Why every individual has a personal responsibility to act ethically
All individuals must take personal responsibility for the important role they have to play in business and society.
Individuals have personal values, guided by various factors throughout their lifetime; but, corporate entities also purport to have values defining the culture of the organisation. An individual’s personal values and behaviour will be influenced by peers and also by the culture of the organisation for which they work. Corporate values often have ethical connotations, but it is the individuals working within those organisations who ultimately determine whether or not the ethical values which an organisation seeks to emulate are actually realised. It is the behaviour of individuals within organisations which is of fundamental importance.
In many corporate scandals the wrongdoing has been committed by certain people within the organisation, often encouraged by the culture and incentives operating within that organisation. The importance of personal responsibility of the individual cannot therefore be understated, especially where an organisation’s culture and incentives might encourage an unethical course of action.
In more recent years, the UK has witnessed a series of high-profile corporate collapses. A distinguished career can easily be shattered by acting inappropriately or by failing to seek to prevent others from acting inappropriately.
The impact on the individual of such a scenario can be catastrophic. The aim therefore has to be to seek to ensure that such a situation never arises. This obviously involves the person themselves ensuring that they behave appropriately at all times, but also that they seek to influence the behaviour of others where possible.
Ethical leadership
Whilst there is a need for those in charge of organisations to establish an appropriate ‘tone at the top’, it is equally important for this tone to be cascaded down through the rest of the organisation and embraced by all those who work in the organisation.
The concept that everyone can ‘take a lead’ is true in many respects. Leadership in ethical matters does not only relate to those at the top of an organisation. Everyone should see themselves as a leader, regardless of whether they are just starting in their career or have many years of experience.
Appropriate challenge can help organisations innovate more effectively and can stop problems from escalating.
Robust challenge must be seen as healthy and positive in relation to organisational culture. As discussed in the ICAS research Speak up? Listen Up? Whistleblow?, whistleblowing/ ‘speak up’ mechanisms within organisations are vitally important. They empower and support individuals to have the confidence to promote good behaviour, influence others and ‘speak up’ if they encounter ethical issues, without fear of retaliation. They also support an inclusive culture. Speaking up allows issues to be dealt with at the earliest opportunity before they escalate. People need to take the lead and be able to speak their mind, within reason, for the good of the organisation. ‘Challenge’ should not be resented.
In the shorter-term, such a task may be easier for individuals who are in senior management roles as they are able to exert greater influence on how an organisation is run and how it interacts with the outside world. However, those in all areas within a business have the ability to influence all of those with whom they interrelate.
Individuals should have the confidence, the moral courage, to speak up and influence the culture of organisations in which they work, to ensure that the organisation interacts with all of its stakeholder groups in an ethical manner. This is something that is very important, both for the individual and for the organisation concerned. Everyone has an important role to play in promoting ethical behaviour in the business community to the benefit of society in general.
The ICAS Code of Ethics
Chartered Accountants (CAs) have to comply with the five fundamental ethics principles enshrined in the ICAS Code of Ethics: Integrity; Objectivity; Professional competence and due care; Confidentiality; and Professional behaviour. CAs must also be cognisant of the fundamental requirement of the accountancy profession to act in the public interest. Newly qualified ICAS Members commit themselves to doing so by means of an ethical declaration at the ICAS Admissions Ceremony; and all ICAS Members are also required to make an annual affirmation to that effect as part of the Annual Renewal of their ICAS Membership. This forms our charter with society.
Each individual CA has to take personal responsibility for the maintenance of the highest standards of ethical principles throughout their career. CAs also have an important role to play in promoting ethical behaviour in the business community – they are encouraged to take a leadership role in instilling those ethical values in the organisations in which they work.
CAs therefore need to take the lead in relation to their own actions, and also challenge others when challenge is necessary. However, ICAS also recognises that, in many situations, ‘doing the right thing’ may not be easy. ICAS regards ‘moral courage’ as an underpinning qualitative characteristic required of a professional accountant. Since 2017, the need for CAs to have ‘courage to act morally’ has been highlighted in the ICAS Code of Ethics. CAs must have the moral courage to exert ethical leadership when changes in an organisation need to happen, or when inappropriate behaviour by others needs to be revealed or stopped. Clearly, the more senior the CA is in an organisation, the easier it will be to influence change, but every CA has their part to play.
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Personal responsibility and ethical leadership are two of the main themes of The Power of One – ICAS’ business ethics initiative. The Power of One calls on all Chartered Accountants (CAs) to place ethical leadership at the heart of their professional responsibilities, to shape the culture and values of their organisations, to help re-establish ethics at the core of business practices and to rebuild public trust in business. Whilst The Power of One initiative is primarily targeted at CAs, the values promoted by The Power of One are equally transferable to the broader business community.
To read more of ICAS’ series of contributions on ethical leadership – The Power of One – visit the ICAS website.