23 April 2014

The Director of the Institute of Business Ethics (UK) is currently in New Zealand on what has become an annual visit to the local membership of the Institute. She is also sharing the IBE’s wisdom with other interested organisations.  Since 1986 the IBE has advocated the commercial importance to businesses of instilling a values based culture among their boards, managers and staff.  IBE has a portfolio of ethics resources and training materials and reports of a growing stable of ethics surveys – much available on its website. Surveys on Ethics Surveys 2013 reviews nine highly regarded research projects carried out last year – which are remarkably consistent in their findings – giving readers the benefit of the collated conclusions.

The challenge for any organisation inculcating integrity among its workforce is the small percentage who seem motivated only by self interest.  A meeting with corporate lawyers yesterday was told by the IBE Director that this could number as high as 2% or 3%.

And the problem occurs at all layers of business as was illustrated last week with the fraud convictions of two directors of the Anglo Irish Bank. A three month trial in Dublin had considered a 2008 scheme by which 450 million euros was given in loans to property developers, already deep in debt to the bank, to manipulate the market by buying Anglo Irish shares which were fast losing value as the financial crisis started to tame the celtic tiger.

Deloitte recently published guidance which refers to the tangible elements of creating a culture of integrity, beginning with tone at the top, including the mood in the middle and the buzz at the bottom (an expression used also this month in a FCPA Compliance and Ethics blog entry about the problem GM faces with massive vehicle recalls to remedy faults caused by petty cost saving on an essential part.)

“Culture is what people see as recognised and rewarded. For employees, the face of culture might be their supervisor. The voices of culture are the legendary stories told throughout an organisation that reinforce the fundamental values that it stands for. As important and essential as compliance is, in the struggle between culture and compliance, culture always wins. That’s how powerful it is….. if companies aren’t managing culture, culture is managing them. Organisations can protect themselves by communicating their values on a consistent basis. Unfortunately …. management and boards tend to under communicate values by a factor of 10…”

A culture of integrity is the real oil – although today’s date perhaps suggests another “real thing”.  This is the anniversary of the 1985 launch of “new Coke”, so negatively received that it was withdrawn within 3 months.

 

www.ibe.org.uk/frequently-asked-questions/3#faq275

http://abcnews.go.com/International/wireStory/anglo-irish-bank-executives-convicted-fraud-23361402

http://deloitte.wsj.com/riskandcompliance/2014/04/22/keith-darcy-how-boards-can-raise-the-bar-on-ethics-and-compliance/

https://tfoxlaw.wordpress.com/category/fcpa/tone-at-the-top/

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