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1. Ethical Audit
Ethical audit is a new technology which is being developed at the European Institute for Business Ethics (EIBE), Nijenrode University, the Netherlands Business School. There is nothing new about ethical behaviour in business, nor about programmes designed to improve and perhaps formalise an ethical approach to decision making within companies. In the United States, in particular, in recent years many companies have appointed a senior manager with dedicated responsibility for promoting ethical behaviour throughout the company. In Europe, such appointments are the exception rather than the rule, but many, perhaps a majority, of Europe's major companies now have an ethical code or code of conduct.
The reasons for examining the state of a company's ethics are many and various. They include external societal pressures, risk management, stakeholder obligations, and identifying a baseline to measure future improvements. In some cases, companies are driven to it by a gross failure in ethics, which may have resulted in costly legal action or stricter government regulation. More often, however, companies choose to do it simply because it is right, it is important, and because it is likely to bring business benefits.
Ethical auditing is a process which measures the internal and external consistency of an organisation's values base. The key points are that it is value-linked, and that it incorporates a stakeholder approach. Its objectives are two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control, to meet the ethical objectives of the organisation.
The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company's ethical profile. Companies recognise the importance of their financial profile for their investors, of their service profile for their customers, and of their profile as an employer for their current and potential employees. An ethical profile brings together all of the factors which affect a company's reputation, by examining the way in which it does business. By taking a picture of the value system at a given point in time, it can:
- clarify the actual values to which the company operates
- provide a baseline by which to measure future improvement
- learn how to meet any societal expectations which are not currently being met
- give stakeholders the opportunity to clarify their expectations of the company's behaviour
- identify specific problem areas within the company
- learn about the issues which motivate employees
- identify general areas of vulnerability, particularly related to lack of openness
Ethical audit is a new technology which is being developed at the European Institute for Business Ethics (EIBE), Nijenrode University, the Netherlands Business School. There is nothing new about ethical behaviour in business, nor about programmes designed to improve and perhaps formalise an ethical approach to decision making within companies. In the United States, in particular, in recent years many companies have appointed a senior manager with dedicated responsibility for promoting ethical behaviour throughout the company. In Europe, such appointments are the exception rather than the rule, but many, perhaps a majority, of Europe's major companies now have an ethical code or code of conduct.
The reasons for examining the state of a company's ethics are many and various. They include external societal pressures, risk management, stakeholder obligations, and identifying a baseline to measure future improvements. In some cases, companies are driven to it by a gross failure in ethics, which may have resulted in costly legal action or stricter government regulation. More often, however, companies choose to do it simply because it is right, it is important, and because it is likely to bring business benefits.
Ethical auditing is a process which measures the internal and external consistency of an organisation's values base. The key points are that it is value-linked, and that it incorporates a stakeholder approach. Its objectives are two-fold: It is intended for accountability and transparency towards stakeholders and it is intended for internal control, to meet the ethical objectives of the organisation.
The value of the ethical audit is that it enables the company to see itself through a variety of lenses: it captures the company's ethical profile. Companies recognise the importance of their financial profile for their investors, of their service profile for their customers, and of their profile as an employer for their current and potential employees. An ethical profile brings together all of the factors which affect a company's reputation, by examining the way in which it does business. By taking a picture of the value system at a given point in time, it can:
- clarify the actual values to which the company operates
- provide a baseline by which to measure future improvement
- learn how to meet any societal expectations which are not currently being met
- give stakeholders the opportunity to clarify their expectations of the company's behaviour
- identify specific problem areas within the company
- learn about the issues which motivate employees
- identify general areas of vulnerability, particularly related to lack of openness