As an engineer, I work in a profession that generally maintains high ethical standards. Our peak representative body, Engineers Australia, has a strong code of ethics.

As the leader of that review team, I spoke with many of our members and was impressed with the importance they placed on ethical behaviour.

Yet in spite of this, I sometimes see things that disappoint me. Take for, example, a World Bank decision in June 2013 to add a major Australian engineering consultancy firm to the World Bank’s list of debarred and cross-debarred firms for a year. This meant that for a 12-month period, that firm could not win any World Bank projects, could not work for a firm awarded World Bank contracts, and could not receive any proceeds from the bank.

The World Bank Sanctions Board found that the firm fraudulently failed to disclose its agreement to pay a $US34,000 ”marketing fee” to a sub-consultant, submitted invoices for reimbursement of $US210,000 in housing costs not actually incurred, and used false supporting documentation to request reimbursement of $US150,000 in vehicle and transport expenses.

Because of this, the firm was cut off from a significant area of business. While technically this bar lasted only 12 months, the actual impact was likely much greater. The reputational damage would certainly result in a much higher level of scrutiny of the company’s tenders in this and other areas of business. By their own actions, they had taken a level playing field and made it an uphill climb. The impact on company morale must have been severe.

This shows why maintaining high standards of ethical behaviour is not simply the right thing to do. It is a business essential if firms are to maximise their opportunities and their return on investment in staff, technology and skills.

Cutting ethical corners may seem attractive to a manager focused only on winning the next job, but such attitudes have no place in an organisation wanting to build a healthy, long-term business.

Engineering is a tough market. There are many firms that can provide clients with high levels of technical advice, so the pressure is on to find that ‘differentiator’ which gives you the edge. Unfortunately, there are times when those competitive pressures see firms taking the sorts of actions I discussed in the example above.

Cutting ethical corners may seem attractive to a manager focused only on winning the next job, but such attitudes have no place in an organisation wanting to build a healthy, long-term business. You might do it once or twice, but this approach will eventually catch up with you, just as it did the firm in the World Bank example.

To my mind, the best business differentiator is to combine technical excellence with a willingness to build long-term relationships with clients. You should forge partnerships that focus on the client’s needs so you become sought after as a trusted provider of services.

Ethical behaviour is at the heart of this. As a colleague of mine with a major engineering firm says, “High ethical standards and conduct are regarded as a survival imperative in our company. Our attitude is that the first time you give advice that is not professionally and intellectually independent is the last time you will have the opportunity.”

Apart from the immediate loss of business that results from unethical behaviour (real or perceived), there are other longer-term impacts. I once worked for an American multinational that was frequently accused of unethical behaviour. That was all a long way from the Australian arm of the business, yet the mud stuck.

We once had a booth at a graduate recruitment fair and got positive responses from quite a few final-year university students. We invited them to a meeting to discuss opportunities and introduce our graduate program. But a number said, “I’m sorry but I have done some research on Google and I don’t like the things I found there. I don’t think I could work for a company like that.” So our opportunity to recruit some of the brightest young graduates available was lost.

There are a number of strategies that engineering firms with high ethical standards follow. These strategies make good business sense by better managing risk – reputational and financial – along with enhancing the decision-making capacities of staff. But importantly for the industry and the professionals themselves, these strategies reverse the race to the bottom driven by short-term thinking.

  • See the big picture. A successful business is not simply a collection of jobs, one after the other. Growing your business requires a strategic understanding of how individual projects and assignments can take the company to where you want it to be.
  • Lead from the front. Ensure that all levels of management take their ethical responsibilities seriously and display zero tolerance to unethical behaviour. Act as role models for staff at all levels.
  • Have a code of conduct and enforce it. Here I must emphasise that a code of conduct is not simply a list of rules. Ethical problems are often complex and do not lend themselves to simple ‘let’s look up the book’ solutions. Often, the process of ethical analysis and reflection is as important as the final decision. The following quote from the Engineers Australia Code of Ethics summarises the characteristics of the best codes:

“Our Code of Ethics defines the values and principles that shape the decisions we make in engineering practice. The related Guidelines on Professional Conduct provide a framework for members of Engineers Australia to use when exercising their judgement in the practice of engineering. Ethical engineering practice requires judgement, interpretation and balanced decision-making in context.”

  • Embed your code of conduct in sound induction and staff development programs. New staff should have no doubt as to what is expected of them. But don’t simply read them the riot act – ensure your development programs provide an opportunity for staff to learn about ethical behaviour and understand the importance (and difficulties) of ethical analysis.
  • Provide staff with opportunities for ethical learning and reflection. Ethical decision-making is often complex. You can help staff develop their ethical understanding and skills by reflecting on the ethical aspects of past or recent case studies.
  • Support your staff. Ethical behaviour involves two-way conversations, so provide a mechanism where staff can discuss and seek advice on ethical issues. As my colleague from earlier says, “There is hardly a day goes by when I am not asked to assist people to think through what is the ‘right thing to do’ in various circumstances”. Another major company I know has a procedure where staff can inject ethical concerns into decisions about pursuing new jobs. In some instances, this has led to the company not chasing significant projects.
  • Build open and honest relationships with clients. Help clients understand and deal with ethical issues when they arise.
  • Consider the ethical aspects of everything you do. Remember that because something is legal, that does not automatically make it ethical.
  • Don’t be afraid to say no. If a potential client is asking you to cut corners or act unethically, then they are not the sort of client you want to work with.

Unethical behaviour is not confined to the commercial sector. It also exists in the public sector. This is not to accuse individuals working in government as deliberately acting unethically. Rather, it’s to point out how standardised policies and procedures serve to systemically support unethical behaviour.

The area that I am most familiar with is government procurement policies for infrastructure projects. There is a golden rule in engineering procurement that good contracts allocate risk to the parties best able to manage that risk. Many standard government contracts do not – they endeavour to allocate almost all risk to the contractor (whether the contractor can manage that risk or not) while absolving the government from risks that they are best able to manage. Contractors are then expected to accept unlimited liability for their actions. In addition, many government procurement procedures still focus primarily on lowest price, even though their stated policy may be to seek the best available value for money.

No doubt these practices are motivated by well-intentioned attempts to get the best value for public expenditure and to protect procurement authorities (and their political masters) from exposure to unnecessary risk.

However, the unthinking application of these policies has driven engineering consultants and contractors to operate in an environment of unrealistically low margins and unreasonably high risk. This environment is conducive to unethical behaviour, with companies cutting corners and acting inappropriately in order to win work and stay profitable.

What’s unfortunate about this is that at the heart of an act of unethical behaviour, there is often someone who thinks they are doing the right thing for the company. When these things occur, you often hear justifications like “it’s a tough market and we have to do this to survive”, “if we don’t do it someone else will”, or “we haven’t done anything illegal”.

In my experience, unethical behaviour by engineering companies is not common. But if we are to see a business environment where corner cutting is eliminated, governments need to lift their game too.

Let me conclude with a quote from Shakespeare because, when all is said and done, ethical behaviour relies on the ethical understanding of individuals. As Polonius states in Hamlet,

“This above all: To thine own self be true, and it must follow, as the night the day, Thou canst not then be false to any man.”