Wednesday 26 November 2014

Key to decision making: what does my gut tell me is the right thing to do?

One of the world's most ethical  companies (WMEC) makes it crystal clear to employees what to consider when making day-to-day decisions.  "If an employee is in any doubt about whether something is ethical then the internal guide spells out what is expected through key decisions  such as "what does my gut tell me is the right thing to do?" If the employee is still unsure after these questions then they can stop and ask for help from the Ethics and Compliance helpline."

The world's most ethical companies talk openly about "how things are done around here". They have vocal and visible ways of doing things their way for example "will it help build trust in you and the company?" Their "way" is continuously reinforced in day-to-day life providing a common terminology and language to help challenge unethical decisions which are outside the norm.

They unashamedly talk about ethics, ethical behaviours, doing the right thing, responsibility and corporate citizenship and there is clear pride in this. Employees have regular training on ethical conduct backed up by internal documents which explain explicitly what is expected, how this translates into ethical behaviours with examples of ethical decision making stories. This has become part of their ritual and routine.

The key perhaps for companies looking at responsible business practice therefore is to develop a culture of confident and comfortable challenge where accounting for how you feel (what my gut tells me) plays a valid and valuable part.




Thursday 20 November 2014

Creating reasons to believe

Many companies now have their vision and value statements as part of standard business practice, but the key difference shown by the research conducted into the world's most ethical companies entitled "changing the story: reasons to believe" was the fact that these companies provided on-going, genuine, committed  "reasons to believe" what was being stated to all stakeholders. They showed the difference between stating something and acting out the statement in practice ie how they do it.

They don't just put their customers first ( a now overused value statement) they demonstrate how they do this e.g. by treating customers like family and genuinely putting the customer before profits. They don't just talk about transparency they are open e.g. one company posts its political donations on its website.They don't just expect high standards from their suppliers they share best practice with them. They don't just talk about the environment they act like the "best neighbour they can be".

And in doing all this they are still profitable. But changing the corporate story in this way requires huge and unrelenting energy from the top team, what the paper terms "tempo from the top" to ensure that business and ethical performance are aligned and fully functioning. While building and retaining trust in this way does require a lot of effort, it is surely worthwhile in creating a motivating,fulfilling and enjoyable place to do business, which has spin-offs for all stakeholders, including the investors.

Wednesday 12 November 2014

Banks don't give a XXXX for their clients' For Ex.

Today the FCA fines 5 banks a collective £1.1 bn, the largest fine ever imposed, for misconduct in the foreign exchange markets. It states that the banks put  "their interests ahead of their clients" and behaved "unacceptably".

This is another fine example of why ethical behaviours are so important to business. Without them an organisation is at risk of both large direct costs (the fine itself), huge reputational damage and a continuing erosion of trust ( much harder to rebuild than lose) and regulatory interference and scrutiny (the FCA will be undertaking an "industry-wide remediation programme on root causes") which damages and impacts the whole of the sector.

 It is therefore a competitive imperative not only to act ethically but also to take the lead in engendering responsible behaviours and ethical business practices for the benefit of the whole sector. Whether you're one of the banks directly involved or nor, the result is that all banks are maligned and damaged. This is something their leaders should a give a xxxx about.

Tuesday 11 November 2014

Tempo from the top to create momentum from the middle

In a review of the world's most ethical insurance companies, produced for the Chartered Insurance Institute (CII) as part of its ethical guidance series, one of the key points was for the main change agents ie the leaders, to demonstrate "tempo from the top", a term coined to replace the more passive "tone from the top". Leadership tempo is seen as a key way in driving "momentum from the middle" ensuring that the organisation fires on all cylinders, essential elements in gaining competitive advantage (sector leadership) both financially and ethically. Their success does not happen overnight It requires determined and sustained communication and feedback with stakeholders and a real sense of business purpose.

To read more see  the "changing the story: reasons to believe" report.http://www.cii.co.uk/media/5693987/c14j_9286_ethical_culture_5_reasons_to_believe_-_v3_web.pdf

More of the findings will be covered in this blog over the forthcoming days.

Monday 3 November 2014

The living wage is good for business

Today the UK Living Wage rate has been set at £7.85 per hour, an increase of 2.6% on the 2013 rate and 21% higher than the national minimum wage of £6.50 per hour; improving the take home pay of 35,000 low-paid workers across the country who are employed by over 1,000 Living Wage accredited organisations.

Mike Kelly, Head of Living Wage at KPMG stated that the “Business benefits of the Living Wage include higher retention and productivity, and over 1,000 responsible businesses recognise this. The Living Wage may not be possible for every business, but is certainly not impossible to explore the feasibility of paying it.”

 Stephen Uden, Head of Corporate Citizenship, Nationwide reinforces this message“To celebrate Living Wage Week we are proudly displaying the Living Wage logo to demonstrate we are part of a movement of responsible businesses. Increased staff motivation and retention rates, reduced absenteeism and recruitment costs are common benefits reported following implementation of the Living Wage".

As the Living Wage companies are showing fair treatment of employees is a key factor in building reputation and trust in a business which in time will help to boost sustainable long-term value.