Top Five External Environment Drivers of Business Ethics

_ Legal: laws, regulations

_ Economic environment

_ Political environment

_ Social values

_ Privacy

Top Five Processes/Factors for Ensuring an Ethical Business Culture

_ Leaders model ethical behavior

_ Leaders communicate consistently

_ Ethics are integrated into the fabric of the organization

_ Ethics are a component of the performance management system

_ Ethics are a consideration in recruiting and selection

Top Five Internal Practices for Ensuring an Ethical Corporate Culture

_ Code of conduct

_ Ethics training

_ Corporate social responsibility programs

_ Ombudsman available

_ Ethics helpline

Top Five Drivers of Unethical Behavior

_ Pressure to meet unrealistic business objectives

_ Desire to further one’s career

_ Desire to protect one’s livelihood

_ Working within a cynical, demoralized environment

_ Ignorance that the act was unethical

Drivers Impacting Business Ethics

Question Two

How important are the following business environment drivers in terms of their

impact on business ethics today and in 10 years?

                 Today                       In 10 Years

Corporate scandals                                3.82        1                          4.06                      4

Marketplace competition                      3.63        2                          4.18                      2

Demands by investors                           3.53        3                          3.98                      5

Pressure from customers                      3.49        4                          4.13                      3

Globalization                                         3.48        5                          4.19                      1

Executive compensation                       3.41        6                          3.76                      8

Change: M&A, restructuring                3.29        7                          3.73                      9

Diversity, including generational         3.25        8                          3.85                      7

Pressure from prospective

and existing staff                                   3.24        9                          3.87                      6

Organizational structure,

e.g., matrix, virtual                               3.17        10                         3.64                   10

Outsourcing and offshoring                 2.98        11                         3.54                   11

“Pain Avoidance” Is Currently the Top Business Environment Driver Impacting

Ethics in Business

Not surprisingly, “corporate scandals” was identified as the top-rated business environment driver of business ethics today.With our recent history of corporate malfeasance scandals, the threat of public excoriation – and potential jail time – is understandably a powerful motivator to behave.

Globalization and the Resultant Increased Marketplace Competition Are the

Most Powerful Forces Driving Business Ethics

As we rapidly and relentlessly progress toward a true global economy, the organization’s business practices will become increasingly transparent and important to the development of both consumer trust and business-to-business trust. Business partners, who don’t wish to share in any guilt by association, will demand ethical practices from one another.What business partner wants to be connected to child labor or kickbacks and bribes? What consumer will feel good about buying from such a company?

Investors Will Demand Ethical Corporate Practices

“Demands by investors” ranks among the top five drivers both today (#3) and for

the future (#5). Scandals, indictments of senior executives and bad publicity drive

down stock prices and can even force a company toward bankruptcy.

The Organization’s Employees Will Demand Ethical Behavior

Our results indicate an increase in the rankings of “pressure from prospective and

existing staff” from #9 today to #6 in the future. If the oft-predicted shortage of

skilled and talented workers occurs, organizations cannot afford to be perceived as

untrustworthy or engaging in illegal activities. People want to feel good about their

employers and proud to be part of a strong team that conducts business in an ethical

manner.

Copyright 2006, American Management Association/Human Resource Institute

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