Chartered Management Institute: In my opinion

Chartered Management Institute Companion Ian Robertson, group CEO of Wilson Bowden, argues for an ethical framework for decision-making.

Last Updated: 31 Aug 2010

April's In My Opinion by Kevin Beeston referred to the impact of over-prescriptive controls on companies' responsiveness. I read it with great interest because one of the themes I developed during my years as president of the Institute of Chartered Accountants of Scotland (ICAS) was the need to fight back against the 'zero tolerance' mentality to risk management - and the stifling effect it has on an enterprise culture.

As always, it is one thing to complain and another to provide solutions, but one obvious way to begin to tackle the problem is to ensure that there is an acceptable set of standards for decision-making within which to work. And the underpinning of that surely must lie in an ethical approach to business that is understood and accepted by all as the behavioural norm.

It was this belief that prompted ICAS to tackle the issue as part of its 150th birthday celebrations last year, by conducting research within the UK accounting profession and producing a discussion document entitled 'Taking Ethics to Heart'. This identified the lack of a clear framework for ethical decision-making and proposed what might be done to remedy the problem.

Although much of the document looked at accountants in practice, a larger proportion of us work in business, rather than in the profession where the boundaries for behaviour are more clearly prescribed and defined. Concern was expressed, for example, that whereas in the profession 'if you blow the whistle, others will back you up', in companies 'you will lose your job'.

Others referred to the isolation of working in business and of the difficulties that familiarity can cause outside the well-regulated structures of the profession.

We can all think of examples where doing the right thing can be a difficult choice. Doing an audit, where one can criticise impartially and walk away, is very different from challenging the very people you work beside - or for - every day. These might include the strong-willed CEO or chairman whose attitude to expenses, pension funds or personal morality impinges on the running of the business. Such a CEO could be stopped earlier by those around him if they have a universally recognised framework against which to express their concerns.

Asked individually, many can come up with the underlying principles for a framework. One accountant in an investment bank defined it via a series of questions: 'Do I consider this decision to be morally defensible?

Do I believe that a reasonable person would draw the same conclusion? And will the decision compromise my personal or professional reputation? If the answer to any of these questions causes doubt, the decision is questionable and therefore unethical.'

Despite the soundness of individual solutions, there was a clearly identified lack of foolproof solutions to provide comfort and support for all. The answer to that must have its origins in a holistic approach within organisations, most importantly influenced by 'the tone from the top'.

As one respondent so aptly put it: 'Leadership within whatever culture is crucial, supported by appropriate mechanisms ... but mechanisms without leadership will not work.'

Succinctly put - and placing responsibility for establishing a framework for ethical decision-making firmly with the boards of companies. And so it should be. If we wish to escape from the shackles of the suffocating zero-tolerance approach, we have to be able to offer our stakeholders comfort that our own approach to business decision-making meets the standards they would expect of us - and that these standards can and will be delivered in our businesses. It is not good enough to gripe and say 'trust us'; we must be able to demonstrate business behaviour that will earn and deserve that respect.

In practical terms, that means such things as working with the professions to develop realistic ethical education materials that can be used to provide structured ethical training at all levels in the business; documenting and evaluating risk management using an ethical performance framework; including ethical codes of practice in organisational handbooks, and not as an afterthought; including self-assessment on ethics in appraisals; and appointing ethics officers.

A strong view was also expressed - perhaps the loudest message to come across - that internal audit and audit committees have a much larger role to play in assessing the ethical standards of the enterprise. And at the end of the day, emphasising that 'tone from the top' is a must. There cannot be 'one set of standards for them and one for us' if the framework is to succeed.

Business leaders must take a proactive stance if anything substantial is to happen - and that is the challenge I would make to us all in business, commerce and government. We have it within our own grasp to strike a blow for entrepreneurialism by demonstrating how we can work in a way that engenders trust and respect for our day-to-day business behaviours and decisions.

Let us see if, by working together, we can deliver that for the benefit of UK business - and for the public interest.

CV Ian Robertson is group chief executive of Wilson Bowden, the UK's fifth-largest housebuilder and commercial property developer. He joined the company in 1994 as finance director, and became its CEO in 2003. He is immediate past president of the Institute of Chartered Accountants of Scotland and is a member of the Financial Reporting Council.

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