More governance legislation on the way?
You are on the Board of Directors of a Cypriot company and the company is looking to subcontract the cleaning. How many of you would set up a company under your parent’s name and put in for the tender? A full 44%, according to research carried out by Dr Maria Krambia-Kapardis, Professor of the PricewaterhouseCoopers Chair in Applied Accounting Research at Intercollege.
More reassuringly, however, 48% would do nothing at all. But if you are male, under 30 and a manager, you are more likely to be a crook than otherwise, according to the findings.
The research was carried out in February-April 2005 among 544 managers, supervisors and high-ranking employees in Cyprus as well as a small percentage of MBA students.
Although Krambia-Kapardis acknowledges that the self-administered questionnaires do not necessarily reflect what happens in practice, they are are useful start in tackling the issue of ethical conflict in business.
This is an issue not only in Cyprus, where the size of the population makes attaining true independence a severe challenge for members of the board, but also elsewhere in the world, where scandals such as Enron and Parmalat have exposed that unethical practices can damage the bottom line.
Inconsistence in outlook
The research noted that although the majority of respondents have a concept of ethical behaviour and consider ethics important, there were a number of inconsistences between their views and certain unethical practices they would approve of.
To give an seasonal example, 76% of respondents said that they would accept an expensive gift from a client even if it is strictly against company policy: 43% would accept it on behalf of the company, 20% would accept it in order not to insult the client and 13% would use it to award an employee.
Other answers to questions give more cause for concern: 43% would use inside information for personal gain, 43% would also get involved in price-fixing and 37% would sell goods at below cost to destroy a competitor. Some 41% would not be prepared to sacrifice money in order to act ethically.
Thankfully, however, only 4% (around 20 people) would blackmail their boss if they found out he or she was defrauding the employer.
More legislation on the way?
Speaking at the presentation of the findings, Minister of Finance Michalis Sarris hinted that more legislation to promote good governance was on the way.
Noting that ethical codes are “a complementary mechanism to the operation of the market” he said that there is a “there is a “greater need today to promote a code of conduct”, which he said could be achieved “through legislation or incentives in voluntary compliance.”
PricewaterhouseCoopers already has a written code of conduct and is working hard in this small country to apply it properly.
Board member Liakos Theodorou said that the code of conduct cannot be “merely a list of rules but an integral part of the life of the organisation.”
Leadership is key
Leadership from the top is seen as the key to changing the culture. Krambia-Kapardis referred to a famous court case in Australia, where a woman defended the fact that she had borrowed a TV and video player from the company warehouse by noting that all the managers did the same thing every Friday.
One delegate at the presentation suggested that if we want leadership in ethical conduct from the very top in Cyprus, we should start by demanding it from the government.
Fiona Mullen
