Companies that train employees how to implement ethics codes outperform their peers, argues Simon Webley

In a 193-page internal report into the Deepwater Horizon disaster, BP says that decisions made by “multiple companies and work teams” contributed to the accident. This, BP says, arose from “a complex and interlinked series of mechanical failures, human judgements, engineering design, operational implementation and team interfaces”.

When companies face outrage from the media and pressure groups about their perceived behaviour, it often seems to be forgotten that they are not intelligent entities in themselves, but are comprised of fallible human beings making subjective judgements.

Whilst you cannot “control” what your employees think unless you are in a science fiction film, a code of ethics, supported by an ethics programme, is one way of helping employees make the “right” decisions and understand what is at stake. Most larger companies have such a code.

However, the number of companies that don’t comprehensively train all their staff in applying the company’s ethical values is surprising.

Of respondents to the Institute of Business Ethics’ 2010 triennial survey into how companies use their codes of ethics, 40% do not offer training on ethical standards to all staff.

Cut back too far?

It may be that in the current climate of cut-backs and budget slashing, spending money on ethics training is seen as a luxury, but I suggest it is a cut-back that companies can ill-afford. IBE research in Does Business Ethics Pay – Revisited shows that businesses that train their staff to understand and implement codes of ethics financially outperform those that do not by a significant margin in the longer term.

A business is made up of its individual employees, all of whom make discretionary decisions every day drawing on their own set of values. These values, or ideas of what is right, may not be what those at head office expect.

Let’s look at some dilemmas which could face a member of your staff.

• “My sales figures are low; I really need my bonus so I can pay the rent. I’m going to have to make this sale, even though this old lady doesn’t need the product.”
• “I might be fired if we don’t get this contract. I’ll have to pay a kickback to make sure we do.”
• “We’ve got to meet this deadline or we won’t get paid by the client. It’ll mean cutting a few corners …”
• “I know that one of my colleagues is stealing from the till, but I daren’t tell anyone in case the rest of my colleagues turn on me.”

Staff need support to “do the right thing”. In the IBE’s 2008 Ethics at Work Survey around a quarter of employees (23%) had been aware of conduct they thought violated the law or their organisation’s ethical standards, but only 58% of them reported it to a manager.

The cost to business if it fails to support staff to do the right thing can far outweigh the cost of a training budget. Fines from regulators, loss of confidence from investors, loss of reputation amongst customers, loss of assets through fraud – all of these potential integrity risks could be averted by a small investment.

Simple and effective

Providing training in how to resolve ethical dilemmas can help, not only by giving practical tools but also in sensitising staff to issues which may arise. This needn’t be complex, or take up hours of time better spent working (a common complaint amongst business ethics trainees!). E-learning can offer a simple but effective way to introduce the topic and start internal discussions about ethical issues.

Creating a culture where doing business ethically is “the way we work” is a long-term project, but it is effective to begin by raising ethical sensitivity and acumen.

Only when staff at all levels feel they have permission to discuss openly what bothers them, and where their ethical dilemmas lie, are you on the way to a culture of openness and transparency.

We may not be able to eliminate human error. But by supporting staff in their dilemmas, by creating workplaces where it is safe to question and challenge decisions, and if necessary lose money if those decisions aren’t the right ones to make, we may be able to mitigate against potential disasters.

There may be much more at stake than an ethical reputation, as Deepwater Horizon has shown.

Simon Webley is research director at the Institute of Business Ethics.

The IBE’s e-learning tool Understanding Business Ethics is available as a CD-ROM from www.ibe.org.uk. For a download version, contact the IBE on +44 (0)20 7798 6040.