More investment in ethics, but where is it going?


Bradshaw of IBEKatherine Bradshaw,
Communications Manager, Institute of Business Ethics

Investment in corporate ethics programs has increased over the last three years, according to a recent survey by the Institute of Business Ethics (IBE). But what are companies spending it on?

When the IBE first conducted research into this back in 1995 investment in ethics was unusual. Now our regular annual survey shows it’s the norm. The UK FTSE 350 promote high ethical standards in business practice through their codes of ethics or similar documents. [1]

But the challenge remains: how best to support employees in everyday operations and decisions to live up to the values espoused in any code of ethics?

Our analysis of 500 business ethics news stories of 2013 shows the most commonly reported issue was bribery, corruption and facilitation payments. There were 139 such stories–13% of the total.

These media reports were closely followed by the treatment of stakeholders–12% of the total. Of these there was a relatively even split across customers (49%) and staff (45%).

Other commonly reported issues included executive remuneration, fraud/theft and tax. [2]

So where are companies spending their increased investment? Equally important, why doesn’t this expenditure seem to be working?

embedEmbedding ethics into business processes

It seems there has been an increase in the embedding of ethics into business processes. For example, ethics in recruitment is 63% up from only 38% in 2010.

Most of those we questioned (74%) said a breach of their company’s code of ethics led to a disciplinary procedure during the last three years. This too represented an increase by about 50% since 2010. Two thirds of corporations now include ethical issues in staff appraisals

Training too has returned to the earlier 2010 levels. Despite the increased investment in ethics programmes though, one in five companies seem to offer training only once to general employees and managers. Only a third routinely train staff and managers once a year.

Given the seriousness with which companies are taking any breaches of the code, it is imperative staff have the right tools to apply in their day-to-day business relationships.

For training to be effective and the information retained by employees, it needs to be continuously repeated.  Without regular refresher sessions for example, it’s unlikely employees will gain the necessary acumen and sensitivity. Consequently, there’s an increase in the risk of an ethical lapse occurring in their business conduct.

Training needs to include a face-to-face element so as to be effective in influencing behaviour. A   rapidly rolled-out e-learning programme for example, will not tackle the difficult issues.face to face

A culture of integrity and openness allows the ethical dilemmas from doing business to be discussed. Employees also feel supported in doing the right thing. Creating such a culture is a powerful way to reduce the risk of an ethical lapse.

tone at the topTone at the Top

Ethical values must be at the heart of how business is done.  Compliance is not enough. What matters is the spirit of ‘doing business ethically’. This needs to be embedded within day-to-day business activities.

It’s also essential Chief Executives lead by example. The can do this by stating openly in their codes of ethics that the ends do not justify the means. They must back this up with support for ethics in action; celebrating ‘good’ conduct and vilifying ‘poor’ behaviour.

Senior management also needs to be trained to develop ‘ethical sensitivity’. That is, an understanding of fairness, openness, transparency, integrity, responsibility to others. Their development should also include the ability to recognise conflicts of interest when they arise.

Leaders who talk about ethical issues support their staff. By behaving in an open and transparent way they also send the message to all employees, and the wider world, that ethics matters.




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