the volunteer.

In an integrated organisation which is sure of its values and ethics, people will come to understand that the performance of every role is a valuable contribution. As an organisation matures there is a special place for those who are capable of engaging in planning and reflection so that development follows from a programme of conscious choices.

So, there is a very important role for the pioneers of your movement who marked their initial involvement by knocking on doors. Their experience should be welded to best practices in management.

In practical terms you might want to think about setting a time-table for individual credit unions to examine their values, ethics and practice; with a view to feeding each credit union's position into a pool so that a national framework can evolve. You might want to consider how to allocate resources for this project, and to whom and by what mechanism authority might be delegated. As a beginning, you might wish to establish some mechanism for educating each other in the kinds of processes which have been referred to today.

All of this is before you. If done properly it will lead you to adopt the best of lending and collection practices as a matter of choice instead of being driven to do so as a matter of Law.

So, we come to the most fundamental question of all, "Why go to all the trouble and expense of developing this blueprint for ethics and values?"

Each of you will have your own answer. May I conclude by offering a further one for you to consider. It is not the usual answer: namely, that ‘good ethics is good business’. This has been shown to be true, not only for single enterprises but, more importantly, for systems of enterprise. The problem with this answer is that it may only commit you to ethical behaviour for as long as it is profitable.

I have to say that I was immensely pleased to be asked to speak to you on this occasion. It seems to me that the credit union movement has something of great value to offer people today. I am not referring to the usual list of differences to which people draw attention. Rather, I believe that your movement has the capacity to make a difference to the way we, in Australia, see ourselves.

Of all the financial sectors in our country, you are in the box seat when it comes to providing financial services for those increasingly displaced segments of society - the poor and the unemployed (and these days that classification does not refer to a class as such).

You have here an opportunity to bank on character and not on circumstances. And that is a two way street as you will be banking on your own character as much as on that of the people to whom you lend.

Your movement receives a generous allowance from the nation in the form of certain tax exemptions. I believe that this saved you something in the order of $43 million last year. What might you do with that money? One possibility is to use a portion of these funds to subsidise the finance that you provide to those members of society who are down on their luck. To do so would certainly help to justify this privilege in the minds of those who do not fully appreciate the origins of the movement.

Speaking for myself, if I was to wake and read of such a programme in the morning paper, or hear it referred to on radio or television, I would think to myself - "What a wonderful and unexpected thing! It's excellent! It's about time! Now, there's something to be proud of in our country."

You could do that. And, as I said before, I think it would make a difference to how we see ourselves as a nation and as a people.

It would also be to demonstrate a sense of commitment to the founding principles which underpin your movement. I referred to them before. They are:

equality

equity

mutual self-help, and

the concept of human development

To talk of actions and principles of this kind is to draw attention to two fundamental virtues - justice and benevolence.

When all is said and done, the traditional lists of virtues boil down to these two - justice and benevolence. And you will have noticed that much of what I have had to say indicates my support for a kind of ethics based on the development of certain virtues. Honesty, integrity, moral courage, and so on. These involve dispositions to do something for its own sake - learned in an environment in which shared practices of the moment combine with traditions from the past to make provision for wise decisions in the future.

Well, the concepts of justice and benevolence have been given a very distinctive Australian flavour and have informed much of how we see our past. Whether mythical or real, there is something especially appealing about the notions of 'mateship' and giving the other fellow ‘a fair go’.

The trouble is that even sentiments as elemental as these can become nothing more than mere words - muttered out of the side of the mouth at smoko time. Even worse, they can be perverted for ignoble and self-serving ends. You have an opportunity to take those founding virtues, justice and benevolence, and put them into practice as you develop and implement your national framework.

I began with the problem of freedom and the burden of choice. Now I want to throw down a gauntlet to you. Don't evade the opportunity. Don't pretend to take decisive action while really doing nothing.

I challenge you to choose and to choose well!

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