Canadian IT companies need to bone up on business ethics according to analysts

Cultivating a corporate code of conduct can help a business thrive but a considerable number of Canadian IT firms are failing to promote business ethics within their organization, according to industry experts.

By developing regulations that are in synch with the values of its workers and customers, a company can boost its bottom line attract and retain more talent and nurture a favourable image among its clientele, says David Nitkin, president of EthicScan Canada Limited, a full-service ethics consultancy firm based in Toronto.

But, Nitkin said, the records of many Canadian IT firms remain spotty at best when considering issues such anti-harassment policies, good governance, conduct towards customers and competition and environmental policies.

“Many IT companies in Canada do not even have a whistle blower protection program,” he said.

Setting up of a system where employees are guaranteed anonymity and protection when they report unlawful activities, unfair practices, or discriminatory behaviour within the company is crucial for the welfare of both workers and the organization, according the ethics expert.

Studies have shown that without an effective mechanism, it is likely that two out of three witnesses or victims to a wrongdoing would refuse to come forward or file a report. If left unchecked the situation could lead to staff demoralization and resignation or even open the company to possible involvement in illegal activity, said Nitkin.

While the general public has expressed growing concern over environmental issues, many companies also fail to properly and accurately report their performance in implementing ecologically friendly and sustainable practices.

“Many companies would have their clients believe that they are in the forefront of green initiatives but they do not even report their carbon emission statistics to any third party regulatory organization,” Nitkin added.

EthicScan, which serves more than 1,500 Canadian companies, said it has also received report of firms that raid their competition for top IT talents. Some companies pirate a top executive from another company only to fire that worker again after they have extracted from him or her whatever information they need about the competition.

Elijah Dann, who has taught business ethics and philosophy course at the University of Toronto, says that some corporations tend to treat business ethics like a buffet.

Failure in good corporate citizenry can also be exhibited by a company when it refuses to reveal vital information about its products to customers especially when safety, health and privacy issues are at stake. Many North American firms, for example, are facing public ire and legal battles for selling private information.

Last year one Canadian Internet porn company was sued by Facebook for allegedly attempting to steal personal information of users of the social network.

One global technology firm with offices in Canada believes that developing a code of ethics based on a core set of values mutually agreed upon with its workers is essential.

“Implementing corporate ethics is crucial to our obtaining and retaining employees that help us do our business and serve our customers,” said Martha McIvor, vice president of human Resources for Hewlett Packard Canada.

McIvor said HP Canada does have a whistle blower program and a corporate ethics office that investigates reports of any wrongdoing. She said the company also implements an e-waste recycling program.

To develop its business ethics code, HP conducts periodic focus group discussions among its employees around the world to get feedback from workers on issues that matter to them. McIvor said this helped HP come up with what it calls “HP People Promises” a compilation of the company’s commitment to its workers to help “help them grow and win with HP.”

HP People Promises tackle issues such as diversity, career development and global citizenry, said McIvor.

She said recent studies indicate that appropriate codes of business ethics enable better employee engagement. This could lead to as much as 20 per cent increase in performance, boost employee satisfaction by 23 per cent and reduce turn over rate by nearly 50 per cent.

“By keeping this code, were able to stave off competition and establish our self as one of Canada’s top employers.”

Code of ethics reveal how a business views itself and its relation to its workers and the general public, according to Rob Dreyer, senior analyst for Info-Tech research Group Inc. Dreyer conducts studies in IT policies and corporate behaviour for the London, Ont-based analyst firm.

“A business’s code of ethics is an expression of the values of an organization and how it expects its members to act,” he said.

He said business ethics address social behaviour that might occur in the company or society at large and how employees should react to it. The code could include everything from the appropriate use of office e-mail accounts to the need to truthfully report company revenues.

“Government and industry regulations such as Sarbanes-Oxley and Canada’s Bill 198 were developed to address the need to enforce good governance such as reporting company revenues accurately.”

He also said codes of conduct employed by various firms may show some weakness in certain areas and strength in others. For instance, one company may have a very strong employee and customer relations policy but may be faltering in the area of managing its ecological footprint.

Companies seeking to develop a good business code of conduct should first clearly understand what the rules it intends to put up are for. “Is it going to serve as a general guideline or will it regulate specific behaviour? Will it address internal dynamics or relations with people outside the company?”

It is also best to consult employees on issues that matter to them and to regularly inform workers or any changes to company rules.

Dreyer said it is vital that an organization’s values are shared to its personnel and inculcated throughout the company.

For instance, companies like IBM and Accenture makes sure that new hires and existing employees are always abreast with company regulations.

At IBM, Dreyer said, new recruits are suppose to read the company’s code of ethics and must sign a document attesting that they have read and understand the code.

At Accenture, executives take an annual seminar on good governance and how business ethics applies to their role. They must pass the online course in order to receive a contingent bonus, said Dreyer.

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