Code of ethics – rules that must be followed

Every year the American Ethisphere Institute, composed of scientists, lawyers, government representatives and leaders of various organizations, produces the report “World’s Most Ethical Companies”.

There are several factors that determine whether

In 2021, the ranking included 135 companies representing 47 industries from 22 countries. Many business people for whom ethics in business is the number one principle, not only in theory, but also in practice, are fighting to be included in the list. We live in a time when employees, investors and stakeholders feel that the most trustworthy companies are those with a strategy and vision based on ethical goals. Thanks to their attitude, such organizations achieve better results and become market leaders.

Companies wishing to be included in the Ethisphere Institute’s ranking must maintain high standards, apply innovative management techniques, act ethically and in accordance with the motto of the institute "Good, wisdom, business, income". Moreover, they must not have any legal problems and should be involved in charity. There are several factors that determine whether a company can be called ethical: situation, mission and policy, as well as the morality of employees. The code of ethics sometimes does not fulfil its purpose, because it is not put into practice. There may be individuals who do not follow the established rules, and failure to comply with ethical standards leads to pathological situation that should not take place in business.

More and more companies in the world introduce regulations against bad practices – they apply appropriate policies and ethical codes. The leaders are the United States and American businesses, where ethics is the basis of action. They are followed by Great Britain, France and Germany, where companies are highly sensitive to issues such as corruption and other abuses. In Poland, business ethics is also gaining importance, although some enterprises are only beginning to implement certain rules in their organizations. In large corporations, codes of ethics apply both internally and externally. They belong to the criteria for verification of business partners before concluding contracts, in which anti-corruption clauses or references to ethical principles appear more and more often. The very process of creating a code of ethics can be time-consuming. In Grupa Progres a team of several employees has been working on such a document for 2 years. Taking a broad perspective, they created a set of values and principles that we follow every day. The code is supposed to help and it truly helps raise awareness of ethical problems that may be encountered in everyday work and facilitate making the right decisions. In case of any doubts regarding the conduct, our employees may ask for guidance, e.g. from their superior.

This type of document should define work standards, rights and obligations of an employee at every level, including managers. This is particularly important when we take into account the PwC’s "Global Economic Crime Survey 2020", which shows that as much as 60% of abuses in Polish companies result from actions taken by managers. For instance, they frequently use company cards for private purposes or abuse procedures for approving various expenses. Honest employers who follow the code and combat such practices should conduct formal and informal audits of the application of labour standards, which should also include health and safety. It should be clearly emphasized that we undertake to establish and maintain a safe and healthy working environment for our employees, external employees referred to contractors, and visitors.

Human rights are another important issue in the code of Grupa Progres, which is reflected by the lack of violence and a friendly work environment. We do not allow violation of any human and citizen rights due to sex, race, language, origin, birth, property or religion. Mobbing or any other practices that do not conform to the code are also banned. However, it is not sufficient to state that everyone has the right to work in an environment free from violence or harassment. It is necessary to act, for example, to create an internal anti-mobbing procedure and inform employees about the requirement to report disturbing situations. The code of Grupa Progres, a copy of which is

Employees with more than 5 years of service caused damage to the organization twice as much as those working for less than 5 years. The amount of damage caused increases with the level of education – 64% of the perpetrators of all professional frauds had higher education. Men (72%) committed employment fraud more often than women (28%).

in possession of our every employee, includes e.g. information on where to turn for help when they experience or witness inappropriate behaviour. They can also contact their supervisor directly, use the company's business ethics hotline or send a message to a special e-mail address.

Another key component of the code is confidentiality. The number of reported cases of abuse related not only to remote work, but also to the protection of trade secrets, personal data, cybersecurity or supplier verification is growing. In order to minimize the risk, it is necessary to develop an appropriate confidentiality strategy, quickly implement internal procedures and familiarize employees with them. These measures should also deal with conflicts of interest and impose on the team the obligation to resolve them, as they may adversely affect the operations of the company and its shareholders. The abovementioned principles will not work if we forget that, as a leader, we have to compete openly and fairly, and we have the right to obtain information about other entities using appropriate and legal methods.

It is obvious that a code of ethics should be the foundation of every business. Unfortunately, looking at the statistics, many businesses still have a problem with integrity. In 2020, 162,574 cases of economic crimes were detected in Poland, 8,262 more than in 2019 (154,312 cases) and as much as 104,098 more than in 1999 (58,476 cases).

In 2020 the Association of Certified Fraud Examiners (ACFE) published another "Report to the Nations" on fraud and economic abuse occurring in nine regions of the world. It shows that the main factors determining the amount of damage suffered by the organization are seniority, sex, education and age. Employees with more than 5 years of service caused damage to the organization twice as much as those working for less than 5 years. The amount of damage caused increases with the level of education – 64% of the perpetrators of all professional frauds had higher education. Men (72%) committed employment fraud more often than women (28%), and the average value was also higher (about 150,000 USD vs. 85,000 USD). Moreover, the average damage value increases with the age of the perpetrator. The report also reveals that out of the 2,504 cases studied, the average loss suffered by the organization amounted to 1,590 million USD. As many as 54% of companies did not recover funds lost as a result of professional fraud.

The damage caused has a direct impact on the organization's ability to create jobs and produce goods or provide services.

The ACFE also identified weaknesses in the internal control system that contribute to committing professional fraud. It is the lack of internal control mechanisms or ignoring the existing ones, the lack of management review and the organizational culture prevailing at high levels of the organization. This highlights the important role of preventive tools and justifies analyses of internal procedures, identifying gaps in them as well as detecting attempts to abuse in order to effectively limit their negative consequences.

According to the ACFE, abuses are most often detected thanks to tools enabling anonymous reporting of irregularities in the workplace, internal audits and inspections or even by accident. This clearly implies that the principles of business ethics cannot be left to chance.

Author:

Vice President, Grupa Progres