Incentivising Ethics: Managing Incentives to Encourage Good and Deter Bad Behaviour

November 2018

Transparency International UK has published this guide for companies on managing incentives to deter bribery and corruption and other unethical conduct and to encourage good behaviour.

Incentive schemes are an important part of encouraging the right kind of behaviour from staff, be it to improve quality or drive up profitability.  Unfortunately, pressure to meet targets, the imperative to “get the job done” and the need to win business have frequently led to shortcuts, resulting in various forms of corrupt and unethical behaviour.

A key argument of this guide is that, for incentives to work as intended, a company must ensure that it has an open and ethical culture in which staff are encouraged to do the right thing and feel able to challenge management decisions and targets they think are unethical or dysfunctional. This should be reinforced by a strong tone at the top.

Incentives should be linked to the company’s overall business strategy and aligned with the company’s values, code of ethics and compliance programme. Further, incentive schemes should actively encourage ethical behaviour through the use of non-financial targets that reflect and drive ethical behaviour. Ultimately, this mix of incentives should support the long-term sustainability and success of the company.

These arguments are supported throughout the guide by principles, practical examples and case studies designed to help companies navigate the challenges in this area and operate to high ethical standards.