Businesses are seen as becoming more ethical and Simon Webley explains how abiding by a code of ethics can benefit a firm, its customers and employees.
Every year, the Institute of Business Ethics asks the British public their opinion about ethical business behaviour. This year, the survey shows that the public’s general opinion on this topic has improved. More than half (52%) now say they consider that business behaves ethically, a slight recovery from the dramatic dive to 48% in 2017, but not yet back up to 2015 levels (59%).
The strength of negative opinion is also decreasing, with fewer people now saying that business behaves “not at all ethically” – this is down from 9% in 2012 to 5% in 2017.
Since the survey began in 2003, the British public’s opinion has consistently leant more towards judging business as behaving “ethically” than “not ethically”. However, in the past year, public opinion fell significantly, down 11 percentage points compared to 2015.
Although this recovery is encouraging, it may be that business is positively benefiting from scandals that have hit other sectors, such as American politics, Hollywood, Westminster and football. By contrast, business may be appearing more responsible in the eyes of the public.
This “#metoo effect” ties in with another annual survey – the Ipsos MORI Veracity index, which examines whether the public trust different professions to tell the truth. This year, for once, business leaders are not among the five least trusted professions, and 36% of respondents trust them to tell the truth as opposed to 33% last year. Professional footballers (26%) are among the least trusted for the first time and, perhaps unsurprisingly, politicians remain at the bottom with 78% distrusting them. In fact, trust in business leaders has improved by +11 percentage points since the survey began in 1983.
However, in these times of fake news and social media scandals, trust is still a fragile and precious commodity. Having a reputation for honesty and ethics can differentiate a business and make it more successful in the long term. This trust can create a solid and sustainable base on which to do business, enhance reputations and increase customer loyalty.
Some people think that business ethics is an oxymoron – like a deafening silence or a jumbo shrimp and don’t see it as relevant to daily life. Media reports of malfeasance by big business – sinister marketing practices, dodgy tax deals, fat cat pay and manipulative algorithms – increase the perception that business ethics has little relevance in our workplaces.
Business ethics is not just about big issues like human rights, modern slavery, sweatshop labour or climate change. By the coffee machine, in the staff room, down the pub, people will often be heard talking about ethical issues without even realising it; issues of fairness, trust, conflicts and dilemmas.
The IBE defines business ethics as the “application of ethical values to business behaviour”. In short, it is about how business is done. Yet just as everyone thinks they have a sense of humour, we all think we are ethical and don’t really take the time to consider what that means.
Whether it’s deciding a supplier of goods or services, choosing who to hire or fire, or wondering whether to bend the rules for a client or take that contract, we are making ethical choices every day.
Let’s consider four common ethical dilemmas that might occur no matter the job or business. Try to identify these and ask yourself what you would do in these situations?
Sian has a long-standing client who, over the years, has become a family friend. Their children go to the same school and they occasionally spend weekends together. At one barbecue, he pulls her to one side and asks for her help to get the bank to look favourably on his request for a business loan. “If I don’t get this loan, I’ll miss the deal. You know how to make the figures look good. Can you do me this favour? No one would know.”
Tara needs to find a new supplier. She calls a few to get quotes and invites them in to pitch for her business. Danny, the boss of one of the firms, suggests a scoping meeting. “Let’s do it over lunch!” he says. “I always find it really helps to get a clear idea of the brief over a nice bottle of wine. I find the best partnerships are those cemented by friendship.”
Craig is overwhelmed by the pile of bills in his in-tray and it’s payday. He looks out from his office at his staff working late on year-end accounts for clients. At this time of year he knows it can take months for his invoices to be paid. He looks through the bills again. He’ll pay his staff, no question, but some of these are going to have to wait. He has warning letters for his car and the children’s school fees. Tariq’s bill is by far the biggest. His firm have always been lenient with him in the past, and Tariq knows he is good for payment – in the end. But it’s tough times for everyone in this business, and Tariq had mentioned to him before how in the red he was.
Rav is in a bar, when he spots the two account managers from Maddison’s – his local competitor – having a very boozy after work get-together. They are being very loud, and he can’t help over hearing them talking about a pitch they are going to make for a big contract. Rav’s business hasn’t been doing well these past two months. He could do with a new contract and this would make a difference because, after the loss of a major client, he has been struggling to make ends meet. He considers moving tables to find out what exactly they are talking about.
The importance of trust
Financial accountants – as with any business – need to be trusted to operate. However, for IFA members it is all the more important. They are trusted to give objective and independent advice and to conduct themselves with professional ethics, especially as they are often working in or providing advice to small and micro businesses in which the owners’ very livelihood is invested.
Customers and employers are looking for accountants they can trust. Developing ethical acumen is not only an essential personal skill; it is also a vital business attribute. Customers are attracted to companies whose accountants offer the very best both professionally and ethically.
Not only will the Institute of Business Ethics’ e-learning – Understanding Business Ethics – help to identify ethical dilemmas, it provides practical tools to solve them and sensitise users to the issues and “integrity risks” that may arise in business life. Completing this e-learning course will demonstrate an understanding of business ethics and commitment to high professional standards; both for one’s own personal brand as well as to customers, colleagues and employers.
Do the right thing
Ethical dilemmas arise in the grey areas – the tension between doing the right thing for your business, customer, family, yourself and your profession. This is where values come in. Ethical values are the compass by which we live our life; they are what is important to us. Our values help us make decisions on which way to turn in a situation.
Thinking about values will help in decision making. Ask yourself: who would my decision hurt? How would I feel if others knew about it?
True, being ethical is not always easy and it may take courage. But beginning to think about these things will help you to live your ethics every day. Don’t let business ethics be a deafening silence.
Simon Webley, research director, Institute of Business Ethics