In the absence of trust is (obey me) the only mantra?
| Published date | 01 September 2005 |
| Date | 01 September 2005 |
| DOI | https://doi.org/10.1108/13581980510622108 |
| Pages | 254-259 |
| Author | Philippa Foster Back |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
In the absence of trust is ‘obey me’ the only
mantra?
Philippa Foster Back
Received: 29th March, 2005
Director, Institute of Business Ethics
Philippa Foster Back is Director, Institute
of Business Ethics, London
This article is about ethics and compliance.
These are two different aspects of internal
culture which companies sign up to: com-
pliance because they have to and ethics
because they feel they ought to. In govern-
ance terms they are deemed an important
way of engendering trust from their share-
holders and stakeholders, but are they
effective in meeting management chal-
lenges? What should companies be doing
day to day in their business to engender
trust? And finally how do ethics and com-
pliance interact and is new regulation and
legislation the only answer in building
trust?
SETTING THE CONTEXT
The 21st Century organisation faces wider
scrutiny than its 20th Century counterpart.
Scrutiny is from not only the shareholders
as to whether or not the company is
making a profit and paying a dividend, but
from others who are interested in how the
company’s profits are being made. They
question whether the company is acting
responsibly and behaving ethically in pro-
viding the goods and services that it does.
Hence there is a growing interest in ethics
and compliance.
There are three main challenges facing
management today:
— Long term growth versus competitive
pressures.
— Producing products and services
responsibly.
— Building and keeping a good reputa-
tion.
Competitive Pressures
This challenge is that of a company’s man-
agement seeking to grow and maintain
long term growth against the backdrop of
competitive global markets. The challenge
becomes acute when management seek to
do their business ethically knowing they
may lose business to others who, in the
company’s view are prepared to cut cor-
ners or behave unethically. Such instances
highlight the problem, as interpreted by
some people, that doing business ethically
can ‘cost’ a company in terms of lost rev-
enues, contracts and work. In the financial
services industry this might be one bank
having chosen not to lend funds to a parti-
cular industry sector such as defence or
tobacco, seeing its competitors doing so
and moving ahead in profitably. Choosing
to do business ethically can hurt the
‘bottom line’.
Competitive pressures abound in all
markets, though there is a perception in
the business community and public arena
that there are certain countries where such
pressures are greater. This is primarily due
to the expectation that bribery and corrup-
Page 254
Journal of Financial Regulation and Compliance Volume 13 Number 3
Journal of Financial Regulation
and Compliance, Vol. 13, No. 3,
2005, pp. 254–259
#Emerald Group Publishing
Limited, 1358–1988
To continue reading
Request your trial