Exploring how Australian finance directors' corporate sustainability espoused values are embedded into subordinate subculture and why corporate sustainability assumptions are not

Abstract

Since 1893 legal and compliance investigations into the Australian finance industry have continually found problematic elements in the culture; however, none of these investigations have led to a solution (Hickson & Turner, 2002). To address the paucity of fieldwork literature in the critical area of finance, which impacts millions of Australians every day, organisational development (OD) and corporate sustainability (CS) have been brought together for investigation. The following interpretive, exploratory case study features real-world insights from representatives of the 490,000 Australian finance staff who look after millions of customers, many who are vulnerable (Australian Bureau of Statistics, 2021). In the Royal Commission into Misconduct in Banking, Superannuation, and Financial Services Industry (Commission), evidence was presented of customers losing their livelihoods and in some instances their life (Farnsworth & Selvaratnam, 2018; Hayne et al., 2019; Ziffer, 2018). The culture of Australia’s large finance organisations has a significant impact on communities’ economic, social, and environmental common good. A study into OD, subculture particularisations within a finance organisation, provides an angle few have explored. This study asks how and why the most dominant subculture—directors—embed or do not embed the CS values (economic, environmental, social) they espouse. The exploration has involved listening to the voice of archetypal subcultures: directors, designers, and operators, within an organisation. As part of a rigorous four-phase thematic content analysis, three data sets (interviews, archival documents, and observation) were triangulated to ascertain what concepts corroborated or contradicted. Findings revealed both homogenous and heterogeneous themes in the organisational culture (OC). Directors of the large finance organisation (LFO) embedded a key espoused CS social value: customer centricity, to their subordinate subcultures through enacting the value themselves. These directors also embedded command and control (C2) hierarchical power assumptions. Day-to-day director defensive behaviours contributed to the LFO’s espoused values: daring, brave, collaboration, and skilled, not being embedded to subordinates. Defensive routines detracted from embedding CS because when directors used defensive mechanisms such as blocking upward communication, denial, and creating “undiscussable,” their subordinates did this too. A new, rigorous CS-OC finance framework incorporating defensive and embedding mechanisms was developed and applied to the LFO data. The purpose of this framework was to provide a trustworthy understanding of where an organisation sits on the CS spectrum. When the relevant data from the case study was collated and placed into the framework, the LFO was at the lowest end of the CS spectrum because environmental considerations were not deemed a valid assumption. That said, the LFO OC did align to a number of the economic attributes of CS, as well as a few of the social elements—in some instances operating above the industry norm (Hayne, 2019a). Practitioners could learn from the LFO’s customer centric approach. Other practitioner implications include the need for directors to have meaningful, authentic feedback loops which would inform them if their CS espoused values were a lived reality or not. In the case study, directors were not aware their subordinates could not speak up because it was not psychologically safe. Directors firmly espoused the organisation’s commitment to fiduciary duty (FD), yet were unaware their operators did not know what FD means. The lack of trustworthy subordinate feedback allowed directors an overconfidence in their OD capabilities. A key academic contribution from this study is a holistic research design for understanding CS culture in large organisations. This design was used in the case study to respond to the multi-dimensional research questions. The OD design calls for different organisational voices to be heard, and allows for particularisations in subcultures to be identified rather than defaulting to untrustworthy cultural scripts (Alvesson et al., 2017; Bell et al., 2020). One further contribution to the CS literature is the deep insight OD plays in large finance organisations; this insight is important for understanding defensive routines which can prohibit CS being fully integrated. The key enablers of defensive routines (directors) in this investigation promoted C2 assumptions, which meant subordinate subcultures could not report up on CS OC issues. Subordinates were expected to, and did, uphold an egalitarian façade, all the while being frustrated and underperforming. The work discussed in the thesis begins to address the large OD culture gap in finance literature (Li et al., 2013). The new framework is presented for both practitioners and academics to hold up a mirror to the lived reality of organisations entrusted with millions of Australians life savings and businesses which bring harm or good to the environment.