Posts Tagged ‘culture’

Business Ethics

Friday, May 8th, 2009

I attended a seminar run by the Institute of Business Ethics the other day, where the issue of ethics in modern business was explored. Modern business people are now used to talking about their business values, things such as Quality, Excellence, Teamwork etc; however, perhaps less discussed are Ethical Values such as :-

  • Honesty
  • Transparency
  • Integrity
  • Openness
  • Trust
  • Respectfully
  • Fairness
  • Responsibility

Business values tell all employees what is important, and Ethical values tell them how to do business. The message about values goes beyond employees and is a commitment to all stakeholders such as customers, suppliers the community and shareholders as well.

We only have to think of the Enron debacle and the fallout from that to realise that failure to address ethical behaviour effectively can ruin more than one company. Click here to hear just how bad it can get!

Here is a variation on the ‘two cows’ theme:-

ENRON Venture Capitalism: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred, via an intermediary, to a Cayman Islands company secretly owned by the majority shareholder, who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more.

So getting it wrong can damage your business… think of how people feel about some of the big oil companies that have contribute to huge oil spills (remember the Exxon Vladez?).

If you are in a large organisation you probably have a neat little folder telling you about your company’s ethical standards. Interestingly, Enron had one too; it was written by lawyers and thus incomprehensible to normal human beings. Also, their system of reward & review only paid bonuses to the top 25% of the staff, so anything that might impact your performance affected your prospects.

As long as your Ethics Guidelines is just one more binder on your bookshelf it will do little good. It has to become part of the corporate culture, part of how you do things, part of your organisations DNA. You need to have an open culture where these dilemmas can be discussed. In the real world, no matter what a little book says, there are shades of grey. How do you handle foreign customers, suppliers and politicians who have different cultural norms? Just which countries cultural norms should you be abiding by?

Here is a simple three part test that can help keep you from making a misjudgement:-

1. Transparency: Would I mind if others knew what I have done? Or perhaps, would my gran be proud of me if she knew this?

2. Effect: Who, if anyone does my decision/action harm? Remember all those stakeholder groups!

3. Fairness: Would my decision be considered fair by those affected?

An interesting and salient fact is that businesses who get their ethics right out perform those who don’t on 3 out of 4 measures and survive hard times better. This is an issue that affects your bottom line! These days with a competitive job market, people don’t stay with employers that make them feel bad about themselves and their actions.. they walk. Can you afford ethics? Can you afford not to have them!

“Let me give you the definition of ethics: it is good to maintain life and to further life. It is bad to damage and destroy life. And this ethic, profound and universal, has the significance of a religion. It is religion.”Albert Schweitzer

For those of  those of  you who want to move into action here is some guidance on good and not so good practice in this area.

 Institute of Business Ethics Guide to making Codes of Ethics Effective

Good
Practice

Poor
Practice

Root the code in core ethical values

Pinning the code to the notice board

Give a copy to all staff

Failing to obtain board commitment to the code

Provide a way to report breaches in a confidential
manner

Leaving responsibility for its effectiveness to HR
or any other department

Include ethical issues in corporate training
programmes

Failing to find out what concerns the staff at
different levels

Set up a board
committee to monitor the effectiveness of the code

Not to feature the code in induction training and
management development activities

Report on the code’s use in the annual report

Not to have a procedure for revising the code
regularly

Make conformity to the code part of a contract of employment

Make exceptions to the code’s application

Make the code
available in the language of those staff located overseas

Fail to follow up breaches of the code’s standards

Make copies of
the code available to business partners, including suppliers

Fail to set a
good example by corporate leaders

Review code in light of changing business
challenges

Treat the code as confidential or a purely internal
document

Make sure senior staff “Walk the Talk”

Make it difficult for staff to have direct access
to the code

Pond Life?

Saturday, April 11th, 2009

I have always wanted a pond since I was a little boy; I remember being fascinated by one my grandfather had.  Eventually, once our kids were old enough for it to be safe, my son and I built one and it gives me huge pleasure every day.  I was recently given a number of beautiful fish and had to upgrade the filtration to handle these new fish.  The thing is that fish generate waste that poisons the water and you need to make sure that there are enough plants and microbes to convert the waste from poisonous ammonia into harmless nitrogen.

When you gather  people together in close proximity they also generate ‘stuff’ that needs processing and you need to create a healthy environment and systems to handle this.  You need to provide space, time and opportunity for them to communicate both their good ideas and their peeves.  In a properly balanced team environment the bits that one person leaves behind will be picked up by others.  One person’s weakness will be balanced by another’s strengths.  As a leader, you have to take responsibility for creating an environment in which your people can thrive….

“Language screens reality as a filter on a camera lens screens light waves”

“It is your human environment that makes climate”   Mark Twain

 

Golden Oldies

Saturday, February 28th, 2009

I was driving along the M25 this evening and noticed one of these old Bentley Speed 6’s: as I pulled off about 30 minutes later onto the A3, there it was.  We were next to it and you could hear this huge, powerful throaty growl.  I guess it must have been almost 80 years old and still sounded amazing!  I then realised that I was listening to Chuck Berry ‘Johnnie B Good’ and that is 50 years old and still had its power.

When you build something right, when you give it your heart and soul, it stands the test of time.  I wonder how many of the things we are making today will be around in 50 years and still be ‘doing the business’? 

I think that something special happens when we offer the best of ourselves, whether that be at work or just show up and let ‘our light shine’.  How do you set this kind of example?  How do you create an environment where excellence flourishes?

“Excellence can be obtained if you:
…care more than others think is wise;
…risk more than others think is safe;
…dream more than others think is practical;
…expect more than others think is possible.”