Do the Right Thing

8 December 2009 Chris Roebuck

Maintaining an ethical approach to business benefits a company, its staff and customers. Chris Roebuck explains to CEO how following your moral compass should be your guiding principle.

The banking crisis has prompted the private sector to implement controls and regulations to minimise risk. However, this is not the silver bullet many think. Regulation only covers current activities and new activities will still pose a risk until the regulatory framework catches up.

Furthermore, there are legal activities that could be viewed as unacceptable, which could present reputational risk, such as the controversy over UK MPs' expenses or the use of corporate jets by CEOs of bailed-out organisations in the US.

"Small issues, if left unchecked, can slowly eat away at an organisation."

These behaviours can never be covered effectively by control systems or regulation. However, risk can be minimised by using a strong moral compass to define right and wrong.

It is not just the big problems CEOs need to worry about. Small issues, if left unchecked, can slowly eat away at an organisation, creating the possibility of large-scale disasters.

Variations in the global regulatory environment can also add to the risk. Adopting an effective moral compass creates a consistent approach, irrespective of local culture. This is vital when legal activities in one country present reputational risks in another.

Best behaviour

Your moral compass needs to be founded on your business strategy and values, and staff must have input. This will make the values simple, understandable and owned by everyone.

"Every line manager in the organisation should be an exemplar of good behaviour."

People have a greater attachment to what is right or wrong rather than to operational risk systems. The former belongs to them as individuals, the latter to the organisation. This difference is critical in determining behaviour.

Making it happen relies on the work of the CEO, chief legal or risk officer and the HRD. The CEO is the driver, the CL/RO the monitor and HR operates as the facilitator.

Every line manager in the organisation should be an exemplar of good behaviour. Your moral compass has to constantly reinforce its message to individuals and the organisation through communication, development activities and discussions between line managers and their teams.

The steps to create or refine your organisation's moral compass are simple:

  • Create new or reaffirm old values and work bottom up so everyone can commit to them.
  • Include customers and investors.
  • Ensure your staff agree to make these behaviours effective on a daily basis.
  • Make sure all the company line managers, including senior management, demonstrate these behaviours and expect their people to demonstrate them.
  • Reward people who set the right example.
  • Measure delivery.

When all your employees use a moral compass, it not only has the effect of reducing risk, but also drives engagement to deliver excellent customer service, find cost efficiencies, innovate for the future and build your internal and external brand.

Despite high-profile examples of a lack of moral behaviour by business leaders and politicians, there are also many organisations that still do things right, even in these tough times when it is easy to bend the rules.

Not only is having a strong moral compass vital for the organisation, but it is also the right thing to do. It is good for business and good for the soul.