The Ethical Enterprise: Doing the Right Things in the Right Ways, Today and Tomorrow

If you think business ethics is crucial in today’s scandal-ridden era, then just wait a few years. The reasons for running ethical businesses are only going to get more compelling—as well as more complex—over the coming decade, suggests a new global survey commissioned by American Management Association (AMA) and conducted by the Human Resource Institute (HRI).Why should companies behave ethically? The top-ranked reason is to protect a company’s brand and reputation, closely followed by the desire to “do the right thing,” according to survey respondents. Their responses highlight the fact that business ethics has both bottom-line and moral implications for business professionals.

The AMA/HRI survey on “The Ethical Enterprise” included responses from 1,121 managers and HR experts from around the world. The survey was conducted in conjunction with AMA’s affiliates and global partners, including Canadian Management Centre in Toronto, Management Center de Mexico in Mexico City, Management Centre Europe in Belgium and AMA Asia in Japan .

“We hope this study will serve as a blueprint for many leaders as they implement their own corporate ethics programs. Dealing with these challenging and complex issues forces leaders to consider and communicate what their businesses really stand for,” said Edward T. Reilly, president and CEO of American Management Association. “Corporate ethics programs should not only address what leaders expect from their employees, but also what employees and other stakeholders should expect from the corporation and its leaders,” Reilly added.

Participants in the survey—who included professionals from a range of corporate functions, especially HR, general management and operations—also believe that globalization will be the number one business driver of ethics in 10 years’ time. After all, globalization not only is going to intensify market competition, but is going to make establishing organization-wide ethical corporate cultures and standards more complex.

One major challenge for leaders will be to deal with even more competitive market conditions while not compromising corporate values. The survey asked respondents to identify the factors most likely to cause people to compromise an organization’s ethical standards. The top answer, by far, was “pressure to meet unrealistic business objectives/deadlines.” If emerging businesses in China, India and elsewhere drive managers to set unrealistic business goals, then companies could see a whole other era of scandals.

But survey respondents seem to expect there will be greater pressure to behave ethically. They expect to be held to higher corporate social responsibility (CSR) standards in the year 2015. An even more radical shift may be the growing importance of “environmental issues,” which respondents predict will be the second most important external driver of business ethics (out of 10 drivers) in 10 years; it is in the ninth position today.

As for specific programs and practices, a corporate code of conduct is viewed as being most important. Such a code must reflect and reinforce the values and principles of an organization. Rounding out the top five programs are ethics training for all members of the organization, CSR programs, ombudsman services and helplines. In summary, employees need to have a code to set the ethics foundation, training to help people truly understand it, and programs that permit them to inquire about and report ethical violations.

Of course, simply putting such programs in place is not enough; organizations need to find ways to measure their program’s effectiveness. The AMA/HRI survey found that the best ways of doing this are through ethics surveys, customer complaints and ethics audits. Going forward, it’s clear that ethics challenges will evolve as globalization continues. The survey found that the top-ranked ethics-related global workplace issues are linked to working conditions, and the highest-ranked ones include forced labor, child labor, health and safety and discrimination/harassment. As corporate operations and suppliers spread to every corner of the world, one of the primary concerns of business is to make sure the rights of all employees are properly safeguarded.

About AMA

American Management Association is the world’s leading membership-based management education and professional development organization. Since 1923, it has provided valuable and practical action-oriented learning programs to business professionals at every stage of their careers. More than 500,000 AMA customers and members a year learn new skills and behaviors, gain more confidence, advance their careers and contribute to the success of their organizations through a wide range of AMA seminars, conferences and executive forums, as well as through AMA books and publications, research, online learning and self-study courses.