Accounting Rules Some of those with whom we spoke discussed the place of accounting rules and metrics as potentially contributing to unethical behavior. Personnel matters, customer issues, stakeholder conflicts and gray areas are common, explains Deriso. This societal covenant has been demonstrated by Synovus throughout its 115-year history. These ethical pressures can be very severe especially in publicly traded companies where so much of the focus is on short-term results. Pages are intact and are not marred by notes or highlighting, but may contain a neat previous owner name. The company is listed on the New York Stock Exchange and was founded in 1949.
There is simply a lack of tolerance for deviation and your professional reputation is often at stake here. Pages are intact and are not marred by notes or highlighting, but may contain a neat previous owner name. In terms of what guides his own sense of ethics and personal integrity, Huck, a former naval officer, still looks to the honor code of the Naval Academy, from which he is a graduate. In reality, if someone is committing fraud they are still probably going to sign a rep letter. From creativity and adaptability to communications and teamwork, each of the companies they profile has found its own path--and each company's approach offers powerful insights for your enterprise. Cyprus strongly believes that it is time for the profession to bite the bullet and begin practicing what he calls principle-based accounting versus the present rule-based accounting. These isolationist tendencies may unwittingly be conducive to unethical financial behavior.
Tools for Assuring Ethical Behavior The executives interviewed for this report were asked of their views regarding tools and programs that would help assure ethical behavior and integrity-based financial leadership. Vice Chairman of the Board, Synovus Gary L. The smaller size of the company lends itself to closer, more personal relationships with its shareholders. At ThriftBooks, our motto is: Read More, Spend Less. And you must have the confidence to bear up under criticism, to bear up under the pressure to make the numbers. While valuing diversity, the selection process works to insure a commonality of basic values. From an ethical and practical perspective, an ounce of accounting prevention is worth a pound of after-the-fact reporting.
All employees including senior management sign the code of conduct. We talk about it openly. Hunt Assistant Controller and Director of Accounting, Corning, Inc. The strategic business partner model of finance has magnified the importance of the critical soft skills of leadership for financial executives. For example, Art Alderson of Cox Communications reports that new hires at the director level and above are carefully evaluated by an industrial psychologist to assess style and competencies to ensure a good organization fit. Ethics and ethical tradeoffs are rarely cut and dry. He was commissioned by the Financial Executive Research Foundation to study emotional intelligence and associated leadership competencies as they relate to financial executives.
The company experienced tremendous growth in recent years. Responsibility to Stakeholders Versus Shareholders The concept of corporate responsibility to a broad set of stakeholders as opposed to a more narrow focus on shareholder value emerges as a central theme in our study. How are these competencies developed and nurtured within your organization, and are they done so with the specific objectives of ethical behavior and financial integrity in mind? In this respect, the ethically intelligent finance organization — and financial executive — has an opportunity to make a difference by setting the right example and appropriate tone. For example, he notes that shortsighted quarterly reports have become even more stressful, with skittish investors being even more sensitive to any negative news. A number of related themes emerged from these interviews that were related to promoting ethically sound behavior in financial professionals.
He has worked with executives from many of the world's leading organizations, including American Express, Banco Popular, Bristol-Myers-Squibb, and Unilever. With an emphasis on explaining not only what financial decisions have been made but also the associated risks and how others might look at them differently. It could distract from what we are supposed to do. Stern Graduate School of Business. The company is proud that following the stock market crash in 1929, it did not lay-off a single employee. Briefly stated, it understands the chief goal of business to be the creation and deliverance of value to a voluntary or democratically controlled marketplace.
Furthermore, many executives wear two ethical hats, one for business ethics and one for personal ethics. The dynamics at companies of smaller size typically result in more personal relationships between a company and its shareholders. . Again, the metrics emphasized by an organization can reflect a broader stakeholder approach to business. He is also is a regular speaker at international business conferences sponsored by Financial Executives International, the American Management Association, the Canadian Management Association, Management Centre Europe, and other leading organizations. Hoarding or hiding information is one of the small steps leading to the loss of integrity.
But a transition away from the traditional model of capitalism toward what has been termed a Covenantal Ethic which will be explained in more detail in the next section need not hinder a corporation's or non-profit organization's ability to reach its business goals. Instead the bulk of causation appears to have its roots in the market's short-term pressures, — the individuals that impose them and how financial leaders and business executives react to them. Financial Executives Research Foundation, Inc. This is the eBook version of the printed book. Schwalberg graduated Phi Beta Kappa from Emory University, received his doctorate in psychology from the State University of New York at Albany, and interned at Brown University.
Finally, Solomon includes an interesting section on ethical styles and how they may interact. His books include The Empowered Organization: Redefining the Roles and Practices of Finance and Foreign Exchange Risk Management: A Survey of Corporate Practices both with Henry A. The smaller private companies, too, take note of the importance of having a more relationship-based, long-term, stakeholder approach to business, in fostering integrity and ethical behavior. She also noted that, structurally, multiple lines of communication allow for information — including information that may pertain to ethically questionable behavior — to flow across multiple levels of the organization. A company is riding the wave, it dissipates, but earning pressures are still there. Am I willing to see this in the news? What do you do when the needs or well-being of one group of stakeholders conflict with equally valid needs of other stakeholders? In fact, it is integral — if not embedded — into the financial decision-making process itself and the relationship that such financial decisions have on all the stakeholders of this company.
But most importantly, says Smith, integrity and ethical behavior among leaders must be made highly visible to all members of the company. These case studies take place globally, in various staff sessions and conferences. Somewhat more controversial, but consistent with a stakeholder focus, the culture of ethically intelligent organizations increasingly seems to reflect adherence to the Covenantal Ethic model of capitalism as opposed to the Enlightened Self-Interest model. It is a core value followed for its own sake. While this may not be in the best interest of corporate balance sheets, it will be in the best interest of the users of financial statements and shareholders.