An introduction to ethics audits
Ethics auditing relates to a business’s code of conduct or code of ethics. It is about ensuring that the organisation operates in an ethical way and that all employees follow the guidance provided to them. In this section, we provide you with a detailed definition of what an ethics audit is. We also look into the objectives of such audits and provide ethics audit examples.
What is an ethics audit?
Before we get into the definition of an ethics audit, let’s explore what an ethical culture is. The term ethical culture represents the values of an organisation, its behaviours and its business practices. It relates to the way that employees work together and their wellbeing. Businesses that thrive at implementing ethical cultures support their employees and encourage them to ‘do the right thing’.
An ethics audit is the act of reviewing the organisation’s code of ethics and the internal controls, policies and processes in place. As part of an ethics audit, the team auditing the business will review core documentation, interview employees, analyse the responses to incidents and review the company’s values. As with any audit, the company’s objectives, risks and controls are looked into.
The objectives of ethics audits
Without regular ethics audits, incidents or unethical behaviour might go unseen and therefore remain unaddressed. As such, illegal activities or unscrupulous behaviour are not uncovered and might continue and put the organisation at risk.
When an organisation conducts regular ethics audits, they are able to spot behaviours that fail to comply with the guidance provided. They can also pinpoint any gaps within their documentation that might need to be filled.
Some businesses use ethics audits to communicate to the organisation staff and to promote the code of conduct, procedures and policies in place. It is an opportunity to remind all staff of their duties and responsibilities when it comes to their behaviour.
Ethics audit examples
The content of an ethics audit will depend on the organisation’s setup and the type of business. For example, for some businesses that are more exposed to hazards due to the nature of their activity, safety might be an important factor. However, we can assume that all ethics audits have the following content:
- general information on working hours and information on wages
- legal aspects around labour practices including information on forced labour and worker representation
- insight into disciplinary practices
- definition of discrimination with examples
- guidance on waste management
- hygiene and health and safety information
The above themes can be added to ethics audit reports that provide detailed descriptions for each area of concern.
How to conduct a successful ethics audit
To conduct an ethics audit, the organisation should assign a team that will represent all employees. The lead should ideally have experience in conducting ethics audits. Once this ethics committee has been assembled, they can start reflecting on the objectives of the audit and creating a plan that will lay out the milestones for their ethics audit. Some organisations also use external consultants to conduct their ethics audit. This ensures that there is no bias in the results. Below are some steps that are recommended for a thorough ethics audit:
Step 1. Define the company values
The first step that the ethics committee takes is to evaluate the organisation’s values. Doing so will allow them to establish the culture of ethics of the company. Within this evaluation, they include concepts like integrity, diversity and inclusion, safety, respect and more.
The committee may benefit from including individuals with a range of perspectives so that different employee experiences can be reflected in the audit process.
Related: A guide to employee voice
Step 2. Collect existing documentation, including the code of ethics and the code of conduct
The values identified in the first step will need to be reflected in the company’s code of conduct. This document should provide guidance to employees on the behaviours that are appropriate and those that are not. Compliance and risk should be covered in both the code of ethics and the code of conduct. The documents should be clear and understandable to all employees. Ideally, they should also contain concrete examples.
Step 3. Create a thorough risk assessment
Creating and communicating the code of ethics is not sufficient. Organisations need to go beyond and outline the compliance risks that they might be subject to. To do so, they should conduct a risk assessment to understand if the changes that the organisation is going through present any risks. During this stage, the ethics committee should look into the existing laws and regulations as well as some best practices.
Step 4. Create or update the documentation on ethics
Being detailed is important. For this reason, it is recommended that the policies and procedures address all risks identified in the previous phase. Being thorough in the company’s internal documentation by ensuring that all risks are covered might be time consuming but it is also likely to prevent a lot of hassle should an incident occur.
Step 5. Promote the code of conduct and other documentation to all employees
Like with any internal documentation, it is important to communicate the procedures thoroughly. Make sure that you create a communication plan that covers all the channels used by employees. Training or presentations might also be beneficial. The training and communication should clearly highlight the company’s objectives, the main guidelines of the code of conduct, as where to find the documentation.
Step 6. Collect feedback and implement regular reviews
Create an ethics programme that is open to feedback and subject to regular reviews. When it comes to ethics, employees have a role to play because they are stakeholders in the application of the guidance. Plan for regular reviews of your procedures. Conducting regular audits ensures that all the documents are current. It also encourages frequent communication with all employees on the code of conduct and compliance when it comes to behaviour.
Step 7. Ensure leadership engagement
Keep leadership engagement apparent throughout the process. Leaders need to lead by example, as well as promote the code of conduct and have a responsibility to educate their teams. There are several ways in which you can demonstrate to all employees that the code of conduct is endorsed by leaders. For example, you can have the CEO make a statement that formalises the organisation’s values. You can also provide leaders with additional training on behavioural compliance.
Developing a strong ethics culture is essential for organisations to be compliant. This culture can be achieved through ethics audits conducted thoroughly and on a regular basis. Doing so may help create a culture that fosters diversity and inclusion and help promote the organisation’s values both internally and externally.
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