Do ethics count in management?
After the financial markets crashed various attempts were made to ensure managers behaved a little more ethically. CMI launched a management manifesto that aimed to encourage professionalism amongst managers. Max Anderson launched the MBA Oath, to improve business ethics displayed by MBA graduates.
One has to wonder however if all of this is actually working. KPMG reported recently that managers are the people most likely to commit fraud in the workplace. This chimes with CMI findings that show around 25% of managers have knowingly acted in a dodgy way.
So news this week that the launch of the new Bribery Act is being delayed, with the UK already lagging behind the rest of the EU on bribery legislation, does little to suggest that the UK government are taking this matter seriously.
How ethical is your company?
With the culture of an organisation increasingly important in differentiating oneself from the crowd, behaving ethically can help set you apart, both as an individual and as a company.
But what exactly defines an ethical manager? Is surfing the web for personal means un-ethical? If you ship a product you know to be defective, is that un-ethical? Insider trading? Pilfering from the stationary cupboard? Pretending a cheque is in the post to a supplier to delay payment?
Where exactly do you draw the line? I'm sure many of you will have encountered at least a few of these in your working lives. We have a checklist available on creating a code of practice for your workplace, but how do you ensure it is adhered to?
How to become ethical
Often when a code is in place it gets stuck within the HR function. Successful ethics management depends less on formal ethics programmes and more on employees' perceptions of fairness. Examples and scenarios of ethical behaviour should be widely communicated within the organisation through the use of stories and case studies. This allows for debate and discussion of what ethical behaviour is and for it to be reinforced.
Senior leaders must also accept more responsibility for establishing the organisation's reinforcement systems. This, in turn, will inspire confidence and help create a climate of ethical behaviour.
How do you encourage ethical behaviour in your organisation?
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Comments
Yes, I think they should do. Trust is crucial in business, and if you don't have good ethics it's hard to trust anyone.
Hi Adi,
Ethical behaviour is very much part of the culture fabric, the society in which we carry out our business, and our own ethics. No matter how many codes of conduct and ethics rules are bannered, it is ultimately down to the influnce of the factors I just mentioned. This is what I believe anyway :-)
Mo
I think you're right Mo. Codes of conduct, whilst well intentioned, are often limited in what they achieve. For me changing corporate culture is arguably the hardest job in management today.
Totally agree with Mo the issue of ethics in business and public life today is recognised more and more as critical in determining success or failure in every sector of our economy. Yet even with all of the emphasis on morality and spiritual values in business and professional life, our society sometimes appears to be spiritually rudderless. Multi-billion pound or dollar business and government scandals are practically a daily item in the news. Disgraceful scandals have already tarnished the reputations of (and sometimes ruined) talented people, great corporations, and government organisations. And you don’t have to look far to find ethical problems. Just look around you. With the economy the way it is, where every pound counts, businesses are tempted daily to charge more than they should, or short-change their customers in a variety of ways. One of my favorite jokes is the classic Henny Youngman line about ethics in business:
You own a dry cleaning place. A guy walks in and gives you his suit to be cleaned. When he leaves, you find a $100 bill in one of the pockets. Now, the ethical question is this: Should you tell your partner?
All of us who are in business or in a professional practice are also customers. And customers aren’t immune from ethical problems. How many people who through a mistake are undercharged fifty pence at the petrol station or at the grocery store or in a restaurant do anything to correct the error?
Most of the attention is on ethical principles, guidelines, and codes of conduct, which are developed more and more by schools, professional associations, such as CMI, companies, and governmental bodies. Every professional association has a set of ethical guidelines for practitioners. Service organisations, such as Rotary, have long had statements of ethics designed for the everyday practice of business and professional activities.
If you look at it in within a psychological value, of course looking at ethical problems (rather than business, religious, or legal) point of view. It seems to me that if we can better understand why people are motivated to behave ethically or unethically, then we will know better how to prevent or at least minimise unethical behavior.
Point taken too much academic but the fundamentals are the same in every organisation. If you want to get ahead in Ethical Behaviour you must first change organisational culture. This is the first and most important principle that every business must adopt as best practice.
Ethics are crucial in this day and age for two main reasons (for me). Firstly you are looking to build long-term relationships with both customers and employees. You can't do that without trust, and good ethics are the bedrock of trust.
Secondly, in the age of social media and 24 hour news, any slip-up is likely to get leaked very, very quickly, and spread very far. It's corporate suicide to let slip your standards.
Hopefully WeBuyAnyCar will get their commupance for their somewhat less than ethical dealings. After the OFT ruling on them it'll be mightily tough for them to regain market confidence I should think.
Yes i hope they sort themselves out. Their reputation has gone to pot. 96% of online quotations were, once the final inspection was given, dropped by 10-35% of the valuation given. OFT had complaints that the inspection teams were getting bonuses for re-valuating the cars to lower prices. Not good at all but i think and hope that any company takes heed. Is making a profit more important than organisational reputation.
