Is scandal brewing in your corporate culture?

When companies operate in competitive environments, managers are more likely to tolerate unethical business practices if profit is generated, a new study shows. One of the researchers, Dr Niek Hoogervorst, Assistant Professor at Rotterdam School of Management, Erasmus University told Treasury Today: “Managers don’t look at employee behaviour from a moral viewpoint but in terms of what impact it has on the bottom line of the organisation.”

In competitive sectors – such as car manufacturers, the financial industry and the media – if an unethical behaviour results in profit, it is likely to be tolerated. If the same behaviour results in loss, however, there is a tendency to punish culprits. But this type of culture cannot be sustainable – or good for business. As Peter Swabey, Policy & Research Director at ICSA: The Governance Institute (ICSA), the professional body for governance, says “governance issues keep cropping up in companies of all kinds. But a lot of things we are seeing are not necessarily against the rules or against the corporate governance code, it’s more a question of the way in which individuals have behaved and the way in which individuals have met their obligations.” Read more…

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