Best Practice Ethics Management: Integrating Values within Your Organization
Posted: 8 Mar 2013
Date Written: November 26, 2012
Financial services play a key role in creating prosperity and welfare in our society. They facilitate a good life, but can also seriously frustrate it (see part 3 of this thought paper). This huge impact comes together with the responsibility to carefully consider the interests of all stakeholders of a financial institute, such as clients, shareholders, employers and the society in which the bank operates. The turmoil in the financial industry over the last years raised serious doubts whether this responsibility is still to the core of morality in the financial sector. As a consequence, national and international governments impose new regulations and guidelines to make banks comply with preset standards. But in order to strengthen accountability and regain public trust a compliance approach can never suffice (part 4). Compliance is aimed at preventing misconduct – doing the moral minimum - while it is expected from financial institutions that they reorient themselves towards their social function and to the related values worthy to live for. This requires an approach that stimulates ethical and value-driven decision making across the entire organization. This thought paper explores the lessons for management in developing and implementing such an ethics management approach (part 5). However, before we elaborate on this, we need to explore a more fundamental question about the morality in the financial sector. Since, as long as we don’t understand the reasons why the financial sector drifted away from its social function, there will always be the risk that attempts towards ethics management will be mere symbolic at worse and suboptimal at best. For this we will first turn to an overview of the ethical failures in the financial industry (part 1) and see how the views of philosopher Thomas Hobbes shed light on the current developments in the financial sector (part 2).
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