The Business Ethics Twin-Track E-Book

Steve Giles

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Corporate F&A
• Sprache: Englisch

Seitenzahl: 910

Veröffentlichungsjahr: 2015

Beschreibung

Institute a proactive reputational management framework that matches individual behaviour to organizational values

The Business Ethics Twin-Track is a practical guide to reputational risk management. A deep exploration of the concept of reputation, the ways in which it can suffer, and the consequences when it does, the book outlines an ethics controls framework that can mitigate risk and improve business performance. Readers will learn how to identify and manage weaknesses, and how to institute a system of governance that embeds proper, ethical conduct into the corporate culture. A clear set of controls and procedures provides actionable instruction that can be customised to suit the organisational structure, and discussion of historical and international ethics provides the context for implementation. Case studies illustrate the real-world applications, while interviews with executives from a variety of sectors provide important practical insights into some of the key issues discussed in the book.

The law regulates behaviour in health and safety and financial crime, but otherwise, conduct is largely determined by the culture, ethics and values of an organisation. Effective reputation management is complex, and often difficult to achieve, as much of the available information on the topic is more theoretical than practical. This book bridges the gap by providing the tools that will help managers to:

• Implement a modern ethics control framework, encompassing codes, officers, reporting lines and training
• Consider the role of the media and social media in reputational damage to individuals and organisations
• Analyse the key controls in responsibility and governance frameworks from around the world
• Determine the causes and controls of conduct risk, including incompetence, negligence and criminality

Today's fast-paced media environment means corporate reputations can be obliterated in moments, and damage limitation is often too little, too late. Adopting the measures set out in this book will embed ethics into the culture, and match people's behaviours to the organisation's values.

Leseprobe

Table of Contents

Title Page

Copyright

Dedication

Acknowledgements

Prologue

OPENING

ABOUT THE BOOK

MY EXPERIENCE

THE BOOK: KEY MESSAGES

SUMMARY

CLOSING

Chapter One: The ethics project

THE OPPORTUNITY

THE STRONACH GROUP PLC

AN OFFER FROM THE CHAIRMAN

DISCLAIMER

Chapter Two: The business ethics framework

THE ETHICS PROJECT: FIRST WORKSHOP

THE BUSINESS ETHICS FRAMEWORK

KEY TERMS

BUSINESS DILEMMAS

WORKSHOP CONCLUSION

Chapter Three: Bribery, corruption and adequate procedures

BUSINESS ETHICS IN ACTION: SECOND WORKSHOP

BRIBERY AND CORRUPTION

CASE STUDY

THE BRIBERY ACT 2010 (UKBA)

PERSONAL EXPERIENCES

WORKSHOP CONCLUSION

Chapter Four: Reputation, risk and conduct

REPUTATIONAL RISK: THIRD WORKSHOP

REPUTATION

THE HUMAN FACTOR: PEOPLE, BEHAVIOUR AND CONDUCT RISK

PEOPLE RISK

CASE STUDY

ETHICAL RISK IN THE STAKEHOLDER BASE

WORKSHOP CONCLUSION

Chapter Five: The governance dimension

EFFECTIVE GOVERNANCE: FOURTH WORKSHOP

WHY GOOD GOVERNANCE MATTERS

CORPORATE GOVERNANCE OVERVIEW

THE DEVELOPMENT OF CORPORATE GOVERNANCE CODES AND LEGISLATION

THE US POSITION

THE UK POSITION

CREATING AN EFFECTIVE AND TALENTED BOARD

WORKSHOP CONCLUSION

Chapter Six: Aspects of leadership: ethics, tone at the top and handling a crisis

ETHICAL LEADERSHIP: FIFTH WORKSHOP

LEADERSHIP

THE COMPONENTS OF ETHICAL LEADERSHIP

HANDLING A CRISIS

WORKSHOP CONCLUSION

Chapter Seven: Risk, compliance and the controls framework

A THREE-STAGE PROCESS: SIXTH WORKSHOP

RISK MANAGEMENT

COMPLIANCE AND CONTROLS

INTERNAL AUDIT

WORKSHOP CONCLUSION

Chapter Eight: The business ethics toolbox

ETHICAL DEVELOPMENT: SEVENTH WORKSHOP

CORPORATE SOCIAL RESPONSIBILITY (CSR)

