Ethics man proves a winner

Young managers are increasingly having to adhere to an ethical code of practice, reports Roger Trapp

On the face of it, there is not much linking the restaurant chain Thank God It's Friday with ethics. After all, the startlingly successful arm of the Whitbread organisation is all about families and groups of young people having a great night out in the sort of place where the noise level would appear to pre-empt philosophising about the rights and wrongs of life.

But there is perhaps no better illustration of how the subject of business ethics is starting to affect all kinds of organisations. The management of the company is adamant that business ethics is fundamental to an understanding of how the company runs itself - in particular, how it achieves the staff motivation for which it has become noted.

David Graham, marketing director of the company, which after 10 years has 18 sites around the country, goes so far as to say that ethics is "central to the way we promote the business". The operation, which has imported a concept that has thrived in the United States for three decades, makes a great play of its standard of customer service. And having realised that it cannot achieve this without a properly motivated staff, it has set about creating the conditions in which employees can earn money for themselves and for the firm.

It is the sort of attitude that is increasingly finding favour with business. Though it might not yet assume the importance of profit, strategy and market share, ethics is something that young managers starting out today are increasingly likely to come across. Last week, for example, the telecommunications regulator accused BT of not behaving ethically because of its attitude to competition.

A year ago, Jack Mahoney, Dixons Professor of Business Ethics and Social Responsibility at London Business School, recalled in an article that when a friend heard he was teaching a business ethics course for MBA students he responded with: "That must have been a short course." But, in truth, ethics is becoming an increasingly integral part of management training - and of business itself. And not just for altruistic reasons.

Greed might have been good in the Eighties of Gordon Gekko and his real- life counterparts, but in the Nineties consumers and society in general have become more critical. The success of organisations such as Body Shop - despite some criticisms concerning its approach - and Virgin (which has been able to carry its good image into financial services), as well as the enduring popularity of Marks & Spencer, suggests that consumers value trust. This helps to explain why some brands are still popular while others are fading away and why, for instance, an Allied Dunbar recruitment advertisement that emphasised the company's involvement in community programmes achieved four times the responses of one that did not. This is not something that can be easily ignored, and young managers must realise that what was acceptable for their immediate predecessors will not be so for them.

Sheena Carmichael, one of a growing number of consultants specialising in ethics, sees a fundamental change under way, with all sorts of organisations - from the Labour Party to financial services companies - putting ethics on to their agendas. The fact that a conference taking place in London this week is just one of several in as many weeks dedicated to the subject is evidence of the growing interest, she says.

But for this interest to develop into something more far-reaching depends on managers taking it to heart. "Ethics isn't a quick fix," she says, pointing out that a lot of managers and consultants think it is.

Besides choosing to work for companies that have some kind of ethical stance, young managers can do their bit by trying to find out the company's policy on ethics. If there is not one, they can start within their own department by encouraging staff to be open and honest. "You can sometimes develop a ripple effect," she adds.

Because of the recent trends for downsizing, delayering and decentralisation, young managers are more likely to be in a position than in previous generations to put ethical policies into action. The problem is that without older, wiser heads around them, they are in danger of not knowing what standards are acceptable. It is therefore essential for there to be established codes of practice. And to avoid managers feeling isolated and unguided, those codes must be communicated, says John Drummond, another ethics consultant.

Mr Drummond, whose company Integrity Works has helped several organisations set up codes of conduct, adds: "It's not good enough to have a set of values; you have to make sure people understand them."

Like Ms Carmichael, he argues that downsizing, in particular, has often destroyed trust among customers and surviving employees. There is growing evidence that with money clearly not the only factor determining people's job decisions, there might be a competitive advantage for the company that promises to keep people and retrain them for changing circumstances.

Mr Drummond predicts that the company of the future will be the "high trust, low cost" organisation that is able to steal a march on the opposition by having the confidence to give its staff the freedom to run their own affairs, so saving money in setting up elaborate management systems designed to command and control their activities.

In the meantime, young managers, says Mr Drummond, must ensure that they are not only ethically aware, but also "ethically articulate so that they are able to respond to people".