At this time of great uncertainty, ethical behaviour is key
At this time of great uncertainty, leaders of all organisations must ensure that ethics and integrity are seen to transcend all other organisational objectives and strategies. Organisations need to drive trust and ethical behaviour is key.
In recent years there has been a decline in public trust and an increase in public scepticism, not just in business, but in many of our institutions. Despite the rhetoric about championing ethical goals, the reality of organisational culture can be quite different, with some organisations failing to live up to their stated values.
Tone at the top
The ‘tone at the top’ is the fundamental building block of ethical behaviour and Boards of Directors must own these responsibilities. These include the general acknowledgement that shareholders and other stakeholders have a legitimate interest in how the company is meeting its social and environmental obligations. The new S172 reporting obligation should assist Boards in ensuring that, not only do their directors comply with their statutory duties, but also that shareholder, employee and other stakeholder considerations are properly considered in the Board’s deliberations.
Boards are responsible for establishing a set of clear values, defining the culture of their organisation. These values serve as the basis for how everyone in the organisation is expected to behave. As discussed in the Institute of Business Ethics publication: ‘Embedding Business Ethics - 2020 report on corporate ethics policies and programmes’, it is important that ethics, values, and culture are regularly discussed at Board level.
Shareholders also have a responsibility to ensure that ethical values are core to the organisations in which they invest.
The unprecedented circumstances organisations are currently operating in can put added pressure on ethical values. Fleets of aircraft are grounded, retail stores are closed, and many employees and self-employed people will be receiving the bulk of their income from the government. However, even in these times, there have been positives to promote such as the sharing of intellectual property between corporates to enable speedier production of ventilators and the creative uses of 3D printing to make protective masks to help those in the NHS on the front line tackle an invisible enemy.
Embedding ethical values
It is imperative that leaders of organisations not only set the appropriate tone but also lead by example and ‘walk the talk’. However, it is equally important for this tone to be cascaded down through the rest of the organisation and embraced by all those who work in it. A culture of ‘doing the right thing’ needs to exist at all levels. Codes of ethics can be helpful as part of a framework, or as a decision-making tool, for embedding the importance of trust and integrity across an organisation.
All members of the Board, and management (the tone in the middle), must behave in a manner which reflects the company’s values, and this should be their driver when making critical decisions. Chartered Accountants at all levels have a key role to play in ensuring values are lived within their organisations to ensure public interest responsibilities are met.
Organisations must also value their employees. The most trusted organisations are those that are trusted by their employees. ‘Grassroots’ support must be encouraged through regular communications – confidential ‘speak up’ mechanisms and open forums. The more open an organisation is, within reason, the less likely it is to have ethical issues that could discredit it.
Many organisations will highlight their employee welfare policies – such as health and safety, wellbeing and training – but it is essential that they stand by such policies in practice, particularly in these difficult times.
If government support such as the Coronavirus Job Retention Scheme is appropriately accessed and properly communicated to staff, most employees will understand why some businesses are having to furlough workers on a short-term basis to allow the business to survive.
Whistleblowing mechanisms within organisations are vitally important – empowering and supporting individuals to have the confidence to promote good behaviour, influence others, and ‘speak up’ if they encounter ethical issues, without fear of retaliation. There is also a need for managers to ‘listen up’ to concerns and actually do something about it. .
An organisation is perceived, and remembered, by the way its employees behave. It is vital that individuals at all levels within organisations live up to its ethical values. If organisations do not do what is right for their employees, customers and other stakeholders, they will not survive in the longer-term. The importance of trust must not be understated.
The COVID-19 tide will eventually recede, however, the memories are likely to last a lifetime.
As well as the ICAS Code of Ethics, as part of its The Power of One business ethics initiative, ICAS has published a number of ethics resources to support Members. Search ‘Ethics and The Power of One’.
ICAS offers an Ethics Helpline Service.
ICAS is also partnered with Protect to provide ICAS Members with access to an independent whistleblowing advice helpline. This service offers free advice regarding whistleblowing and speaking up.
