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Fostering a More Ethical Business Culture

CGMA logoA few weeks ago, I shared with you my (reasonable and totally understandable) enjoyment of data points and survey results in all their shapes and sizes. I have also always been a huge fan of The Ethicist column in the New York Times Magazine, and put serving as ‘The Ethicist’ near the top of my dream jobs list. Needless to say, the recent results of the global business ethics survey from the AICPA and the Chartered Institute of Management Accountants were right in my wheelhouse.

It’s encouraging to see that four out of five businesses worldwide report that they have committed to ethical performance. But according to Managing Responsible Business, a global survey of almost 2,000 CGMAs, the rhetoric does not always match the reality. While 80 percent of organizations provide a code of ethics to employees, only 36 percent collect ethics information such as the number of employees attending ethics training and actions taken on hotline reports. The report suggests that companies need better processes to really operationalize their ethics programs.

“CPA, CGMAs can play a key role in guiding companies in how to better collect and report ethical information by drawing on their training and understanding of professional ethics, as well as their skills in obtaining, analyzing and acting upon management information,” said AICPA President and CEO Barry Melancon, CPA, CGMA.

There’s an important role for CEOs, CFOs and boards of directors as well.

“The importance of leadership should not be underestimated,” Philippa Foster Back OBE , Director, Institute of Business Ethics, says in the report. “The culture of an organization is set by the ‘tone at the top’ whether that be senior management, or branch managers, or team leaders.”

And the tone at the top appears to have weakened, according the CGMA report. Neither senior management nor boards of directors seem to be reviewing, analyzing and monitoring ethics data to the extent they were in 2008. In 2012, 78 percent of senior management reviewed this information, down from 86 percent in 2008. For boards, the number has fallen to 56 percent from 68 percent.

These findings come alongside others in the report, which suggest increased pressure – particularly in emerging economies – to act unethically.

There are a number of steps that can be taken to foster an ethical business environment. The AICPA and CIMA recently released an ethical management checklist to help executives effectively embed sound ethical practices in their businesses.

Managing Responsible Business is a follow-up report to one conducted by CIMA in 2008 and is the first time responses from the U.S. have been included. Geography and company size are key factors in the findings, with larger companies from more developed economies generally having more advanced ethics programs. U.S. companies, for instance, are most likely to monitor or evaluate ethical standards, according to the report.  

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