Ethics watchdog urges firms to change ways from within

25 September 2014 -


IBE looks into whether management confusion has negated the positive impacts of ethics and compliance officers

Jermaine Haughton

Widespread management failure to grasp the importance of ethics and compliance (E&C) practitioners is hindering efforts to foster an ethical corporate culture, according to a new study published today. Titled The Role and Effectiveness of Ethics & Compliance Practitioners, the report shows that E&C professionals are not being given enough support from senior management to furnish staff with crucial information and practices for brushing up ethical behaviour with their companies.

The IBE report has emerged in the wake of numerous, high-profile scandals – from fixing of the LIBOR interbank rate, to Standard Chartered moving millions of pounds through the US financial system on behalf of illicit Iranian, Sudanese, Libyan and Burmese interests. In the IBE’s view, the severity and regularity of these types of wrongdoings since the start of the century suggest the fault does not lie with individuals or groups but with organisations as a whole.

As such, the study – based upon interviews with 18 senior E&C practitioners, predominantly based in the UK and Europe – aimed to review the roles and purpose of those currently working to improve corporate culture.

One predominant message that came from the research was that because E&C officers are a relatively new profession, managers are confused about what they do on a daily basis. That has led to practitioners having to decide for themselves what their roles should involve, as bosses have failed to carve out clear remits. Therefore, the research found, E&C practitioners are not always offered the support and resources they need to make the function a success.

Report author Fiona Coffey said: “The current debate as to whether the E&C function should be recognised as a profession has focused primarily on the technical competence of practitioners and the need for formal qualifications. This research shows that the personal skills and qualities are just as crucial. These, together with the quality of support from senior executives, shape the extent to which E&C practitioners can contribute to an agenda that goes beyond regulatory compliance and is focused on building and maintaining a culture of integrity.”

The study identified three “domains of activity” that all E&C roles have in common. Some, but not all, E&C roles move beyond the delivery of standardised programmes into areas that pose a direct challenge to “business as usual”.

1. Custodianship

Safeguarding and embedding current best-practice methods via traditional E&C programme activities. This domain will focus on compliance and require high-level management support to achieve consistent values and standards. The approach will almost be like that of a police officer, requiring skills such as sensitivity in handling difficult cases and superior knowledge of the organisation, its networks and relationships.

2. Advocacy   

Challenging any existing corporate values and standards that fall short of best practice by bringing difficult issues to the surface and debating them. In other words, encouraging more open dialogue around ethical issues at work. This domain will be mainly concerned with ethics and require high-level access to decision makers. The function will be like that of a lawyer, influencing company policy through rhetorical skills and legal expertise.

3. Innovation  

Changing business processes that present an unacceptable risk of legal or ethical failure. This domain will have a risk-management focus, and require a mandate for change. The function will be that of a friendly but critical business partner, seeking to convince senior figures of the opportunities that change management can bring. The aim is to secure the kind of resources that would help to deliver workable solutions.

IBE director Philippa Foster Back said that the findings provide boards and senior executives with an understanding of the value of the E&C function, how it can be aligned with their business models and what they need to provide to make the function effective.

She explained: “This report identifies three interpretations of the E&C role, which will help practitioners, executives and non-executive directors sitting on corporate responsibility committees to push further in establishing a corporate culture of ethical business conduct.” Foster Back added: “This work reinforces the IBE view that ethical business conduct in organisations is based on engagement from those at the top in setting values and shared principles, then empowering and supporting those assigned the role to bring these to life.”

Download CMI’s ethics report warning against “robotic management”.

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