BUSINESS ETHICS IN PRACTICE

www.transparency.lt

Sergejus Muravjovas

BUSINESS ETHICS AND TRANSPARENCY INITIATIVES

Promotion of Business Ethics Principles in the Baltic Region (2006-2008)

“More Integral Medical Treatment” study (2007)

Transparency in Construction Sector Study (2007-2008)

“Towards Transparent Media” project (2007)

“Promoting Media Accountability” project (2008)

[ TI Lithuania, TI Sweden, TI Latvia, SIDA ]

[ TI Lithuania, Association of Ethical Pharmaceutical Companies, Association of Drug Producers, LR Ministry of Health, Union of Lithuanian Doctors ]

[ TI Lithuania, EIKA, REALTUS, YIT KAUSTA ]

[ NORDEN, TI Lithuania ]

PARTNERS: SIDA, ECCJ, OECD Watch, TI

How do Lithuanian business people understand

business ethics and CSR initiatives?

there are no cultural obstacles

there is no resistance on behalf of employees

do not see any economic enticements

lack state support

do not see initiatives that would support socially responsible business

profit-making is essential – no “win-win” view on business activities

payment of taxes

following the law

securing work safety

employee health care

World Bank (2005)EKT group study (2007)UNDP regional project (2007)TI Lithuania business ethics study (2008)

CONDUCTED STUDIES:

TI Lithuania business ethics study (2008)

Interviews with 20 out top 100 companies in Lithuania, according to the “Verslo žinios” annual company list

Carried out in spring – summer of 2008

One-hour-long in-depth interviews with A-level executives

Ten questions

Funded by Swedish International Development Agency

Q1: What is your company mission?

¼ business leaders were ready to present and elaborate on their company mission:

“To perform construction work with quality and on time. This work has to surpass expectations and last.”

Others stressed the importance of profit:

“The aim of the organization is to create profit”, “to earn profit for shareholders and serve good quality products to the customer.”

Q2: What are your company values?

A good relationship with the customers, employees and environment is the essential value

In particular, those who have thought it through

Others: Ambitiousness, leveling it with the standards in the society

“I would not separate values into those of business and those that are not, they are one and the same. No one has said it better than in the Decalogue”.

The Ten Commandments

1. You shall have no other Gods but me

2. You shall not make for yourself any idol, nor bow down to it or worship it

3. You shall not misuse the name of the Lord your God

4. You shall remember and keep the Sabbath day holy

5. Respect your father and mother

6. You must not kill

7. You must not commit adultery

8. You must not steal

9. You must not give false evidence against your neighbour

10. You must not be envious of your neighbour's goods. You shall not be envious of his house nor his wife, nor anything

that belongs to your neighbour

Q3: What does “ethical business” mean to you?

There is no clear or uniform understanding of what “ethical business” is

¼ of company representatives pointed out that there are many unethical companies in Lithuania that doing well

“When I see companies behaving unethically, I console myself with the thought: “It will come back to haunt them in the future”.

“Ethical business” is keeping your word?

Q4: Who do you consider to be ethical business leaders in Lithuania?

The majority could not provide an immediate answer

Six, after some consideration, did not provide any answer

All those that look into the future are ethical?

Western / Scandinavian-owned companies?

Q5: What is your opinion about codes of ethics?

More than one-fifth of companies do not have a Code of Ethics

Only a small number spoke of the Code of Ethics as an integral part of their business identity

Codes of ethics are useful when they are followed

Many view the Codes with scepticism, not sure how much they are actually followed

Q6: Does your company use a code of ethics / similar rules?

YES:

Why? – Top-down, trickled down “umbrella” codes, an essential need

How was it developed? – A few speak of a group-driven approach;

How does it help solve problems?

From “Don’t ask me, it does not help!” to “We have a box for anonymous reports, which is always full; we have our company newspaper. The presence of the Code makes people think – when you have rules written down, they really work like hidden advertisement, and just get imprinted in your consciousness.”

Disseminated through Internet, newsletters, etc.

NO:

Why not? – Not enough time, PowerPoint presentation

What do you do when there are problems? – The vast majority solve issues through dialogue / discussion

How do you explain to employees company culture? –

“Since many have such company cultures, when someone misconducts, we do not “throw them away” but talk.”

Q6: Does your company use a code of ethics / similar rules?

Q7: What is “transparency business” in Lithuania?

The majority understand what this should mean

Unfair competition

“I am amazed of the extent of corruption in Lithuania. To me “transparent” means being open and declaring their interests, particularly when it comes to lobbying.”

“One year and half ago we were declaring our profits and losses but then noticed some negative things. Competitors and providers started to abuse this information and ask us: “Last year you had a profit of 10 million Litas, so aren’t you going to put down the price?”

Q8: How do you understand a concept of “win-win”?

“Generally, this is a good thing but there are some exceptions”

The majority of business people like the idea but question the extent of applicability in Lithuania

“The market is not a walk in the park, holding each other hands. If businesses compete with technology and quality of work and the customers receive good quality products, then it’s a win-win.”

Q9: What is the future of “transparent” and “ethical” business in Lithuania?

“Our situation is not improving…”

“There is less strangling in Lithuania nowadays…”

“The future is good. It’s all getting sorted out, although when I compare my working environment in an international company to the Lithuanian one… it looks like it got worse…”

THANK YOU FOR YOUR ATTENTION!

QUESTIONS?

www.transparency.lt

Sergejus Muravjovas