The public’s faith, faith in most US businesses and financial markets has been devastated as a result of the financial crisis and recession of 2008. Sadly, trust in business, their boards of directors, business executives and political leaders seems to be at a low point and will probably remain there for some time. And it can be argued, justifiably so.
For businesses and industry to redeem respect and confidence there is only one long-term option, starting with and cascading down from the board of directors, resulting in a greater degree of openness, transparency, and honesty. ethics must be reestablished in the board room.
The business community cannot attain their potential economic value without a never-ending obligation to the highest level of ethics and social responsibility. This commitment is not an option and must be driven by corporate boards of directors, the source of power in all corporations.
Over the years there has been a resurgence of interest and attention given to ethics. Occasionally, becoming a subject of national debated; at times being considered as an on or off concept, in fact, ethics is a complex, multi-layered concept that demands thoughtful deliberation.
Ethics has slowly evolved into modern day standards of social mores and legislated into laws. Stated business principles have also advanced into codes of conduct and professional standards by different business and political associations. Too often, ignored by business executives because of financial greed.
The notion of ethics is not a new management concept. An article on WorldIQ.com entitled: Simple view of ethics and morals states “Ethics is often called the science of morality It attempts to answer the essential question, “How should we live our lives? Is there or will there ever be an exact answer to that question which applies to everyone, to every situation, consistently accepted and practiced by all? Probably not?"
Directors must be part of the ethics rally; in fact, they should be in the front row. Directors must conduct themselves at the highest standards of honest behavior and not allow or accept inappropriate engagement by other members of their organization.
The objective of establishing an ethics policy is to set guidelines for all employees to follow. It is the responsibility of all to be familiar with and comply with these policies. Of course, It is not possible for a single set of standards to cover all and every situation. On occasion conditions may develop where policy does not address specific situations, in these instances one must still observe appropriate standards of conduct.
Management and staff of any organization must have the highest standard of honesty, truthfulness in business and personal dealings. The firm’s reputation is perhaps their most valuable asset; their reputation depends on professional behavior and serious concern for their customer. It takes years or an entire career to build a solid reputation and one transaction to destroy it. No amount of money can replace or enhance the firm’s reputation. Directors should not treat this matter lightly, there is a high price to pay.
Whether a one-person operation or a large interstate organization directors are strongly encouraged to adopt a written Code of Ethics. It should be displayed in conspicuous location(s,) perhaps several, so as to be readily seen by the officers, staff, and clients. Generally speaking, if it is important to directors and senior management it will be important to all staff members.
The following four management ethos will establish the underpinnings of a strong ethics culture and will set the standard to be followed. This list is not meant to be all-inclusive but will hopefully outline the groundwork of instituting a company ethics policy.
- Loyalty- to all stakeholders, employees, customers & stockholders.
- Transparency-accountability, no question unanswered, creates trust
- Privacy- take all steps necessary to protect sensitive
- Conflict of Interest- It becomes an issue when management puts their personal interest over the customer’s interest.
It must be remembered, the suggestions outlined in this article are management’s responsibilities & duties; to the company, the employees, customers, ethically, morally and legally!
Garry Barnes is a director of PW Partners Consultancy, former bank President/CEO and currently serves on the Board of Directors of Holladay Bank & Trust in Salt Lake City. He has taught at the university level and is a frequent writer/lecturer on banking, finance, and real estate matters. Barnes has served on the SBA National Advisory Council and was a consultant to the Central Bank of Russia (in-country). Garry can be reached by e-mail at pwpartners@msn.com