Passage 2

In the old days measuring company performance was simply a case of looking at turnover, profits and dividends. However, the last few years have seen environmental and ethical issues move to the forefront of public concern and resulted in a closer scrutiny of a company’s performance in terms of its business ethics. As the Government has been slow to respond to the increasing importance of ethics, companies have been forced to address the subject themselves and re-align their own management policies accordingly. These policies will determine how a company conducts all aspects of its business, from dealing with clients to reporting to shareholders.

By setting themselves up as ethical, however, companies are not so much promoting the importance of ethical conduct, the well-being of the local community or the development of society as a whole, as engaging in a powerful marketing and PR exercise to attract both discerning clients and bright young recruits. In today’s markets, any company without a coherent ethics policy is in danger of surrendering a competitive advantage to its rivals.

In order to develop an ethical code of conduct, companies will have to deal with issues such as the legal implications of their disciplinary measures and the effect any new procedures will have on employees. However, new policies can only be developed once the company has identified the core values that underpin its day to day operations. Without a clear understanding of these values, it is impossible to develop a code of conduct compatible with the company’s culture. An effective code will dictate how employees approach conflicts and other stressful dilemmas not covered by the normal terms and conditions of employment. It will provide employees with a clear understanding of what behavior is expected when they find themselves confronted with such dilemmas.

Ethical procedures are particularly critical in times of crisis. Pay disputes, sexual harassment charges or cases of fraud, for example, can involve very complex issues that require careful decision-making and can have a very negative effect on staff morale. At such times it is crucial that companies act in an ethical manner. By doing so, they may not be able to avoid the potentially damaging publicity such cases inevitably attract; they will, however, be in a much stronger position to defend themselves in a court of law.

The major obstacle which companies face, having established a code of conduct, is that of ensuring that each individual member of staff follows it. Some organizations simply distribute leaflets to all staff in the hope that they will read and act on them. Other companies take a more active approach and invite management gurus to hold seminars on the subject, which, while often highly entertaining, have little long-term impact. Although some companies now include ethics as part of their standard induction program, it is widely accepted that this is not enough. The issue of ethics in the workplace is now of such importance that it needs to be incorporated into incompany development programs for all employees, from the shop floor to the boardroom.

With little sign of public concern abating, no organization can afford to ignore the subject of ethics in the workplace. In order to address the issue effectively, companies need to ensure that staff at all levels feel committed to the company and its values and are motivated to transfer this commitment into ethical behavior.

Business ethics are becoming more important as a result of ________.

Why are companies promoting ethical practice?

What must companies do first to develop an ethical code?

At times of crisis, a code of conduct reduces the ________.

How can companies ensure that staff follow ethical procedures?