Do managers feel pressure to put profit first?
Most manager’s income is tied to their performance, and the key performance indicators (KPI’s) by which they are judged are invariably financial rather than altruistic.
A UK report Management Agenda 2015 asked 1600 managers and workers whether they felt pressure to compromise their companies’ ethical standards to meet business objectives. One third of respondents reported that they had.
They said that the most common pressure was a need to follow their manager’s objectives, followed by overly aggressive financial or business objectives.
The report’s authors Roffey Park Institute, believe leaders may not realise their instructions can be interpreted in this way.
They suggest that the most ethical managers in practice are the ones who consciously take the time to think their decisions through, while others may simply not have time to do that, and are not aware their decisions may have undesirable consequences.
The report also identifies a gap between an organisations stated values, and those practised by their management –a difference in policy and action.
The Institute of Business Ethics agree with these findings, and say that employees do not trust their managers not to cut corners to win business, even at ethical companies.
They believe this may be a training issue, and that people are not aware of how the business expects them to behave.
Organisations who do have ethical policies need to ensure that staff are given clear guidelines and told how to apply them. They need to understand that they should make ethical decisions and will not be penalised even if it costs the company money or means a target is missed. Staff need to trust that this will be the case.
To some extent this depends on all leaders “buying –In “, because if there is even one leader who varies from the policy, trust will be lost. If there is one person in a leadership position who is unethical, the whole company can be compromised. This presents problems for a management team who have appointed a manager who does not act ethically.
This situation can be addressed by clear communication about what is expected of managers in terms of ethical decision making and reinforcement that ethics should always take precedence over profit.
What areas should ethical policy cover?
Let’s have a look at the different areas of a business and consider how ethical policy may impact it.
Human resource policies
Paying the legal minimum wage, or above it
Not using child labour
Fair working hours
Workplace safety, health and safety policy
Breaks during the working day
Paid Holiday entitlement
Health care and family health care provision
Family friendly policies
Help with childcare costs
Looking after staff in retirement
Employing disabled people,
Equality of opportunity
Relationships with suppliers
Fair trading practices
Fair and transparent negotiations
Honouring agreement and contracts
Prompt invoice payment
Monitoring Supplier ethical compliance
Discouraging bribery and corruption
Advising new suppliers
Sales and marketing
True and fair advertising
Concern for product safety
Transparency on ingredients
Respect for customer privacy
Concern for environmental impact
Health and safety policies
Careful waste disposal
Not participating in testing on animals
True and fair view of accounts
How does a company ensure its ethical policies are enforced?
Despite these policies, we frequently hear stories of ethical misconduct, misappropriated finances, broken contracts, unfair labour practices, bribery and corruption. So how does the management team ensure its policies are understood and interpreted correctly?
They need to communicate regularly with staff, restate the policy, ensuring guidelines are well understood. New recruits must be trained in the detail of the policy. Some companies insist on annual ethical training for all staff as a condition of continued employment.
Someone in the management team should “own “the policy and be available to discuss contentious issues and offer guidance and interpretation to managers who request it.
Management must strictly monitor compliance and ensure deliberate violations have consequences that are visible to everyone.
Ethical policies and practices don’t of themselves guarantee success, but it is likely in today’s culture that companies that do not have them are less likely to succeed.