Monitoring ethics and assessing performance

June 01, 1997

In summary the need is first to establish the organisation’s ethical and socially responsible parameters, then to determine the priorities, the strategy and policy, and how they are going to be institutionalised, and finally to put in place an effective management structure to ensure that the policies and objectives are met.

Environmental analysis

The first step is to determine the organisation’s current situation vis a vis its agreed code and any independently recognised statements of principles to which the organisation has chosen to adhere. Next, the current situation should be assessed against the commercial, economic, social, technological, competitive and political environment of the organisation, and also of future trends. This process, known as environmental analysis, occurs in four stages:

scanning all segments of the relevant environment to identify warning signals of changes already under way and of possible forthcoming changes;

monitoring specific trends and patterns relevant to the organisation;

forecasting the future direction of organisational environmental changes;

assessing how the trends and developments might affect the organisation.

Stakeholder analysis

The organisation should also consider the use, where relevant, of a social impact study. An organisation is ethically and socially responsible for the social impacts of its decisions, or the lack of them. Stakeholder analysis identifies each stakeholder, their interests, comparative and relative importance to the organisation and the ability of any one stakeholder to influence others.

There are seven major steps in stakeholder analysis:

mapping stakeholder relationships;

mapping stakeholder coalitions;

assessing the nature of each stakeholder’s interests;

assessing the nature of each stakeholder’s power, including that over other stakeholders;

prioritising stakeholders’ interests;

monitoring shifting coalitions;

monitoring future stakeholder issues and changes in power.


A further management discipline in ethical and social management is benchmarking. This is the process of measuring business practices against competition and industry leaders, not necessarily those in the same business of the organisation.

Social audit

A final important management tool is the social audit. The social audit can tell management:

where it is now – what issues it is currently addressing and how;

how effectively they are being managed – by meeting targets and objectives and, where relevant, budgets;

the extent to which the organisation’s ethical code and other principles and codes of conduct are being met;

the relevance of ethical and socially responsible initiatives to the organisation’s activities and its social environment

whether the issues properly address the needs and concerns of shareholders and stakeholders;

future issues the organisation should or may need to address;

the extent to which the organisation’s ethical and socially responsible policies are understood both internally and externally.

Above all, a properly structured audit will show the organisation what it is not doing!

Walter Raven is a consultant in business ethics. He presented a paper on Managing Ethics and Social Responsibility to the 1997 Conference of the UK Association of the European Business Ethics Network, held in April.

Corporate Citizenship Briefing, issue no: 34 – June, 1997