Can you have social responsibility without ethics?

The UK's Institute of Business Ethics reviews accusations that appear against companies in the news headlines - around 300 stories for last year. Of these, the largest number involved issues affecting customers. For instance, product safety issues, misleading advertising or overcharging. The next largest group covered market abuses, such as anti-competitive behaviour or bribery. Third then came a wider group of environmental and human rights issues.

Businesses that try to build trust with customers by running green programmes don't succeed unless the public is convinced that the action is sincere. It doesn't have to be pure altruism - people don't expect businesses to behave like charities. But if they feel it's all just for show they will be more negative, more cynical than if the company had done nothing at all.

If the stories that illustrated a lack of business ethics within business were just down to small numbers of rotten apples and the personal integrity of certain individual leaders, you wouldn't have such strong trends in terms of certain sectors registering so much higher on the scale of malpractice. Not when business leaders hop from business to business on a pretty regular basis, many of them changing sector as they do so.

The fact is that the business models of some sectors have more incentives to cheat than others. The market rewards bad practice, or the rules make it very difficult to play along whilst being successful if others aren't.

The answer isn't to treat companies in these sectors like dangerous dogs that must be muzzled - we still need thriving successful businesses, and by and large they are not run by evil or stupid people.

But it is a serious challenge, both to regulators but also to business leaders to look carefully at the business model that applies to each of these businesses.

80 percent of the companies that have been hit by these stories over the last year are amongst the top 100 listed companies. Nearly all of these firms are committed to CSR, and have codes of ethics. So why isn't it making the difference?

The point is having a policy, and having a code, is not the same as achieving consistent and reliable behaviours in line with that policy and that code. If you mean it, you have to really drive it through the business so that the person in the call centre knows the values of the business and what they mean for how they should behave when faced with a dilemma.

It is not a question of the integrity of the people at the top that means that the big companies fail in this - but it is a failure of management nonetheless not to achieve better results in consistent behaviours.

If your business operates in one of those sectors that yields more temptations than most, it is even more important.

From mallenbaker.net

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