The term Corporate Responsibility is being bandied about in many out-of-context terms. It is important to look at the whole of business, rather than at the micro-niche parts. Depending upon whose definition of Corporate Responsibility we hear, it could currently symbolize:
In reality, Ethics has long been with us., though some companies did not observe, designate or prioritize it Discussions about ethics in business come from the shadows when crises of magnitude present themselves. Also in reality, companies will continue to make catastrophic blurs in public confidence unless their eyes are widely opened.
In order to succeed and thrive in modern society, all private and public sector entities must live by codes of ethics. In an era that encompasses mistrust of business, uncertainties about the economy and growing disillusionment within society’s structure, it is vital for every organization to determine, analyze, fine-tune and communicate their value systems.
In my opinion, Ethics is more than just a statement that a committee whips together. It is more than a slogan or rehash of a Mission Statement. It is an ongoing dialog that companies have with themselves. It is important to teach business domestically and internationally that:
Ethics relates to every stage in the evolution of a business, leadership development, mentoring and creative ways of doing business. It is an understanding how and why any organization remains standing and growing, instead of continuing to look at micro-niche parts.
Integrity is personal and professional. It is about more than the contents of a financial report. It bespeaks to every aspect of the way in which we do business. Integrity requires consistency and the enlightened self-interest of doing a better job.
Financial statements by themselves cannot nor ever were intended to determine company value. The enlightened company must be structured, plan and benchmark according to all seven categories on my trademarked Business Tree™: core business, running the business, financial, people, business development, Body of Knowledge (interaction of each part to the other and to the whole) and The Big Picture (who the organization really is, where it is going and how it will successfully get there).
One need not fear business nor think ill of it because of the recent corporate scandals. One need not fear globalization and expansion of business because of economic recessions. It is during the downturns that strong, committed and ethical businesses renew their energies to move forward. The good apples polish their luster in such ways as to distance from the few bad apples.
Mandated reforms cannot take the place of personal responsibility, company ethics programs and industry standards that uphold values. No piece of legislation cannot cause sweeping actions overnight.
Ethics means operating a business in ways that meet or exceed the ethical, legal, commercial and public expectations that society has of business. This is a comprehensive set of strategies, methodologies, policies, practices and programs that are integrated throughout business operations, supported and rewarded by top management.
The growth of corporate responsibility as an issue and a mandate stems from several events and trends:
The value of corporate responsibility can be measured in quantitative and qualitative ways. Companies have experienced bottom-line benefits, including improved financial performance, reduced operating costs, access to capital, increased sales and customer loyalty, positive reactions to brand image and reputation, heightened productivity, employee commitments to quality, empowered loyal workforces and reduced regulatory oversight.
Corporate Social Responsibility is concerned with treating stakeholders of the company ethically or in a socially responsible manner. Consequently, behaving socially responsibly will increase the human development of stakeholders both within and outside the corporation.
Corporate Sustainability aligns an organization’s products and services with stakeholder expectations, thereby adding economic, environmental and social value. This looks at how good companies become better.
Corporate Governance constitutes a balance between economic and social goals and between individual and community goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for community stewardship of those resources.
Ethical priorities for your company in the New Order of Business may likely be addressed in the event that you:
Perception is reality. It is no longer sufficient to pay lip service to ethical issues, such as investor protection, consumer accountability, issues management, protecting the environment and diversity. Concern must be demonstrated. The public needs to see action on every company’s part. The same holds true for public sector institutions.
Credibility is formed by the ability to impact all other issues. Total quality means that we must communicate cross-culturally. Find out what people need to know, when they need it and then deliver it.
Organizations who fail to address ethical issues of the day are endangered species. Whatever the public expects of companies, then those companies should expect the same of themselves. My concerns revolve around these areas:
Too many artificial measurements abound and are based upon flash, sizzle and hucksterism. Having the weekend movie box office grosses for movies on TV and in newspapers every Monday is bogus. Momentary box office grosses are not accurate measures of a film’s worth. So much coverage of sales volumes leads media pundits to use ludicrous terms like “X knocked off Y this weekend.” When the public hears that misleading statements, they start talking that way too. The public consciousness needs to get away from teasers and slogans.
Anybody who hangs their hats on changeable, temporary rankings is headed for a fall. Top rankings as the ultimate measure of worth and value lead to cottage industries that manipulate the numbers. Bogus research gets purchased. Inflated production reports, unrealistic market shares and improvement quotes receive the spin of those vested in perpetuating the myths. Projecting futures by past momentary successes will escalate the sweepstakes mentality. As long as the media keeps posting movie box office receipts as the only measure of films’ standing, then films will be made to match those criteria.
Business has turned into a smoke and mirrors aura. When perceptions matter more than realities and hype more than substance, then the stakes keep escalating to a frenzy. They parlayed the hype to the media, who conveyed to the public, who re-conveyed to each other via idol chatter. The buzz created an unrealistic stock marketed, populated by get-rich-quick day traders.
