Business ethics is a finance problem, too

Ethics is an issue that’s handled strictly by the folks in HR, right? Well, that shouldn’t be the case.

More and more, CFOs are making employees’ ethics – specifically, behaving appropriately and consistently with the laws, regulations, expectations and standards of the organization – a top priority.

In a CFO.com blog post, Norman Marks attributes this trend to the fact that CFOs are quickly realizing that inappropriate behavior can lead to compliance failures, fraud and theft, and can adversely affect employee morale and the firm’s rep.

And this, of course, can affect operational and financial performance.

Some Surprising Statistics

Earlier this year, The Ethics Resource Center published its biannual business ethics report which surveyed 4,800 responses from various levels of employees.

Marks notes that the responses aren’t wildly different from previous results but there are still some numbers that finance professionals need to be cognizant of:

• 45% of employees have witnessed misconduct at work
• Almost 66% have reported misconduct, but 22% of those who reported misconduct said they suffered retaliation as a direct result.
• The number of companies with “weak ethics cultures” increased from 35% in 2009 to 42%.
• 13% of those surveyed are feeling pressure to bend the rules or break the law (an increase from the last report), and
• Just over a third of employees said their managers don’t display ethical behavior (an increase from 24% in 2009).

How to Overcome

So what does all of this mean for you, the finance professional? Marks suggests that CFOs go further than the report’s suggestions. It’s time to revisit the HR-preferred “talk to your supervisor” approach to potential problems and think about implementing a system where employees are encouraged to report independently.

It’s also time to focus on big-picture ethical problems. “Wasting time at work” was the most frequently reported misconduct, according to the report, but it’s time to focus on ensuring policies and controls are sound, proper metrics are in place and these efforts are monitored at regular intervals.

All in all, Marks says, CFOs can add great value to ethics programs by taking the lead. Ask questions, be alert to misconduct and, most important, set an example for your workers.