Yes, I think a company like We Buy Any Car could quite easily go to the wall. Others such as BP and BAe however I'm not so sure. I mean I personally think BP have acted terribly recently, not just over the oil spill in America but their terrible deal with Rosneft in Russia. Do the majority of people even know about these things? Do they even care if they get 'cheap' fuel?
Ethics is concerned with morals, fairness, respect, caring, sharing, no false promises, no lying, cheating, stealing, or unreasonable demands on employees and others, etc. Business ethics calls for corporate social responsibility (CSR) and addressing social problems such as poverty, crime, environmental protection, equal rights, public health and improving education. We need a practical approach rather than a philosophical one.
Business decisions often concern complicated situations which are neither totally ethical nor totally unethical. Therefore, it is often difficult to do the right thing, contrary to what many case studies will have you believe!
Leaders have to deal with potential conflicts of interest, wrongful use of resources, mismanagement of contracts, false promises and exaggerated demands on resources, which include personnel. Is it the seller’s duty to disclose all material facts regarding the product/ service in question or is it the buyer’s responsibility to find out the pros and cons of what he or she is getting into? Should the seller answer each question exactly as it was asked, and ignore some pertinent information? Or should he or she merely address the spirit of the question? Is the buyer responsible for due diligence? This is a gray area.
For free abridged books on leadership, ethics, teamwork, women in the workforce, sexual harassment and bullying, trade unions, etc. send an e-mail request to crespin79@primus.ca.
Maxwell Pinto, Business Consultant and Author.
http://www.strategicbookpublishing.com/Management-TidbitsForTheNewMillen...
http://www.youtube.com/watch?v=p34hB50lv-8
http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=maxwell+pinto&x=0&y=0&ih=4_6_3_0_0_0_0_0_0_1.144_104&fsc=-1
Is it ethical to plug your book in your first post Maxwell? Especially when you have made this exact comment on several other posts about ethics down the years. Not particularly ethical is it?
Having a code of conduct, behaviour or ethics is part of what defines a profession and a professional. Of course a code won't, of itself, ensure that people behave ethically, but it can be helpful when you find yourself in a difficult position - especially if the environment you are working in doesn't promote or support ethical behaviour. It can also be a useful tool for developing yourself and others, and provide a benchmark for the organisation.
Having a code of conduct is a good starting point, but how often have we seen lawyers for example breeching this for personal gain? I guess it comes down to each individual's integrity, and the following quote from Oprah Winfrey sums it up nicely for me:
"Real integrity is doing the right thing, knowing that nobody's going to know whether you did it or not."
Nice presentation on ethics in management over at the Central & Westminster branch after their recent event on the topic. Worth a look.
Having examples and scenarios of business ethics communicated in organizations by whatever means (case studies, videos, talks,...), is essential for corporate existence. This is expedient as unethical practices in the name of business deals are fast becoming a norm in the business world. The question then is, "Is it the business place that is robbing managers of their ethics or is it the managers who are robbing the business place of its ethics?"
There's a list here of the most ethical companies in the world, at least according to Ethisphere:
http://ethisphere.com/wme2011/
Of particular interest is that their list of ethical companies outperforms the standard stock index by a decent amount.
For me an ethical approach is essential, personally I want to be able to look myself in the mirror in the morning and not be ashamed of what I do.
To my way of thinking an ethical approach eases decision making as my decisions will always endeavour to do the right thing in the circumstances, it is not an option to be devious or to try and gain at the expense of others.
Overall whilst a personal code, I believe it has hard nosed business benefits as well . This means I want to work with ethical clients and want them to work with me knowing that whatever I do I will be trying to make a positive difference.
It's the old adage isn't it, if you look at what you're doing and would be happy for it to be published in a newspaper (or something), then do it. If you wouldn't be happy for the world to know what you're doing, then don't.
If you are in the public sector I would suggest that ethics are crucial. Obviously there is a need for public sector organisations to deliver effective and efficient services, but if these are done unethically then the impact on your consumers confidence will undermine the rest of your delivery.
I would add that in the current climate there is also a ready media market for stories of this type.
Interesting to see that China is opening a website where people can report attempted bribery.
http://www.ibribery.com
or there's also
http://ipaidabribe.com
Ethics are crucial in any sector, public, private or third. Look at the people you respect and then see whether you think they are ethical or not. IMHO if you don't have ethics then respect is hard to attain.
Being ethical doesn't mean you don't make mistakes, but it does mean that you've made the decision for the right reasons.
Oh yeah ethics have quite great importance in management; how do you plan to manage your sub-ordinates if you are an unethical person. Especially in civil engineering project management unethical managers can have very difficult circumstances to cope with.
There's a handy Q&A on the Beeb site about the new bribery act if anyone's interested.
http://www.bbc.co.uk/news/business-13977221
Research from business software and services provider Sage has revealed that nearly three quarters of small businesses (71%) do not understand what the Act is or how it is likely to affect the way they do business.
