Q How does a
company start to address ethics? A If an organisation wants to take ethics seriously,
it needs to identify the core values to which it wishes to be
committed and held accountable. It then needs to translate those
values into guidance for all employees on how to act responsibly
in different circumstances. See below for further details.
Q What are core
values? A Core ethical values are those regarded by a company
as non-negotiable - they form the foundation for a set of corporate
ethical standards and commitment and the organisation's approach
to corporate responsibility. Commonly used value words found
in introductions/preambles to codes of ethics include: responsibility,
integrity, honesty, respect, trust, openness, fairness and transparency.
Organisations may also articulate a set of business values,
such as quality, profitability, efficiency, reliability and
customer service.
Q How do you
translate values into action?
A The best way to start translating values into action is
by producing a code of business ethics, often known as business
principles or 'the way we work'. A codes of ethics explains
the organisation's approach to ethical issues, sets out its
ethical commitments and standards, and provides guidance to
staff on how to react to ethical dilemmas.
Q How does an
ethical code differ from a code of conduct?
A Many companies use the phrases 'ethical code' and 'code
of conduct' interchangeably, whereas the IBE finds it useful
to make a distinction.
A code of ethics will start by setting out the values that underpin
the code and will describe a company's obligation to its stakeholders.
The code is publicly available and addressed to anyone with
an interest in the company's activities and the way it does
business. It will include details of how the company plans to
implement its values and vision, as well as guidance to staff
on ethical standards and how to achieve them.
However, a code of conduct is generally addressed to and intended
for employees alone. It usually sets out restrictions on behaviour,
and will be far more compliance or rules focused than value
or principle focused.
Q Why produce
a code?
A Having a code is good corporate governance practice. The
Cadbury Report on Financial Aspects of Corporate Governance,
published in 1992, stated that "We regard it as good
practice for boards of directors to draw up codes of ethics
or statements of business practice and to publish them both
internally and externally". Producing a code of business
ethics helps companies to understand and address ethical issues.
It encourages consistent and confident behaviour amongst employees
and raises awareness of company systems such as whistleblowing
hotlines or corporate gift registers.
Q How many companies
have codes?
A IBE research in January 2007 showed that about 85% of
the FTSE 100 have a code of business ethics. Preliminary findings
suggest that about half of the next 250 listed companies have
codes.
Q How might companies
go about producing a code?
A IBE has identified nine key
steps to producing a code as part of a corporate ethics
programme. Developing a Code of Business
Ethics, published by IBE in October 2003, gives a detailed
explanation of these steps for developing and implementing a
code. The Code of Ethics section
of this website provides further information on codes.
Q What might
a code look like?
A Three approaches can be identified.
The first sets out the commitments an organisation makes to
its relationships with is different stakeholders, such as investors,
customers, employees, suppliers and business partners. The second
approach highlights key issues facing the company and explains
how staff should behave in these circumstances. Thirdly, some
organisations use an amalgamation of the two approaches.
IBE favours a stakeholder approach in identifying and considering
ethical issues and concerns, but the optimal format for a
code of ethics will depend on the particular organisation
and its business environment.
The IBE Illustrative Code of Business Ethics, published within
Developing a Code of Business
Ethics (2003), provides an example of what topics a code
might cover. It is important for an organisation to produce
its own, unique code and to select the most appropriate format
for its business.
Q Are all codes
the same?
A While there are certain issues that most organisations
will want to address in their code, it is vitally important
that a corporate code is designed to reflect the needs, circumstances
and challenges of an individual business. One size does not
fit all. The ethical issues facing a multinational oil company
are very different from those facing a UK-based management consultancy.
It is also important to involve employees in the process of
developing a code. If the policy and code are to work, a company's
approach has to reflect the concerns of its employees and other
stakeholders.
Many codes of ethics can be found on the websites of large
companies and other organisations. The IBE has an extensive
database and library of codes.
Q Is having a code enough?
A Simply drawing up and publishing a code is never enough.
After all, Enron had a code. A code of ethics or an ethics
policy must be strongly embedded in an organisation's culture
in order to be effective in influencing behaviour and decision
making at all levels of an organisation. It must be supported
by a programme of communication, training and leadership example.
This means, among other things:
all staff are trained on values, standards and use of
the code,
managers at all levels take responsibility for code awareness
and implementation among their staff,
ethical values are incorporated into corporate strategy
and
the organisation regularly reports on their ethical performance
the Board should endorse and support the ethics policy
and top-managers should set an example with their own behaviour
the organisation should ensure that employees can make
enquiries on ethical issues, raise concerns and report misconduct,
for example, through an internal or external speak-up line.
organisations should monitor the effectiveness of their
ethics policy and review the policy regularly.
Q Can companies
achieve accreditation for their ethics?
A Companies are coming under greater pressure to address
and be seen to address social, environmental and ethical issues.
In response, some look for external standards and verification.
The IBE does not offer accreditation, but the IBE's 2002 publication
Demonstrating Corporate Values - Which Standard
for Your Company? explores a range of external standards
and the pros and cons of each approach. A list of selected standards
and guidelines can be found by clicking
here.
Q Who in a company
is responsible for business ethics?
A The responsibility for the company's ethical policies
and/or ethics code may rest with a human resources department,
company secretary, CSR manager, risk manager, compliance officer
or internal auditor. Increasingly, organisations are establishing
responsibility at board level through committees such as Audit
Committees or dedicated Ethics Committees. Top-management are
expected show a commitment to the company's ethics code and
set an example with their own behaviour. Often, middle managers
are given operational responsibility for implementing and upholding
the organisations' code of ethics. For a company to operate
in line with a set of ethical values, all employees must take
responsibility for their own ethical behaviour. However, they
must be supported in this by their employer.
In the USA most large companies employ one or more Ethics Officers
and this is an established profession. In the UK, the person
responsbile for the programme is likeley to be found in the
Company Secretary's office.
Q Where can
I find out more about business ethics?
A The IBE provides generic and bespoke training courses,
including a one day Introduction to
Business Ethics. We also endeavour to assist
with any enquiries we receive on business ethics issues and
programmes.
Have a look round our web site for more information including
details of IBE publications,
research projects and events.
The web site also contains weekly updates on ethics
news and feature stories from around the world, and a number
of links to other business ethics organisations.
