A Moral Barometer

Regulatory compliance has gained prominence during the global economic crisis, with new codes of conduct being implemented. But what steps are being taken to make businesses more ethical? JABE's Damian Schogger suggests a new approach.

In addition to the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Information Officer, and even the Chief Compliance Officer, Chief Risk Officer and Chief Marketing Officer, perhaps now is the time to appoint a new type of CEO...the Chief Ethical Officer.

Driven by the media, the internet, and online social networking, today's consumers are not only interested in product, price and quality, but are increasingly taking into consideration a brand's "externalities" - the impacts an organisation has on the world and society. No longer will a ‘good value' product - whether it's the latest must-have clothing or a hot stock - be seen purely as that. Conscientious and savvy consumers are now closely monitoring the supply chain - looking at how and where the product was made - or what environmental or health impacts the company behind the stock is having.

The ongoing uncertainty of global economic conditions, combined with the continued faith in large institutions still lacking, mean that it is time for businesses to consider appointing an ‘ethics guardian' at a senior management level; someone who will ensure the business's ethics are clearly established, maintained and adhered to, and will become the corporation's moral barometer.

Since businesses have a host of regulatory obligations to meet, as well as internal policies and procedures to adhere to, why shouldn't corporate governance extend to ethics? With the appointment of a Chief Ethical Officer in place, organisational buy-in from top to bottom is crucial for this stance to become part of the corporate tapestry.

Ultimately, strong definitive ethical direction and strategy must be provided through robust leadership. Directors can use a well-defined ethics policy with graduated objectives - from overriding principles at Board level, to rules that can be implemented at operational level - to entrench the ethical values they want their company to represent, with a view to their permeating every aspect of the business.

Once implemented, business should be conducted against a set of published guidelines, with non-compliance resulting in penalties for individuals or teams involved, as set out within the organisation's ethics charter.

Such an ongoing commitment to ethical standards, along with greater transparency, can only benefit a business in the future, both internally and externally. While good news never travels as quickly as its bad sibling, a steady reputation built through positive actions is certain to build morale within the workforce, while externally it is likely to attract new consumers and staff, as well as make investment and partnerships more attractive options.

Inevitably, as the world shrinks, and new markets continue to extend their sphere of influence on the global business landscape, much of an organisation's reputation is likely to be measured against its conduct, values, and integrity, and those of its employees, partners, customers and suppliers. And without a board level appointment to lead, maintain and promote a business's ethics, the adverse affects could be significant.