Following the damning report on the role played by what was Coopers & Lybrand in the collapse of the Maxwell empire, Coopers – or PricewaterhouseCoopers – now acknowledges that some of its senior members fell below the standards that it as an organisation sets itself. Accordingly, it has set up a variety of procedures designed to prevent any repetition of a situation in which it was regarded as having lacked objectivity and scepticism and – famously – “lost the plot”. As PwC’s response shows, even though there has been no suggestion of intentional wrongdoing, such findings are deeply serious for a professional services firm. After all, Coopers & Lybrand was supposedly paid to give independent advice, and in the process, it was supposed to be able to stand up to strong-willed individuals. The affair may have cost PwC £3.5m in fines and costs, but for an organisation that recently reported revenues of $15bn, it is the blow to its reputation that will have hurt most. Today, whatever crowded marketplace a company is in, it is becoming increasingly obvious that consumers are starting to choose between one company and another on grounds other than price. Matters such as reputation and integrity are no longer important only to professional firms. Consumers may not always articulate their decisions in such terms, but essentially they are influenced by how they feel about this store as opposed to that one. Important factors can be the treatment of staff, perceived exploitation of third-world workers and general standing in the community. The most market-aware executives already realise this. Marks & Spencer may have lost some of its spark in recent months, but in the 1998 annual report, Sir Richard Greenbury, its chairman, commented on how its lawsuit against Granada Television over a World in Action programme had been concluded with “an unreserved apology in open court” from Granada and the award to Marks & Spencer of £700,000 in damages and costs. “The company’s reputation for integrity in all its activities is of paramount importance and we will always take firm action to protect that position,” he said. But it is not just the high street that is being affected in this way. Organisations of all sorts are seeing that it makes good business sense to acquire reputations for fair dealing. Not so long ago this would have been dismissed as the woolly thinking of idealists who found themselves running businesses against their better judgement, despite the fact that organisations such as the Body Shop and, in the United States, Ben & Jerry’s Ice Cream and the Patagonia outdoor equipment company, have woken the world up to the fact that you can have a social conscience and still make money. But what is going on now goes even further, and the notion of making money while having a conscience is being turned on its head. As a result, it is increasingly being seen that making money – at least in the long term – is becoming dependent upon having integrity and a good reputation. This kind of realisation is behind the explosion of interest in ethics codes. With companies delayered to the umpteenth degree and often lacking experienced employees, they can no longer rely on eager new recruits being introduced to “the way we do things around here” by some sort of process of osmosis. Instead, they need to set out the rules and regulations in an explicit fashion. And such initiatives do not only play to newcomers. They can be a powerful motivator for all employees. At a time when business leaders of all kinds are talking about values, there is nothing like setting and seeking to live up to ethical standards, if you want to make a workforce feel good. The famous HP Way – the set of principles that guide employees of the US-based computer and electronics company Hewlett Packard as they go about all aspects of their business – is perhaps the most powerful instance of this. Widely credited with having kept the company on the straight and narrow as it has sought to cope with the dramatic shifts that regularly strike the IT markets, the principles’ central position in the company has meant that, although executives may close down operations that cease to achieve the desired levels of returns, they do not lightly lay off staff. In short, just as many consumers want to feel good about their purchases by obtaining them from outlets that they trust and respect, so employees want to do work of which they can feel proud. Nor does it end there. Increasingly, it seems, employees want to work with and for people of whom they approve. The founders of the St Luke’s advertising agency claim that their stance on clients – for example, they do not carry out lucrative work for tobacco companies – is a key factor in attracting staff. With today’s Generation X and beyond increasingly clear about what they find acceptable in the world of work, this is an important point. And its great attraction is that it can become the basis of a virtuous circle. Companies that make it clear that they are serious about their good reputation are more likely to be able to recruit like-minded people, who will then reinforce the culture and so on. In fact, the core to all of this is for businesses to understand that, rather than seeking to appeal to everybody, they should really be trying to mean something to a more select group. And there can be few more potent means of achieving that than through reputation, values or integrity. However you term such an approach, it is clearly a way of creating a sense of engagement with employees, customers, suppliers and parts of the community as a whole. As Jack Welch, the greatly-admired head of General Electric of the United States, is reported to have said: “In the end, all you have is integrity.” Roger Trapp is management editor of The Independent and The Independent on Sunday. His new book, BlunderBoss (published by Capstone), comes out this month.