Bigger businesses more concerned about regulating ethical behaviour

New research from the Association of Accounting Technicians (AAT), the UK’s leading qualification and membership body for accounting staff, shows that the bigger the business, the less likely it is for business owners to trust their employees to act ethically. Only 37% of SMEs trust their staff to do the right thing compared to 66% of microbusinesses.

The research was conducted by Opinion Matters on behalf of AAT, with owners of microbusinesses (companies of up to 9 employees) and owners of Small and Medium-sized Enterprises (SMEs) with 10 to 249 employees.

SMEs are more likely to have a code of ethics and a person looking after ethical behaviour

Interestingly, the report also highlighted that as the number of employees increases, businesses are more likely to find a member of staff dedicated to ethical behaviour as well as having a formal code of conduct. Nearly two thirds of microbusinesses do not have someone looking after ethical behaviour, and one third of these types of businesses do not have a code of ethics.

The scenario is different when we look at SMEs with only 19% admitting to not having a business code of ethics and 39% do not have someone responsible for looking after ethical conduct.

SMEs are more likely to probe the ethical conduct of business partners

When asked whether business owners consider the ethical behaviour of their suppliers before agreeing to work with them, more than 37% of microbusinesses do not look into this aspect whereas only 23% of SMEs do not take this into account.

Director of the Institute of Business Ethics, Philippa Foster Back, said: “Due to requirements of prime contractors higher up supply chains, smaller firms are increasingly asked during tendering processes about their ethical risk management.

“The ethics of a small organisation is typically influenced by the owner-manager as their behaviour will set the tone of the business and any values and ethical principles will usually be implicit. However, there are advantages to having a more formal ethics policy in place. Firstly, it reinforces and makes explicit the values and principles that are part of the organisational culture, so allowing them to be communicated to stakeholders. Secondly, a policy will provide guidance and support to employees on how they are expected to conduct their business.”

Commenting on the research, Adam Harper, Director of Professional Development of AAT said: “In the finance and accounting sector, we are well aware of the importance of ethics in business and the role it plays. New clients are likely to be drawn to work with organisations that demonstrate their integrity, so we take the view that ethical companies are sustainable companies.

“It’s also important for microbusinesses and small businesses to examine their supply chains and to ensure that the people they are doing business with also act ethically to protect brand reputation but also to ensure fair play within industry sectors. A business supply chain is as much a reflection on their organisation as their employees are.”

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