Business Book Of The Week: World of ethics works on theory of relativity

Ethics at work

By Bob Kelley

(Gower, pounds 39.50)

THE INDUSTRY in books on business ethics is explained, at least in part, by the confusion many of us feel when confronted by instances of poor business behaviour. I suspect there is a deep desire in most of us to take people as we find them. On occasion, this can prove a flawed approach and we often leave ourselves open to making the wrong judgements.

In this era of growing globalisation, ethical dilemmas are thrown up in all sorts of situations. For instance, when setting up offices in developing companies, is it ethical to pay under the table for a quick phone connection? Should a company operating in a developing country stand back as its joint venture partner condones the demands of corrupt government officials? This book shows that it is unwise to take too much at face value. For a start, it is unwise to contrast European and US approaches to ethics at work without describing the background to these different approaches in more detail, because it is all too easy for readers to get the impression this country stands head and shoulders above others in business ethics.

On the contrary. The Dutch have lessons for anyone with their concept of poldermodel - that all need to be involved if an enterprise is to be successful, akin to the way polder, or land, is reclaimed from the sea, only with a sense of joint and shared responsibility.

Ethics at Work has several strengths, and one is in its descriptions of ethics in the public and professional sectors, a major contribution to the debate on ethics in the UK. Few have tackled this area with such rigor and understanding. And it is good to see the Institute of Chartered Accountants in England and Wales has issued a Guide to Professional Ethics, although perhaps it is less clear why, despite this, the larger firms are frequently fined. The author is also right to draw attention to the extraordinary "twin stream" approach to business ethics by the Institute of Directors. Taking a Friedmanite position on economics while arguing the advantages of a stakeholder model on ethics, which is little like trying to be all things to all men.

The dilemmas noted at the beginning of the book are first-rate, and are worth the purchase price alone. The author describes someone setting up a joint venture in a developing country only to find that the area is being attacked by "terrorists". This leads to a realisation that his company may be supporting a regime oppressing the majority of the population, and causing environmental damage through deforestation to boot.

The book is also big on the law at work, which is again valuable. A number of UK companies remain content to rely on legal and regulatory frameworks for their ethical base, but the public is often sufficiently far ahead of lawmakers when moral questions arise for this to be a poor strategy. Indeed, it might have been helpful to have to have addressed in more detail this growing challenge, particularly for many multinational companies, that ethics - unlike the law - is about "obedience to the unenforceable". Nowadays, legal compliance is seen by major companies as a minimum requirement for good corporate behaviour, which is prudent because the rate of technological advance alone can often outpace legislation.

The book's view on the emergence of business ethics in the UK provides another instance of taking so many things at face value. Many might be surprised to learn that the beginnings of British interest in corporate ethics began as a result of the increasing number of shareholders in the 1980s.

While this may be partly so, the growth of the environmental movement and the recognition by major companies of its importance, coupled with an explosion of sleaze and growing concerns about human rights, all had a greater role to play.

The author says the scope of the book is limited to the UK, but he also makes selective use of examples from overseas. The danger here is that taking these examples out of context can leave the reader with a lopsided impression of what is happening in the field of ethics at work. A lot is happening but there is a long way to go.

The book perceptively hints that we are seeing in the UK the emergence of a group of companies which sometimes, self-mockingly, call themselves the "usual suspects". They are distinguished by the fact that they take a progressive and open approach in their dealings with a wide range of stakeholders, in particular NGOs (Non-Government Organisations).

BP Amoco, BT, Shell and several others are in regular contact with NGOs and pressure groups, such as Amnesty International. These discussions have led to constructive outcomes, and often highlighted big problems.

But relatively few other leading companies have shown much appetite for joining the ranks of "the usual suspects". Many FTSE 100 companies send representatives to worthy conferences on corporate responsibility, but many leave most of the running to the well-known suspects we have seen before.

In a month that has seen the return of Nick Leeson to the UK, more companies may recognise the growing interest in ethics at work and this may aid public perception of business conduct standards.

The reviewer is managing director of Wokingham-based Integrity Works, which has been advising organisations on corporate ethics for 10 years