Governance Ethics and Reputation

Strengthening business ethics, managing reputational risk, and surviving "undue diligence"

TCA helps companies operating anywhere in the world, but especially those with international subsidiaries or branches to manage reputational risk. Corporate ethics and good governance should be priorities for any business whether it has international links or not. TCA can help companies to put ethical codes of conduct in place and obtain “buy in” from employees and other stakeholders.

A company’s reputation and profits can be severely affected when deviant behaviour hits the headlines. Sometimes companies and their employees engage in unethical behaviour almost without realising it because they are simply continuing internal practices that have gone on for years or they get caught up in the cost and time pressures that the company imposes to meet deadlines and profit margin targets. There are also a number of grey areas where companies’ reputations may be at risk but their employees do not fully recognize it.

In some instances employees of banks and other institutions inadvertently break regulatory rules because they differ from the rules that apply where their head office is. This can happen easily to companies operating outside their own country.

In many cases, companies discover that the laws governing their activities are more lax in other countries than at home. There may be a temptation to skimp in areas like product safety, plant working conditions and other labour standards -- all to save money. There can be a dangerous mentality that says “This is the way it is done here - we need to do it this way too if we are to be competitive”. There is also sometimes a mentality that simply weighs the likelihood and the cost of getting caught and so companies and their employees decide that it is worth risking pursuing bad practices.

While the company and its employees may not be breaking local laws they may be laying themselves open to a campaign against them from a nongovernmental pressure group or a network of NGOs who will take up the case against the “ugly global company”, or a series of newspaper articles or investigative broadcasts that can wreck a company’s reputation. In the world of modern communications, such campaigns move around the world with great speed.

Many people would think twice about engaging in unethical practices if they thought they might find themselves appearing on an investigative television program.

TCA can assemble a team of experts in different aspects of corporate behaviour, and conduct an audit of a company’s practices benchmarking them against the OECD’s Guidelines for Multinational Corporations and other international codes of conduct.

Recommendations flowing from this review can enable the company to acquire a “clean bill of health” which can enhance its ability to survive what TCA calls “undue diligence” - scrutiny by a potential business partner that goes well beyond the customary due diligence conducted by accountants.

By going beyond the minimum legal and regulatory requirements and paying close attention to the ethical dimensions of their domestic and foreign operations, companies can go a long way towards insuring themselves against criticism and being able to publicise the fact that they exemplify the best in corporate global citizenship. TCA can help such companies mount an advertising and public relations campaign to differentiate themselves in the public eye as an ethical company.

As well as averting loss of sales and a declining share price resulting from bad publicity, companies have the opportunity, through responsible and ethical behaviour, to enhance their share price, to be attractive to pension and other funds that specialise in ethical and socially responsible investments, and capitalise on the opportunity to engage in business relationships with companies that are selective about their business partners.

Audit > Review With Senior Managers > Review with Line Managers > Recommendations > Facilitate Change > Dissemination.