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Ethics: the global challenge: the demands of regulations are creating mounting ethical dilemmas for management teams and their communicators.

On a local, national, regional or global front, ethical standards are being seen as increasingly important, whether the situation involves bribery and corruption, executive pay, treatment of employees or suppliers, human rights, intellectual property, or misappropriation of funds. Reputations of global corporations have been shredded by the scandal of unethical behavior. So, why is ethics--an understanding of moral principles applied to decision making--becoming such an important part of the global debate?

Doing business in today's global marketplace places new demands on companies, their employees, governments, the financial community, regulators assessing corporate performance and communicators. There is now greater pressure for regulators to act on corporate malpractice, hence the far-reaching Sarbanes-Oxley Act of 2002 in the U.S. and similar corporate social responsibility initiatives in Europe.

Financial analysts and other market watchers have tuned in to the trend of investors still wanting profits but not without social responsibility from corporations. Terms such as engagement and social responsibility are becoming as common as dividends and earnings. Governments are also being pressured to act. Investigations of bribery and corruption can now involve transgovernmental information exchanges and even extradition.

In the face of widespread ethical malpractice, international business has moved to head off further reputation crises. Some observers feel that ethics may be the most important business leadership issue of this decade, calling for a dynamic relationship among the entire executive "C" suite. Some say that in the company of the future, the whole senior management team will have a direct reporting line to the new supremo of the C suite, the chief ethics officer.

Trends indicate that there is greater pressure for European companies to improve their own codes of ethics to comply with Sarbanes-Oxley or equivalent pan-regional or national codes, according to Muel Kaptein, a professor of business ethics and integrity management at the Rotterdam School of Management Erasmus University in the Netherlands.

In his recent book, The 6 Principles of Managing with Integrity (Spiro Press), Kaptein outlines the multitude of ethical dilemmas that confront business executives and their communicators: When does keeping silent constitute lying? When does an intimate relationship become intimidation? When does the private use of company property constitute theft? How does one achieve a balance between generating profits and jobs, between productivity and pleasure, between sales and safety, between self-interest and organizational interest, and between economics and ecology? In Kaptein's view, how managers and communicators resolve such dilemmas determines their personal integrity, as well as that of the organization.

While the demands of Sarbanes-Oxley also need to be addressed by European companies, particularly by those having operations in the U.S., within Europe there is a bigger variety of legal and cultural approaches to corporate governance, according to Georges Enderle, a professor of international business ethics at the University of Notre Dame, in Indiana. As a result, corporate communication in a multilingual environment is much more demanding than in a monolingual context.

"There are several European Union and national laws covering corporate behavior with which companies are expected to comply," Enderle says. "On the other hand, there are examples of how the consultative approach is producing and communicating impressive results. This is particularly true among small and medium-sized enterprises having to survive in a world of globalization, where the tendency can be toward cutting ethical comers for maximum financial return."

Hoteliers on the Mediterranean island of Majorca, for example, cleaned up their environment and beaches by working as an industrywide group. In Switzerland, upholstery manufacturer Rohner Textil established partnerships with chemical transnational corporation Ciba-Geigy and the independent environmental institute EPEA in Germany to meet its business commitment to "economics and ecology."

The role of communicators

Whether in transnational corporations or smaller companies, communicators face their own ethical dilemmas.

A recent IABC Research Foundation survey conducted by professor Shannon Bowen of the University of Maryland found that among communication professionals questioned on three continents, the study of (and training in) ethics was not seen as a priority. Perhaps of some concern was the fact that 77 percent of respondents reported to the CEO or president or other senior manager within the organization.

The research also found respondents mixed in their views on whether communicators should be "the conscience" of the organization. One respondent commented: "I give it the sleep-at-night test: If I don't vocalize my opposition, can I sleep at night?"

But being ethical is not enough, according to Kaptein. "Companies should communicate their performance repeatedly. One of the greatest challenges is how internal and external stakeholders are convinced of the 'tone at the top.' The challenge for business communicators is to communicate this role modeling in a trustworthy and convincing way. They are, after all, in almost all cases, responsible for issuing corporate social responsibility reports."

The debate over ethical behavior is likely to grow and challenge communication (and other disciplines) in both theory and practice. The post-Enron era could, for example, lead to in-house lawyers' roles being fine-tuned to ensure corporate legal health and fairness for the markets and investors.

Communicators would therefore do well to reflect on the approach adopted by in-house lawyers working around the world in publicly traded companies.

Alan Lane is CEO of VASGAMA, a U.K.-based reputation management consultancy.
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Title Annotation:POLICY
Author:Lane, Alan
Publication:Communication World
Date:Nov 1, 2005
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