The frenzy for slogans and clever quips has anointed the word “solutions” into the business lexicon. Solutions are vendor commodities that appeal to purchasers who don’t know any better. We keep investing in technology, rather than developing “human intelligence.” We buy “solutions” from providers rather than address real, systemic and long-term challenges and opportunities for the company.
The computer consulting industry gave us the Y2K event in 1999, a fever frenzy that was designed to generate billings for consulting, training and sales of technology. American business spent more than $600 billion on Y2K consulting, paying for it by cutting such more important activities as strategic planning, training, employee compensation and marketing. Research shows that 91-99% of those problems never would have occurred. The vendors perpetuated the spin that their work kept the problems from occurring, with unsuspecting buyers believing and perpetuating the justifications.
Accountants see business through the financial dimension. To pick most the top management from the financial ranks tends to perpetuate the myopic viewpoint. Accounting firms are notorious at not wanting to collaborate with other consultants and professional disciplines. By not allowing other perspectives on their radars and controlling the business model in their favor, a continuum of sameness has occurred. It will continue to occur until business widens its scope and perspective.
Conversely, as a reaction to corporate scandals the term CEO is currently in disfavor. The public decries CEOs for the same reasons that we canonize them. People envy the power, status and wealth and cannot fathom the endless behind-the-scenes work conducted by reputable CEOs and management teams.
Most CEOs are not adequately groomed for their roles as company role model and leader. They come from the ranks of core business or financial, without proper exposure to other facets that make a winning company. Thus, they surround themselves with like minds or yes-men. Many CEOs do not take counsel of qualified experts, thus remaining isolated, partially-focused and lonely at the top.
A CEO is only as good as the team that he-she leads. A top CEO fulfills roles and responsibilities across every business unit. The CEO must amass people skills, marketing savvy, planning expertise, quality orientation, leadership tenets, marketplace championing and much more. The days of the internal, bottom-line-only-focused CEO are long obsolete.
Ethics is the science of morals, rightness and obligations in human affairs. Institutions must conduct many activities that impact their general welfare. Ethical issues go beyond nice rhetoric and must encompass duties, principles, values, processes, responsibilities and governing methodologies.
Organizations who fail to address ethical issues of the day are endangered species. Whatever the public expects of companies, then those companies should expect the same of themselves.
The Ethics Statement must be more than a terse branding slogan. Like the Mission Statement in the Strategic Plan, it is the amalgamation of careful thought, weighed insights and tests for fairness and durability. The Ethics Statement must be a part of the Strategic Plan, as are such other fundamental statements covering customer-focused management, diversity, valuing stakeholders, quality management and an empowered workforce.
Every organization differs in how it will implement Corporate Responsibility and Ethics programs. The differences are factored by the company’s size, sector, culture and the commitment of its leadership. Some companies focus on a single area of operation. The Code of Ethics may include Fundamental Canons, Rules of Practice and Professional Obligations.
Business ethics encompass much more than accounting fraud and the publicly stated values of stocks. Ethics should be attached to many other important areas of business. Elements in the Ethics internal company review, which could subsequently be addressed in the full ethics plan, may include:
The corporate ethics program may include a code of ethics, training for employees for ethical behaviors, a means for communicating with employees, reporting mechanism, audit system, investigation system, compliance strategy, prevention strategy and integrity strategy. The program seeks to create conditions that support the right actions. It communicates the values and vision of the organization. It aligns the standards of employees with those of the organization The program relies upon the entire management team, not just the legal and compliance personnel.
A formal and well documented corporate ethics program will prevent ethical misconduct, monetary losses and losses to reputation. If communicated well, it may breed customer trust. In fact, I highly recommend using executive summaries of the ethics program as a corporate communications tool. The sending of the Ethics Statement to customers, suppliers, regulators and other stakeholders demonstrates the extra length to which the company goes to become a model. It becomes a good marketing mailing, and it’s the right thing to do.
As part of strategic planning, corporate ethics helps the organization to adapt to rapid change, regulatory changes, mergers and global competition. It helps to manage relations with stakeholders. It enlightens partners and suppliers about a company’s own standards. It reassures other stakeholders as to the company’s intent.
“The end must justify the means.”
“If I am not what I say I am, then you are not what you think you are.”
“What is moral is what you feel good after. What is immoral is what you feel bad after.”
“Virtue is not always amiable. The happiness of man, as well as his dignity, consists in virtue.”
“Very often, our virtues are only vices in disguise.”
“Always do right. This will gratify some people and astonish the rest.”
“The laugh is always on the loser.”
“The function of wisdom is discriminating between good and evil.”
“Ethical axioms are found and tested not very differently from the axioms of science. Truth is what stands the test of experience.”
“The humblest citizen in all of the land, when clad in the armor of a righteous cause, is stronger than all the hosts of error.”
“We can act as if there were a God; feel as if we were free; consider nature as if she were full of special designs; lay plans as if we were to be immortal; and we find then that these words do make a genuine difference in our moral life.”
“We must learn to distinguish morality from moralizing.”