View press release
Eight out of 10 workers think senior management should face criminal charges for failing to prevent fraud, bribery or corruption in their organisation.
A third of workers claimed to have seen colleagues who have engaged in fraudulent activity promoted, while a quarter do not trust management to implement corporate fraud policies with integrity.
Read more: http://www.belfasttelegraph.co.uk/news/local-national/republic-of-ireland/bosses-in-dock-over-fraud-claims-16019122.html#ixzz1R93azW21
Seems to have mattered for Rebekah Brooks. Good riddance to her!
What a topical issue. It seems to me the News of the World affair demonstrates why ethics do matter. Once the details became public it would have /will take some time for the legal procedures to be enforced and the relevant people called to account. Instead the general public, who are not familiar with all the legal rules, thought this is disgusting behaviour we need to do something. People thought what had happened was un-ethical and took action.
Thanks to Adi for the information about the Worlds most ethical companies and business performance. I shall use this.
Being ethical really does equal being profitable I think Christine. With social media and everything making transparency essential, I don't think organisations can afford to behave badly now. The risks are simply too great.
Bernie Ecclestone the latest to be accused of bribery.
http://www.bbc.co.uk/news/business-14213249
"Formula 1 supremo Bernie Ecclestone has been named by prosecutors in Germany as allegedly bribing a former banker during the sale of the sport in 2006."
Interesting piece here from Seth Godin arguing that businesses can't have ethics, only people can have ethics.
http://sethgodin.typepad.com/seths_blog/2011/07/no-such-thing-as-busines...
I worry that we absolve ourselves of responsibility when we talk about business ethics and corporate social responsibility. Corporations are collections of people, and we ought to insist that those people (that would be us) do the right thing. Business is too powerful for us to leave our humanity at the door of the office. It's not business, it's personal.
I'm with Seth Godin and Charlie Fox here - people are either ethical or not and depending on the people running the company, it will be ethical or not. Also - whose ethics? What is ethical varies widely globally and in this day and age of globalisation, it's important to be mindful of that. I personally believe being true to your self and living by your code of conduct is everything so yes, ethics do count and it's up to people to make them count.
It's interesting how quickly people will break their own personal ethics under the right circumstances though isn't it?
Interesting presentation here talking of the need for a morale 'operating system'
Ethics count in management. Policies, procedures and auditing are a good starting point. However the key is to get staff to live the values (standards) you expect from them. Based on my experience this can be achieved by having great role models to aspire to be, both at work and in our social life.
I agree that this is one of the priority issues for organisations and brands today.
Our organisation works hard to treat our clients and, in particular suppliers ethically. A pet hate of mine is the way tendering processes are conducted by large organisations. Procurement processes have caused tendering companies to be treated unethically both in terms of driving margins down to unworkable levels and requiring a massive amount of work to be conducted to participate in a tender. I believe this is unethical behaviour towards other organisations and inparticular, towards smaller companies.
Of course ethics count in management - if your staff / teams see you acting unethically they will have little confidence in you as their manager / leader and their trust in you will be greatly diminished.
Ethical behaviour has to be part of the culture of any organisation - from MD to most junior apprentice / work experience student..however, as Piya amentioned before, what constitutes ethical varies by person / company / country / industry et cetera. At the end of the day the organisation, especially if a multi-national operation, needs to spell out what its ethics are by publishing a code of expected conduct for its staff to strive to attain and to abide by. Only then can it hope to achieve common standards of ethical behaviour amongst all its staff.
Business Ethic is one of the most important elements that shape organization's culture. Ethics is a combination of certain values which designed, owned and practiced by leaders ( top managment ) and cascaded down to employees.
Ethics are the limitations or borders designed / defined by the leaders, and crossing those limitations / borders is a penetration toward the Un-ethics Zone.
This is what I call it the unethical practice, no matter how small or big was the penetration.
Breaking the (Ethics border) will cause the immigration of the bright talent employees from your organization. Those who are not only having ( formal and emotional contracts ) with you but also ( moral ) one which the long lasting one and most needed these days.
Yes we need Ethics nowadays more than ever, without ethics there will be no trust. And if we lose trust, we will lose communication. When there is no communication everything will collapse.
Breaking the (Ethics border) will cause the immigration of the bright talent employees from your organization.....without ethics there will be no trust. And if we lose trust, we will lose communication. When there is no communication everything will collapse.
I agree Abdul, management acting unethically could well cause the resignation of ethically-minded personnel leaving you with "rogues" in your company - possibly exposing your business to the increased risk of internal fraud and theft !
Shaun and Abdul...I do agree the importance of Ethics in management especially working and running a company, in a place and environment, where Ethics is always put into tests. Sometimes, Ethics would be one of the major separating lines between black and white, grey and white. Sad to say, in some other companies, hatred and isolation would be the price to pay in practicing such.