1. Session number and title
(goes here in 32pt Georgia)
W13 – why business ethics
matters to your bottom line?
Presented by:
Dr. Attracta Lagan
Principal
Managing Values
Presented by:
Dr. Attracta Lagan
Principal
Managing Values
© Copyright of Managing Values www.values.com.au

2. Business Forum
2013
Business ethics context
• Business ethics is a management accountability in
US, UK & Europe
• Australia is out of step with its laissez faire attitude
• Institutional integrity is modern day focus
• Ethical risks are known & regulators demand more
than a paper trail
• IBM’s research points to the inevitability of greater
organizational transparency & accountability
• Current leaders invest in ethics management
systems to protect their people
• Embrace increased transparency as the enabler of
ethical cultures
© Copyright of Managing Values www.values.com.au

3. Business Forum
2013
Business ethics dynamics
• Employees consistently report they are working in
environments conducive to misconduct
• Fall out GFC led many boards to concentrate on compliance
and paper trails at the expense of managing culture
• Compliance inhibits systems view of how risk issues emerge
• Ethical skill development promotes managerial & personal
accountability
© Copyright of Managing Values www.values.com.au

4. Business Forum
2013
Discipline of business ethics
• Focus on the institutional & contextual dynamics that shape
employee behaviour
• Demands that leaders move beyond “tone” setting to aim
higher beyond legal minimums
• To design institutional practices that encourage & reward
ethical behaviour
• To establish robust ladders of escalation
© Copyright of Managing Values www.values.com.au

5. Business Forum
2013
Do ethical failures matter?
• 2012 UBS fined $29.7m system failures
• 2012 HSBC paid $1.92b settle charges money laundering
• 2012 Barclay’s fined £290m manipulating key interest
rates
• 2010 BAE Systems pays £400m settle bribery charges
• 2010 Rio Tinto employees jailed bribery in China
• 2010 Daimler paid $185m fines bribing foreign
government officials
• 2008 Syngenta fined $2m discrimination
case
• 2008 Siemens paid $1.6b settle global
corruption case
© Copyright of Managing Values www.values.com.au

6. Business Forum
2013
Collateral damage
• Loss of human liberty; reputation & livelihood
• Family shame , Company shame, Nation shame
• Increased legislation
• Destabilisation social fabric of societies
• Inter-generational adversity – robbed of right to work &
participate in the marketplace; right to same wellbeing as
parents’ generation
© Copyright of Managing Values www.values.com.au

7. Business Forum
2013
Heightened connectivity
vulnerabilities
• Internet means more people now see how you do things, how you
impact on others and tell others how you should be held
accountable
• Stakeholder internet retaliation - anytime, for no cost and without
restraint
• Linking ethical behaviour to reputation makes ethics integral to
what drives business success eg. Starbucks & Google tax
minimisation fallout
• Management of organisational culture key priority today’s success
formula
© Copyright of Managing Values www.values.com.au

8. Business Forum
2013
Benefits business ethics
 High integrity companies also high performing (CEB)
 World’s Most Admired Companies deliver highest
shareholder value (Hay)
 Clear link between institutional integrity & employee
engagement
 2011 Australian research 78 organisations found companies
focused on culture as well as financial indicators 3 times
more profitable
© Copyright of Managing Values www.values.com.au

9. Business Forum
2013
Top ethical risks - how well are
you managing these?
• Funding concerns enjoying a higher priority than ethical
standards
• Unaligned compensation plans
• Poor management of unacceptable behaviour
• Anti-competitive practices / contract violations
• Harassment / Retaliation
• Health or safety violations
• Insider Trading/stealing
• Substance abuse
• Environmental violations
© Copyright of Managing Values www.values.com.au

10. Business Forum
2013
Businesses of the future
• Build organisational integrity as an enabler business success
• Embrace ethics and transparency as way of flattening
hierarchies & engaging employees
• Step up to employee desire to be part of a business that
seeks to enhance society as well as financial success
Individual
Perception
Time Dimension
Context
dimension Stakeholder
Dimension
© Copyright of Managing Values www.values.com.au

11. Business Forum
2013
How to
- build organisational integrity
Demonstrate ethical leadership e.g. remunerations that
reward sustainable practices & culture builders and not just
bottom line results
Active culture measurement as well as compliance
Train employees & reinforce with visible action on poor
behaviour
Design systems to promote high level of trust
© Copyright of Managing Values www.values.com.au

12. 1212-6
Disclaimer
This paper represents the opinion of the author(s) and not necessarily those of the Institute of Chartered Accountants in Australia (the Institute) or its members.
The contents are for general information only. They are not intended as professional advice – for that you should consult a Chartered Accountant or other suitably
qualified professional. The Institute expressly disclaims all liability for any loss or damage arising from reliance upon any information in these papers.
Dr Attracta Lagan
www.values.com.au
Detailed research available in white paper
Why Business Ethics Matters
- to your Bottom Line
Case studies available on institute website
www.charteredaccountants.com.au
Thank you!
© Copyright of Managing Values www.values.com.au