Ethical Performance
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Cheating companies may not see out the downturn

October 2011

Since the 2008 crash, banks, businesses and politicians have talked of the need for greater responsibility, yet there has been little changed behaviour to match the rhetoric. Complaints in the financial services sector, for instance, were up by more than 50% in the first half of this year, compared with the same period in 2010. But, as we face a possible double-dip recession, would a more responsible business approach make a difference? Well, this depends on your definition of ‘corporate responsibility’. For many, CR is all about being green and doing good. While this is hardly a bad goal, it probably won’t make the difference between success and failure in an economic maelstrom.

At times like these, the temptation to win at any cost is great. Some may well see the economic climate as a green light for a macho rather than a responsible business culture, but this is a risky strategy. Responsible practice is all about how to win at business without cheating. Not only are the penalties for being unethical greater than ever, but businesses are more likely to get caught. Social media has given the public the ability to hold businesses to account, so transparency and good conduct are vital. What starts on Twitter can end on Newsnight.

In addition, businesses are also subject to more legislation, litigation and regulation. Major legislation, such as the Bribery Act, means that board directors face possible imprisonment should their organisation be prosecuted for corrupt practices. Not knowing is no excuse: directors are now reasonably expected to know what’s going on across their company.  

Responsible business is about having values that are shared by senior management, on which all decisions are based, and which are engrained throughout the organisation. Simply having a code of conduct or complying with industry regulation is not enough. News Corporation has a code of conduct that expressly forbids the paying of bribes and states that its “businesses are conducted in accordance with the highest ethical standards”. Though tightly regulated, the banking crisis exposed the danger of a compliance culture being allowed to triumph over ethics and responsibility.

Businesses that fail to embrace responsible practices risk reputational damage. Where ethics and good practices are dictated from the top, spelt out clearly and properly embedded, the likelihood of such problems are significantly reduced. We see a lot of this already in place across a variety of sectors, driven by individuals rather than industries, by businesses that believe that with ethics and CR at their core, they can deliver long-term success rather than short-term gambles. By adopting CR rather than simply calling for it, we can build better businesses and help foster sustainable economic growth.

Sally McGeachie is corporate affairs director at GoodCorporation and can be contacted at sally.mcgeachie@goodcorporation.com




Sally McGeachie | UK & NI Ireland | Best Practice

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