PAY, BONUSES AND THE BALANCED SCORECARD

THE BUSINESS ETHICS TOOLBOX

ETHICAL TRAINING AND DEVELOPMENT PROGRAMMES

WORKSHOP CONCLUSION

Chapter Nine: Whistle-blowing: encouraging a culture of openness

CREATING AN OPEN CULTURE: EIGHTH WORKSHOP

INTRODUCTION AND BACKGROUND TO WHISTLE-BLOWING

ISSUES AND CONTROVERSIES

THE LAW AS IT APPLIES TO WHISTLE-BLOWING

WHISTLE-BLOWING IN ACTION

THE 10 STEPS

WORKSHOP CONCLUSION

Epilogue

ANOTHER SURPRISE

Index

End User License Agreement

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Guide

Cover

Table of Contents

Begin Reading

The Business Ethics Twin-Track

Combining controls and culture to minimise reputational risk

STEVE GILES

This edition first published 2015

© 2015 Steve Giles

Registered office

John Wiley and Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom

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Library of Congress Cataloging-in-Publication Data is Available

ISBN 978-1-118-78537-9 (hardback)

ISBN 978-1-118-78534-8 (epub) ISBN 978-1-118-78536-2 (epdf)

Cover design: Wiley

To the three people without whom I could never have written this book: my parents, Hilda and Norman Giles; and my wife Val, the love of my life

Acknowledgements

There are many people to whom I owe a sincere debt of gratitude for their time, ideas, insights, help and support during the writing of this book.

First and most importantly I want to thank my wife, Val Giles. I depend on Val totally and have done so ever since we were married. As with so much else that I have tried to do, I know that this book would never have been written without her steadfast support, advice and encouragement.

I also want to thank the various people at the publisher, John Wiley & Sons, who were instrumental in pulling this book together. The commissioning editors Stephen Mullaly and Gemma Valler helped to shape the initial concepts, whilst Wendy Alexander, business development manager, gave the project the go-ahead. I am particularly grateful to Gemma for her good advice and support throughout and for showing continued faith in me by agreeing to extend the original timescale to enable the book to be completed despite the pressures of work. My thanks also go to Wiley's marketing professionals, especially to Ben Hall for his positive attitude, understanding and gentle coaxing of promotional paragraphs out of me when required and to Jennie Kitchen for coordinating the artwork for the book cover with the design team.

Next, I would like to thank my interviewees – the business men and women who agreed to be interviewed by me as part of my research for this book and who gave up their valuable time in order to do so. They are drawn from different industry sectors and were chosen for their business experience and specialist expertise. These interviews provide important practical insights into some of the key issues discussed in the book and, from my point of view at least, they were great fun to conduct. So, I want to say a big ‘thank you’ to: Annabel Parsons, one of the partners at Heidrick & Struggles; Bernard Briggs and David Grew, respectively Managing Director and Finance Director of West Leigh Ltd; Cathy James, Chief Executive of the whistle-blowing charity Public Concern at Work; James Featherby, Chairman of the Church of England's investment advisory committee; Lis Batteson, ex-Managing Director of Quorum Training Ltd; Mike Meldrum, formerly of Cranfield School of Management and now an independent business leadership consultant; Peter Hanlon, senior executive at the Westpac banking group in Australia; Peter Jones, experienced businessman and chairman of the audit committees of the United Kingdom Atomic Energy Authority and the National Nuclear Laboratory; Peter Walshe, a director of Millward Brown, the brand consultancy; and Sandro Boeri, Managing Director of Risk Audit Professional Development Ltd.

Each of these 10 interviews lasted for between 45 minutes and 1 hour. I recorded them using a small digital voice recorder, a very efficient piece of technology but one that would have been no use to me for practical purposes had it not been for the time and effort put in by my friend and (for these purposes) audio typist, the splendid Julie Collins. I have been fortunate to know Julie for many years now. She agreed to type up all 10 of the interviews for me, which she did with her usual blend of patience and efficiency. This typing was all done in her spare time and doubtless took a significant number of hours to complete. Many, many thanks Julie – I am enormously grateful to you once again.

I wish to thank three individuals who each contributed to the book in different but significant ways. My thanks go to Charles Kingsmill, the business strategy consultant who helped me to pull various disparate thoughts and ideas together at the start of the writing process and for his friendship and encouragement throughout. Thanks also to Louise, the Ethics Officer at one of my clients. Louise did not wish to be identified in the book but she was kind enough to spend time with me discussing some of the day to day difficulties involved in trying to manage ethics and behaviour in the workplace. Many thanks also to Philip Weston, director at Kelso Place Asset Management Ltd, the London-based private equity firm, for providing his thoughts and insights into some of the important factors that have influenced his decision-making process when considering potential investment opportunities and when managing the companies subsequently acquired.

