Ethical performance – Driving value from an ethical culture

For businesses around the world, maintaining a constant focus on ethical performance is vital for success. A recent survey found that business leaders are increasingly recognising the need for ethical performance, and its impact on the bottom line.

For businesses around the world, maintaining a constant focus on ethical performance is vital for success.
Reputation can be built or broken almost instantly in this age of increased transparency, government regulation, and public scrutiny. Digital communication and social media enable unhappy customers, employees or even competitors to reach a global audience instantly. Organisations are increasingly recognising that ethical practices impact the bottom line. However, the way in which these practices are embedded and implemented is critical to the organisations’ ability to gain the most from an ethical performance culture.

Feedback from the Front Line

In June 2014 we asked Chartered Global Management Accountant® (CGMA®) designation holders worldwide for their insight into issues regarding ethical performance in business. Indeed, we found that reputation management is already the primary motivation for embedding ethical standards into the organisation and its culture. When asked about how they embed these standards, the leading answer was “conforming to regulations”. However, compliance on its own is not enough. Deeply instilling an ethical culture instead demands committed leadership from the top.
We found that ethics is, and will continue to be, a growing priority for business leaders. Just over half (51%) stated that ethical performance is a bigger focus for senior management than it was three years ago, and 55% believe its importance will grow further in the next three years.
However, we also found striking gaps concerning engagement with ethics:
  • Communication deficit. We found an imbalance between the prevalence of codes of ethics or conduct, policies or guidelines, and the corporate communications programmes and training needed to help implement them.
  • Leadership deficit. CGMAs told us that their organisations are building an ethical culture primarily by conforming to relevant regulations.
  • Training deficit. Inadequate knowledge and ability to apply ethical performance in the day-to-day workplace, coupled with limited implementation of ethical practices, is a corporate risk. Two in five respondents told us their organisations have not yet created channels, such as training, to raise ethical standards, showing us that action is urgently needed in those organisations.
This briefing explores some of the key areas that organisations should consider when seeking to develop and then embed an appropriate and effective ethical culture across the enterprise, including anti-corruption measures. CGMAs have a critical role to play in achieving this increasingly important task.