Have you ever felt under pressure to make a forecast look better, send a marketing message which could potentially be misleading, or seen someone else’s unethical behaviour and decided to look the other way? Many professionals will encounter ethical conflicts at some point during their working lives. It may not end up as front page news but regardless of coverage unethical behaviour has consequences. Not a week goes by without a new business scandal but behind the headlines people’s lives are affected at many different levels – be that the employee, the customer, or a community.
A recent Chartered Global Management Accountant (CGMA) survey revealed that nearly 25% of respondents worldwide worked for an organisation that had suffered from a serious reputational failure. This rose to over a third in the UK, which has witnessed a series of corporate crises ranging from LIBOR to tax avoidance and meat scandals. And our research from last year, Managing Responsible Business, highlighted that one in three finance professionals around the world have faced pressure to act unethically.
Earlier this year the Edelman trust barometer research, which explores trust in institutions, industries, leaders and the impact of recent crises in the banking and financial service sectors globally, identified a "crisis in leadership". Trust in business to do what is right is only at 50%, with a mere 18% putting trust in business leaders to tell the truth. Ouch. That doesn’t bode well for a loyal customer base.
Unfortunately, it is not unusual for accountants to be in the frame. In early September the Financial Reporting Council imposed a fine of £14m in relation to the Deloitte case in the UK. The FRC said its report sent "a strong and clear message" that all accountants had a responsibility to act in the public interest and comply with their code of ethics.
In recognition of the pressures faced, CIMA has just released an ethical scenario tool to help ethical decision making in difficult situations. Publically available to all who work in business, the tool guides the user through a series of scenarios drawn from real life situations. The user decides on what steps to take, whilst also considering the ethical commitments of a professional.
Straightforward as it may seem at a glance, decisions we think are clear-cut in isolation become complex when issues of self-interest, relationships and intimidation are involved. There is not always a clear way forward, but some steps are better than others. Others may be leading you in the wrong direction. The tool allows you to reflect on your sense of right and wrong in relation to the IFAC Code and also the corporate culture in which you are working.
Raising an issue may just be the start of resolving a deeper problem, but for the long term this makes business sense. With an increased public demand for transparency and distrust in business leaders, its not so surprising that the CGMA survey also found that 76% of finance professionals were prepared to lose profit in the short term for protecting a company’s reputation and driving further success in the long term. Would you do the right thing?
Tanya’s previous blog postCorporate transparency test. Could you tell your Mum?