Finally, I want to thank the numerous business people who have assisted in the writing of this book, albeit unknowingly, through their contributions to the lectures, conference sessions, workshops and training courses that I have run. Almost every time that I speak at an event I learn something new from the various comments, questions, observations and stories of the people in the audience. I hope very much that all those who have listened to my talks have enjoyed them as much as I have enjoyed presenting and delivering them over the years.

Ultimately of course this book is my own. I take full responsibility for my writing – all of the judgements expressed, the recommendations put forward, the conclusions arrived at and the mistakes made are mine alone.

Prologue

OPENING

Corporate values: an old story

‘RICE’

In the mid 1990s a company in the United States attracted much acclaim for the innovative way that it talked about itself and what it stood for. This company developed a ‘vision and values’ platform to demonstrate to investors and employees (and also to third-party stakeholders such as customers, suppliers and the local communities where its operations were based) that it was committed to good business ethics. This commitment was most memorably summarised in the pithy and catchy acronym ‘RICE’. Each letter in the acronym stood for one of the four core values that the organisation claimed underpinned its entire approach to business: respect, integrity, communication and excellence.

This was an impressive message, delivered in a highly innovative way. The company would respect everybody that it did business with. It would carry out all of its activities in the ‘right’ way, abiding by the law, keeping its word and meeting all of its obligations. The company would not only talk to people, it would listen to them too. And finally its people and the products and services that it provided could be relied upon because they were all underpinned by the highest level of technical competence and proficiency that guaranteed consistency of performance.

What was not to like about this? The so-called ‘RICE model’ was both smart (the acronym was put together by clever people to be ‘catchy’ so that everyone would remember it easily) and powerful – the underlying message was overwhelmingly positive. The model was designed to signpost those behaviours and actions that the company most valued and thereby to generate feelings of confidence and trust in anyone who had dealings with the business. It was an inspirational message, one that combined competence with a positive corporate culture – people could rely on this company.

So, how did it all turn out? What actually happened in practice?

Well, the story ended in the worst possible way with a dramatic corporate collapse. The cause was far removed from the values set out in the ‘RICE model’ – the collapse was brought about by accounting fraud perpetrated by some top executives and senior managers in the business. The company filed for bankruptcy in 2001, resulting in financial hardship and misery for thousands of employees who lost their jobs and many of them their life savings too. Investors lost billions of dollars. Numerous executives were indicted, mainly from the accounting or trading functions within the company, and many have spent time in jail. There was personal tragedy in the case too: the ex-chief strategy officer committed suicide and the ex-chairman died of a heart attack whilst awaiting sentencing.

The company's name was Enron.1

The ‘say-do’ gap

Enron included a summary of the values of the RICE model in its Annual Report of 1999.2 The Enron case provides a classic example of the ‘say-do’ gap. This is an issue that I often encounter when discussing business ethics – people can become angry when they read corporate statements that are not supported by actions and behaviour. I understand this – it smacks of hypocrisy. It is a relatively easy matter for executives to compile a list of admirable qualities and behaviours and then to talk about these as comprising the ‘core values’ of their organisation. But it is sometimes more difficult in practice for those same executives to conduct business according to their stated values, especially when under pressure in terms of their organisation's results and performance. Failure to act in accordance with values has consequences, all of them negative: disillusionment and disregard for formal rules by managers and staff; and a loss of trust by third-party stakeholders, to name just two.

Turning again to the Enron example, the RICE model was promoted in a 1998 corporate video featuring Ken Lay, Enron's Chairman and CEO at the time, together with Jeffrey Skilling, the company's Chief Operating Officer, entitled ‘Enron Vision and Values’. The footage is still available on YouTube and one section in particular is significant. It shows Mr Lay looking earnestly into the camera, nodding his head and saying: ‘We treat everyone with absolute integrity. We stand by our word; we play by all the rules; we really concentrate on doing our job right.’3 These words carry heavy irony today, knowing with the benefit of hindsight how Mr Lay and some at least of his people actually behaved in practice. Given much of what has been written about the Enron case, however, Mr Ley's words would no doubt have seemed hypocritical, self-serving and cheap to many at the time (not to all, however, and later in the book I recount a meeting I had with an ex-Enron manager that taught me the dangers of relying on simplistic assumptions).

This ‘say-do’ gap is something that people recognise very quickly and they don't like it. It is responsible for a lot of the cynicism and unease that I sense sometimes when I work with groups on business ethics, whether as part of an in-house project team or when delivering talks, workshops or courses. The gap helps to promote the idea that there are no ethics in business and that time and effort spent discussing values, culture and behaviour achieves nothing because all that matters in the cut-throat world of business is results – profits, dividends and maximising shareholder value. According to this thinking, business ethics is a piece of window dressing, at best useful for PR purposes but in reality not central to organisations or to the people who work in them.