Ethics codes required to bridge the integrity gap: Companies need a yardstick to assess their behaviour, writes Roger Trapp

ETHICS are a problem for business. Everybody thinks they are important, but few seem to know what to do about them, according to a survey published last week.

The study by Integrity Works, the business ethics consultancy, and Ashridge Management College investigated the views of non-executive directors, because they are seen as being in a good position to 'guide and shape corporate values'.

A total of 43 per cent said their organisations had codes of ethics. 'Ethics awareness training' took place in 13 per cent of companies, and ethics audits in 8 per cent. But 61 per cent relied on discipline instead of using these measures to encourage the correct behaviour.

More than half of respondents said that ethical standards in business were better than 10 years ago, but a fifth admitted that their companies had never had formal boardroom discussion of the issue. A quarter said their organisations had no means of overseeing ethical standards.

In addition, while most felt it was 'very important' for business to be viewed as ethical, only 42 per cent of them felt that the general public sees business as 'quite ethical'. More than a quarter felt that the public views it as 'quite unethical'.

John Drummond, managing director of Integrity Works, said this suggested that there was a significant 'ethics deficit' between the way business would like to be seen and the way the public perceived it.

To close this gap, a company would first have to assess the size of the deficit, then put in place a meaningful code of ethics and ensure that it was properly monitored and enforced. It should develop an ethics index so that it knows how well its corporate behaviour fits in with stated ethical standards.

'None of these measures are costly in terms of expense, but their absence could be very costly indeed, particularly when someone in the organisation is tempted to sacrifice integrity for short-term advantage. That way lies corporate tragedy,' the report said.

Mr Drummond, who recently helped National Westminster Bank introduce a code, said the matter was becoming a big issue because it was closely tied to reputation.

But another study, by Siobhan Alderson of the Cranfield School of Management, demonstrates how careful companies must be about recognising cultural differences.

Her research into attitudes of more than a thousand UK, Irish and US managers found, for instance, that the British and Irish are chiefly concerned with share price and stockholder behaviour, while their US counterparts see acceptance of bribes as less ethically significant than job termination.

The sixth annual conference of the European Ethics Network in Norway in September will no doubt throw up additional differences.

In the meantime, organisations should bear in mind the Integrity Works / Ashridge study's finding that the chief executive's stance is crucial.