Business ethical policy
Do managers feel
pressure to put
profit first?
Most manager’s income
is tied to their
performance, and the key performance
indicators (KPI’s) by which they are judged are
invariably financial rather than altruistic.
A UK report Management Agenda 2015 asked
1600 managers and workers whether they felt
pressure to compromise their companies’
ethical standards to meet business objectives.
One third of respondents reported that they
had.
They said that the most common pressure was
a need to follow their manager’s objectives,
followed by overly aggressive financial or
business objectives.
The report’s authors Roffey Park Institute,
believe leaders may not realise their
instructions can be interpreted in this way.
They suggest that the most ethical managers
in practice are the ones who consciously take
the time to think their decisions through, while
others may simply not have time to do that,
and are not aware their decisions may have
undesirable consequences.
The report also identifies a gap between an
organisations stated values, and those
practised by their management –a difference
in policy and action.
The Institute of Business Ethics agree with
these findings, and say that employees do not
trust their managers not to cut corners to win
business, even at ethical companies.
They believe this may be a training issue, and
that people are not aware of how the business
expects them to behave.
Organisations who do have ethical policies
need to ensure that staff are given clear
guidelines and told how to apply them. They
need to understand that they should make
ethical decisions and will not be penalised
even if it costs the company money or means
a target is missed. Staff need to trust that this
will be the case.
To some extent this depends on all leaders
“buying –In “, because if there is even one
leader who varies from the policy, trust will be
lost. If there is one person in a leadership
position who is unethical, the whole company
can be compromised. This presents problems
for a management team who have appointed a
manager who does not act ethically.
This situation can be addressed by clear
communication about what is expected of
managers in terms of ethical decision making
and reinforcement that ethics should always
take precedence over profit.
What areas should ethical policy
cover?
Let’s have a look at the different areas of a
business and consider how ethical policy may
impact it.
Human resource policies
Paying the legal minimum wage, or above it
Not using child labour
Fair working hours
Workplace safety, health and safety policy
Breaks during the working day
Paid Holiday entitlement
Health care and family health care provision
Staff discounts
Family friendly policies
Help with childcare costs
Pension provision
Looking after staff in retirement
Employing disabled people,
Equality of opportunity
Relationships with suppliers
Fair trading practices
Fair and transparent negotiations
Honouring agreement and contracts
Prompt invoice payment
Monitoring Supplier ethical compliance
Discouraging bribery and corruption
Advising new suppliers
Sales and marketing
True and fair advertising
Fair pricing
Concern for product safety
Transparency on ingredients
Respect for customer privacy
Production
Concern for environmental impact
Health and safety policies
Careful waste disposal
Not participating in testing on animals
Finance
True and fair view of accounts
Political contributions
Tax avoidance
Director’s remuneration
Dividend policy
How does a company ensure its ethical
policies are enforced?
Despite these policies, we frequently hear
stories of ethical misconduct, misappropriated
finances, broken contracts, unfair labour
practices, bribery and corruption. So how does
the management team ensure its policies are
understood and interpreted correctly?
They need to communicate regularly with staff,
restate the policy, ensuring guidelines are well
understood. New recruits must be trained in
the detail of the policy. Some companies insist
on annual ethical training for all staff as a
condition of continued employment.
Someone in the management team should
“own “the policy and be available to discuss
contentious issues and offer guidance and
interpretation to managers who request it.
Management must strictly monitor compliance
and ensure deliberate violations have
consequences that are visible to everyone.
Ethical policies and practices don’t of
themselves guarantee success, but it is likely
in today’s culture that companies that do not
have them are less likely to succeed.
Do managers feel
pressure to put
profit first?
Most manager’s income
is tied to their
performance, and the key performance
indicators (KPI’s) by which they are judged are
invariably financial rather than altruistic.
A UK report Management Agenda 2015 asked
1600 managers and workers whether they felt
pressure to compromise their companies’
ethical standards to meet business objectives.
One third of respondents reported that they
had.
They said that the most common pressure was
a need to follow their manager’s objectives,
followed by overly aggressive financial or
business objectives.
The report’s authors Roffey Park Institute,
believe leaders may not realise their
instructions can be interpreted in this way.
They suggest that the most ethical managers
in practice are the ones who consciously take
the time to think their decisions through, while
others may simply not have time to do that,
and are not aware their decisions may have
undesirable consequences.
The report also identifies a gap between an
organisations stated values, and those
practised by their management –a difference
in policy and action.
The Institute of Business Ethics agree with
these findings, and say that employees do not
trust their managers not to cut corners to win
business, even at ethical companies.
They believe this may be a training issue, and
that people are not aware of how the business
expects them to behave.
Organisations who do have ethical policies
need to ensure that staff are given clear
guidelines and told how to apply them. They
need to understand that they should make
ethical decisions and will not be penalised
even if it costs the company money or means
a target is missed. Staff need to trust that this
will be the case.
To some extent this depends on all leaders
“buying –In “, because if there is even one
leader who varies from the policy, trust will be
lost. If there is one person in a leadership
position who is unethical, the whole company
can be compromised. This presents problems
for a management team who have appointed a
manager who does not act ethically.
This situation can be addressed by clear
communication about what is expected of
managers in terms of ethical decision making
and reinforcement that ethics should always
take precedence over profit.
What areas should ethical policy
cover?
Let’s have a look at the different areas of a
business and consider how ethical policy may
impact it.
Human resource policies
Paying the legal minimum wage, or above it
Not using child labour
Fair working hours
Workplace safety, health and safety policy
Breaks during the working day
Paid Holiday entitlement
Health care and family health care provision
Staff discounts
Family friendly policies
Help with childcare costs
Pension provision
Looking after staff in retirement
Employing disabled people,
Equality of opportunity
Relationships with suppliers
Fair trading practices
Fair and transparent negotiations
Honouring agreement and contracts
Prompt invoice payment
Monitoring Supplier ethical compliance
Discouraging bribery and corruption
Advising new suppliers
Sales and marketing
True and fair advertising
Fair pricing
Concern for product safety
Transparency on ingredients
Respect for customer privacy
Production
Concern for environmental impact
Health and safety policies
Careful waste disposal
Not participating in testing on animals
Finance
True and fair view of accounts
Political contributions
Tax avoidance
Director’s remuneration
Dividend policy
How does a company ensure its ethical
policies are enforced?
Despite these policies, we frequently hear
stories of ethical misconduct, misappropriated
finances, broken contracts, unfair labour
practices, bribery and corruption. So how does
the management team ensure its policies are
understood and interpreted correctly?
They need to communicate regularly with staff,
restate the policy, ensuring guidelines are well
understood. New recruits must be trained in
the detail of the policy. Some companies insist
on annual ethical training for all staff as a
condition of continued employment.
Someone in the management team should
“own “the policy and be available to discuss
contentious issues and offer guidance and
interpretation to managers who request it.
Management must strictly monitor compliance
and ensure deliberate violations have
consequences that are visible to everyone.
Ethical policies and practices don’t of
themselves guarantee success, but it is likely
in today’s culture that companies that do not
have them are less likely to succeed.
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