BUSINESS ETHICS: THE COMMUNICATOR’S ROLE

1. BUSINESS ETHICS: THE COMMUNICATOR’S ROLE An address by Alan Lane (VASGAMA) to the International Association of Business Communicators’ International Conference Los Angeles – 6-9 June, 2004

2. ETHICS: KNOWLEDGE OF MORAL PRINCIPLES • … process covering issues of care and trust, social responsibility and environmental concern, while identifying the values necessary to balance the demands of performance today with responsibilities for tomorrow.

3. ETHICAL PERCEPTIONS • Merchants have no country of their own. Wherever they may be they have no ties with the soil. All they are interested in is the source of their profits Thomas Jefferson

4. ETHICAL PERCEPTIONS • You are not remembered for what you do in business but what you do in civil society

5. ETHICAL PERCEPTIONS • Public Relations … the company liar … comment from next generation

6. ETHICS: MANAGEMENT PROBLEM • Decisions made in vacuum • Ethics often not included • Result: crises

7. ETHICS: GLOBAL CRISES • Parmalat - Italy • Shell Group – UK/Netherlands • WorldCom/Enron - US • Seibu Railways - Japan

8. CRISIS OF CONFIDENCE • Fraud: senior management perpetuated close to two thirds of cases surveyed • In almost fifth of cases, no action taken due to reputation concerns • Only one in four cases detected by internal controls KPMG survey

9. NOT ALL NEGATIVE • Organisations not things; but people acting in most cases ethically • Business moving from philanthropy to Social Responsibility • But the test: new approaches not PR gloss over unchanged practice

10. ETHICS CRISIS IMPLICATIONS • Catastrophe for financial journalism Where were Communications? • Didn’t they see it coming? • Were they in the circle of influence? • Could they face criminal charges?

11. ETHICS ON AGENDA? • As part of induction/training/legal/ commercial & financial requirements • As part of day-to-day behaviour & decision-making • Role in business planning

12. CORPORATE DECISION CIRCLE • CEO/Managing Director/Presidents/ Heads of businesses • Often outside circle: Communications/HR/Legal/Sustainable Development • Few in circle with knowledge of public expectations & outside environment

13. EXECUTIVE TEAM & BOARD • Communications presence growing trend but limited • Surveys show heads of communications in many admired companies not on executive team or board • Many have no daily CEO contact

14. QUESTION TO ASK So where were Communicators at • Parmalat • Shell • Enron/WorldCom • Seibu Railways?

15. REVIEW COMMUNICATIONS ROLE • At nerve-centre of decision-making? • Aware of decisions with ethical dilemmas? • Seen as having value or influence? • Can affect policy debate?

16. COMMUNICATORS: CATALYSTS FOR REPUTATION • Bird’s eye/helicopter view of organisation • Less of ‘corporate silo’ – daily contact with others • See future terms of business engagement • Know public taste & perception of organisation • Role: help steer organisation ethically

17. COMMUNICATORS: MASTERS OF RELATIONSHIP MANAGEMENT? The ability to deal with people is as purchasable a commodity as sugar or coffee. And I pay more for that ability than for any other under the sun. John D Rockefeller

18. REPUTATION WATCH-KEEPERS Employees are … • The eyes, ears, mouth and conscience of the organisation • Eyes/ears pick up intelligence • Mouth delivers believable messages (ideally with Communications involved)

19. CORPORATE CONSCIENCE OR SERVANT? • Communicators’ role? • Dilemma: …Communicators forced to answer media without full information. Can’t say no; challenge to know everything; yet… • ‘consciously not knowing and seeking information and giving answers, flies dangerous close to lying’ Dr. Simon Zadek

20. CORPORATE CONSCIENCE OR SERVANT? • Not enough to believe organisational values Greatest contribution: • Doubt, question, challenge – ensure organisation at ethical peak of learning capacity Dr. Simon Zadek

21. ETHICS MINEFIELD • New drug with potential threat to human health • further tests or not challenge status quo? • Misappropriation of funds/misinformation • act to head off media witch hunt or stay quiet, hope crisis recedes? • Coca Cola Dasani - communications advice?

22. COMMUNICATOR’S OPTIONS • Blow the whistle • Manage dilemma ethically • Resign • Play ‘corporate servant’

23. WHISTLEBLOWER ROLE MODELS • Sherron Watkins – vice president Enron • Coleen Rowley – attorney FBI • Cynthia Cooper – vice president audit, WorldCom • Not in Communications

24. TO ACT OR NOT TO ACT …to know and not to act is not to know at all Japanese proverb … which means, if you turn a blind eye and fail to detect the rumblings, then your objective professional counsel is of no value

25. AVOIDING ETHICAL DILEMMAS • Communicators to be part of decision-making circle • Assess questionable issues & decisions • Red-flag potential troublesome decisions • Scrutinise business plan & processes

26. COMMUNICATORS’ COMPLAINTS • Shut out of policy decisions • Little briefing, little time to develop, deliver messages that are flawed • Separating Communications from policy-making dangerous; led to many crises

27. THE ANSWER • Communicators often too fixed on boardroom seat • Develop trust-based relationships with line managers – they know what’s going on • Leads to early issue awareness before crisis develops

28. REPORTING LINE ISSUE • Problems when Communications reports to another department, not CEO/executive team • Reports to Marketing: can be pressured to secure publicity for ethically flawed product • Communications’ reputation with stakeholders damaged

29. MEASURING PERFORMANCE • Communications part of ethical performancetracking – need to deliver results • Management decisions screened to assess performance standards/accountability to stakeholders/regulators • Overview of financial/non-financial reporting needs • Ethics health check: stated & lived values gap

30. ETHICS ABUSE: PUBLIC BACKLASH • Ethical performance no longer business add-on – backlash against malpractice • New laws/approaches - Sarbanes-Oxley/European Union - World Economic Forum reviews corporate crime - UN: potential liability on human rights for multinationals

31. COMMUNICATIONS ROLE CRUCIAL • Ethical behaviour/bottom-lining managers often not good mix • Cost-cutting, sweating assets part of problem • Ethically-driven employees often not playmakers - part of bolt-on units (Communications, Sustainable Development, HSE)

32. COMMUNICATIONS POTENTIAL • Communications to influence debate • Work with global standards: UN/Transparency International/Social Accountability International • Persuade management to sign up to Communication professional codes: IABC/IPRA

33. GLOBAL TRENDS POTENT • Linkages between environment, human rights, global governance • Globalisation now the catch-all • Defining social movement of early 21st century • Driven by leaders (business/political) operating in vacuum

34. COMMUNICATORS’ REALITY • Where Communicators & management fail to police ethical behaviour; shareholders or regulatory groups will act • CEOs/CFOs fired and go to jail • Why not Communicators for dereliction of duty to protect reputation?

35. COMMUNICATORS’ REALITY • Worst-case scenario: Communications judged guilty by association with unethical practices • Reputation of 20, 50, 100 years destroyed in a matter of hours or days

36. THE FUTURE Partly in Communicators’ hands: • To contribute to new world order • To help resolve trend towards moral ambiguity