22 May 2020 by Sonia Sharma
Dr Ian Peters MBE, has been appointed as the new Director of the Institute of Business Ethics. He talks to Governance and Compliance about his career to date and the role of business in society.
I believe it is essential to provide a range of opportunities to engage with members or supporters. This extends from customer satisfaction surveys to using social media and providing networking opportunities. At the Chartered IIA we established a number of for a for different groups of members from the Directors of Internal Audit at the largest organisations to groups for new auditors, women in internal audit and those working in different sectors. This enabled us to understand and respond better to different member needs.
The most powerful innovation was to introduce codes of practice for the conduct of internal audit in different sectors beginning with financial services. We were also very successful in growing attendance at our annual national and regional conferences. Our London national conference grew from 250 attendees to well over 600 and provided a great opportunity for members to network and share experience and ideas. Finally, members greatly valued the institute’s increased influence with our key stakeholders including policy makers, regulators and business leaders.
More and more, businesses recognise that they have a purpose that goes much further than simply providing a financial return to shareholders and investors. Businesses of all sizes and in all sectors recognise that they depend on the goodwill of their stakeholders to succeed and they earn that goodwill by the way they behave. In the IBE we work with the people that are charged with ensuring that their organisations do not just comply with regulations but go further and behave in a way that is consistent with their values which are crucial to defining their purpose. In the current coronavirus crisis we are seeing many examples of businesses whose values-based purpose is providing an important moral compass. It is less about what you do and more about the way that you do it; how you look after your employees, how you support customers and suppliers, and what you do for your communities. It is the businesses that respond to these challenges well that will emerge strongest from the current crisis.
It is important to distinguish between the role of internal and external audit. In the case of internal audit, the Chartered Institute of Internal Auditors has worked closely with the profession, board directors, management and the regulators to develop codes of practice which, if followed, will help to reduce the likelihood of further such collapses. Although it is important to recognise that ultimately it is the board of a company that is responsible for success or failure and it is their job to use all the tools available to them effectively, including both internal and external audit. In the case of the external audit sector it is unfortunate that reform has stalled, initially because of the bandwidth constraints caused by Brexit and no doubt now not helped by the coronavirus crisis. It is essential that as soon as possible many of the measures already put forward including placing the Financial Reporting Council on a statutory footing are implemented.
The IBE is always ready to help businesses and other organisations on their ethics policy and practice but we decided early on that it was not for us to preach or tell organisations what to do in relation to COVID-19. If organisations follow ethics-based values in delivering on their purpose then they will do the right thing. What we can and have been doing is to provide our network with an opportunity to exchange experience and ask questions of us and each other. This is one of the most powerful tools we can provide and, of course, we have ramped up our capacity to provide this facility virtually. As we exit lockdown businesses will clearly face many more challenges and we will look at how we can continue to provide support and share solutions.
There is no doubt that the world of business will look very different post-crisis. Indeed, ‘post crisis’ almost suggests that we will be able to move on rather as we were before but right now that seems unlikely. Many sectors such as tourism and hospitality may take years to recover whilst the way we work may have to change for all of us. Many business models will have to change. We have already seen many examples of the caring and compassionate side of business during the crisis (as well as a few examples of bad behaviour) and, going forward, how we support and look after our people, how we relate to our customers, and how we work in partnership with our suppliers are likely to change for the better.
In the new world, more employees are likely to continue to work from home, which creates new management challenges. More retail activity may stay online creating new challenges for our high streets. Our restaurants, pubs, cinemas and theatres may come under threat and our transport sector, especially air travel, may need to find new economic models to survive. Through all these challenges the need for organisations to adopt and maintain ethical values-based decision making will be critical if employees are to remain motivated and customers stay loyal. Sustainable business models will be ethical business models and increasingly this is likely to be what investors will expect as a matter of course.