Managing Fraud Risk: A Practical Guide for Directors and Managers

Introduction

I have now run many more business ethics courses since that first one in Trinidad and Tobago, described above. But I always start each course in the same way, with the example of Enron and the RICE model. I feel that this story shows more powerfully than any other example that I can think of, what can happen when the most fundamental principle of business ethics, the need to match the stated values of an organisation with the actual behaviour of the people working in it, especially those at the top, does not work. Values without action are meaningless. It is so easy for any organisation to “talk the talk” in terms of business ethics by using words like integrity, trust and respect. It is so much more difficult in practice sometimes to “walk the walk”, especially under commercial pressure to hit short-term targets. Yet the failure to match corporate values with employee behaviour creates cynicism amongst employees within an organisation and mistrust amongst stakeholders outside of it. Enron provides a clear and strong example of this.

This Chapter looks at the fundamental principles of business ethics, at the concepts of integrity and trust and at the Golden Rule. It places these principles firmly in the modern business context by looking at the key area of pressure, in particular the extreme pressure that organisations sometimes put on their people to encourage them to hit performance targets. This can impact negatively upon workplace behaviour. The modern business ...