What’s the quality of your ethics strategy?

Published in 8 December 2016 issue of Thought Leadership by USB-ED Ltd

A request to write an ethics strategy for an organisation, in theory, should be viewed as welcome consulting work. It is also a relevant request given both the importance of workplace ethics and the crucial role that strategy fulfils in an organisation. So what’s the catch?

The answer lies in how we define organisational strategy. It is well understood for its role of clarifying what needs to be done to enable the organisation to meet its identified goals. And the plan of action that informs the strategy would generally be appropriately focused on moving the organisation from its current state to a more desirable future state.

Ethics as a key organisational goal

One catch is that this very same role of organisational strategy should apply to an ethics strategy. Specifically, an ethics strategy should not be written if ethics is not clearly identified as a corporate goal. This does not merely imply that ethical conduct is a desired outcome. Ethics warrants being included as a goal at the highest level within the organisation – whether in the organisation’s vision, mission or purpose or as a strategic goal – whence, in turn, it needs to be widely shared among all stakeholders. Without this clarity of direction, ethics initiatives risk not being focused or aligned. Paraphrasing what the Cheshire Cat said to Alice when she asked for directions in Wonderland without a destination in mind: If you don’t know where you’re going, any road will do. 

While different organisations may identify different ethics goals, creating an ethical culture is an optimal objective for most organisations. An ethical culture is also one of the four key outcomes of King IV^TMi

Adding to this overall goal, the overall purpose of an ethics strategy should be to define the basis on which the organisation will conduct its business and manage its relationships.

An informed basis for defining the desired ethical status

Another catch relates to moving to a more desirable future state. To do this in respect of ethics, it is necessary that the organisation has an understanding of its current ethical status, including its ethics strengths and risks. This would enable the organisation to make more informed decisions about where it wants to be or what it wants to achieve as regards its ethics.

This is easily addressed by assessing the organisation’s present ethics status. Ideally, this should not simply be an assessment of the level of ethical awareness among a sample of employees. Instead, the assessment should extend to quantifying the ethical behaviours and practices as experienced and perceived by the organisation’s executives and employees in order to produce credible, representative results. This also addresses the ethics monitoring recommendations in King III and IV^TM, and the legal requirements of the Social and Ethics Committee as set out in the Companies Act.

Primary focus areas

A common problem with an ethics strategy and its supporting initiatives is that it does not adopt a comprehensive approach. The imbalance is manifest in an almost exclusive focus on reducing unethical behaviour. While a focus on preventing bribery, corruption and other types of workplace misconduct is essential, it is not sufficient, since minimising (or even eliminating) misconduct does not necessarily promote or ensure proactive ethical conduct or give rise to the positive actions associated with sound values.

An ethics strategy also needs to include a distinct additional emphasis on promoting and improving ethical conduct and strengthening values. An analogue that illustrates this distinction well is that the path to increased profitability rests both on increasing revenue/sales and decreasing costs.

The three focus areas that constitute a balanced strategy are as follows:

• Decreasing unethical conduct, which includes a focus on preventing bribery, corruption and other types of workplace misconduct.
• Promoting and increasing ethical conduct. This is best addressed via the concept of ethical maturity, with the aim of achieving higher levels of ethical maturity where ethical behaviour is driven largely by a willing commitment to values. This contrasts with lower levels of ethical maturity where ethics and ethical behaviour relies more heavily on the enforcement of laws, rules, regulations and supervision. 
• Expanding the organisation’s ethical boundary. This is to ensure that the organisation’s values and ethics apply to all its stakeholders and embrace a triple bottom line or sustainable focus.

Key principles

A sound ethics strategy should also encompass four guiding principles, namely:

• Integrated: All facets of the ethics strategy and supporting initiatives – including the management of ethics – should be integrated to amplify each other and maximise the impact, as opposed to being diminished as a consequence of a lack of coordination or fragmentation.
• Proactive: All facets of the ethics strategy and the management of ethics should follow a proactive approach, not a reactive one. 
• Pervasive: Ethics needs to be evident throughout the organisation, as opposed to being limited to certain departments, functions or work levels. 
• Regular:Ongoing attention should be paid to ethics and the ethics strategy, rather than intermittent or ad hoc attention.

These guidelines enable an organisation to draft an ethics strategy that can meaningfully contribute to creating and maintaining an ethical culture. However, the true test of its value will rely on the will of leadership and its commitment to ethics.

ⁱ Ownership of King IV™ is held by the Institute of Directors in Southern Africa NPC.