When bosses fall into the ethics gap

British business is full of good ideals - when it comes to other people.

One of the corniest jokes in the business world suggests that it is a widely held view that "ethics is a county to the east of London". Sadly, the joke seems to become no less true with each telling.

The Industrial Society has just revealed an "ethics gap" in British business - between what senior managers say businesses should be doing and what they are actually doing themselves. In the latest of its regular management reports, it suggests that around 80 per cent of companies have some way to go to bridge the divide between fine-sounding mission statements and the reality of business practices.

Seventy-one per cent of 313 managers questioned said that consulting people before taking decisions that affected them was essential to ethical management, but only 46 per cent said that this was practised in their own organisations. Eighty-six per cent said that communicating with employees openly, honestly and frequently was essential, but only 59 per cent said this happened at work. Fifty-five per cent said that enabling employees to balance home and work was essential but only 30 per cent said they treated it as a priority. Sixty-one per cent said that disallowing business with suppliers, contractors or distributors whose practices were unethical was essential, but just 44 per cent said this was enforced by their own organisations.

Despite such gaps between theory and practice, three-quarters of those who responded to the survey said that maintaining ethical standards had or would have a positive effect on financial performance and more than half felt that ethical standards had become more of a priority over the past three years. However, two-fifths said they had never consulted their employees on ethics.

Jo Gardiner, campaign manager at the Industrial Society, said: "Organisations need to work with their employees to define ethical standards which should underpin their business practices. These standards should reflect the competitive business environment while being relevant to people's real life jobs and decisions.

"The gap between what managers know is good practice and what they see happening in their organisations is particularly worrying. Directors and senior managers should lead by example, demonstrating commitment to their organisation's values. Key ethical issues may vary across sectors, but all managers must feel confident in their ability to make ethical choices, so they can distinguish between hard bargains and sharp practice."