Ethical decision-making

Our work can give rise to ethical issues. Examples include: work undertaken for government clients; operating in countries with a poor human rights record; and marketing for sensitive or controversial products.

The decision on whether to proceed with a new piece of work requires judgement. In cases where there is a potential risk to WPP’s reputation employees are required to elevate the decision to the most senior person in the relevant office and then to the most senior executive of the WPP business in the country concerned, who will decide if further referral to a WPP director is required.

During 2008 we identified a number of improvements to our process for reviewing ethical issues in client work, following a dialogue with Co-operative Asset Management, a WPP investor. Changes we will implement during 2009 include:

Referral procedures: Formalising our referral arrangements in a written procedure distributed to all agency CEOs. We will include accountability for escalating concerns over client work in the Code of Conduct compliance form signed by all CEOs annually. Quarterly review meetings will be held for senior managers at Group level to discuss cases of concern and identify new risk areas. These will be communicated to agency CEOs and CFOs via quarterly bulletins from Paul Richardson, Group Finance Director and executive director charged with overseeing CR.

Benchmarking: Benchmarking our Code of Conduct against those of other leading companies and strengthening the Code provisions as appropriate.

Training and support: Launching online ethics and risk training to raise awareness of the risks associated with client work and underline the importance of compliance with WPP’s Code of Conduct. This will include prompts and guidance on when work should be referred to management. The intention is for training to reach the majority of our operating companies’ employees on a regular basis.

Audit: Including client risk factors in our internal audit process.

Zimbabwe

Following allegations that an agency in which one of our subsidiaries, Y&R, held a minority interest, and over which we had no legal control, may have advised Zanu-PF on its electoral campaign, we launched an urgent investigation in the course of which a senior member of the management of the agency notified us that she had been advising President Mugabe in a personal capacity.

WPP’s Board and management have established clear guidelines for our companies on clients for which we are prepared to work and the Mugabe regime in Zimbabwe was not an acceptable client in accordance with these standards.

We were not prepared to have any association with Robert Mugabe or Zanu-PF and we therefore took the immediate decision to divest Y&R’s minority interests in Zimbabwe. This was actioned as quickly as possible.

In their own words

Howard Paster, Executive Vice President, WPP Public Relations & Public Affairs

We tell our clients that well-reputed companies do better in the marketplace, and the same principle applies to us. There is a business value to high standards – quite apart from the inherent value of ethical behaviour: clients are more apt to do business with us; we can visit universities and recruit the best graduates; our people go home happier at night and can be more proud of the work they do.

Seeing right from wrong is easy at the extremes but we know that much of life happens in the middle. Training, education and clear policies help guide our people through these grey areas. The changes we are introducing will strengthen our approach and help our people make the right decisions. Mistakes will still happen on occasion but by operating at the highest level we can minimise these for the benefit of WPP and our clients.

We are a multi-cultural business, operating through over 150 companies in 107 countries. Having strong policies at the centre is only the first step. We must help our agencies embed these at the local level among a hugely diverse employee base.

The growth of our digital business is also bringing new challenges as the speed of business accelerates and the time we have to address difficult questions is compressed. We have to be at the top of our game to react quickly and maintain our standards.

Howard Paster
Executive Vice President
WPP Public Relations & Public Affairs

An external view

Niall O’Shea, Engagement Manager, The Co-operative Asset Management

WPP understands better than anyone why brand and image add value, and that damage to brand is easy to do and difficult to repair. WPP’s own brand is no exception. A company in WPP’s line of work is failing when ‘the story’ becomes about them. We were concerned that certain companies in WPP’s family had, in the past, gained notoriety for taking on controversial clients and using less than ethical methods to represent them. This concern was compounded by the fact that WPP also had expertise in helping companies with marketing their ‘green’ or ‘responsible’ credentials, which left them open to accusations of greenwash if their business as a whole could not demonstrate integrity and consistency, in a world increasingly cynical about corporate motives. In our view, consistency in standards across all company operations is a strong indicator of that company’s social responsibility. Failure to do this, which can expose gaps in company policy, can lead to damage to a company’s reputation and ultimately a reduction in shareholder value.

We engaged with the company and found them candid and open to change. In fairness, the problems were mostly historical and WPP had already taken some action to ensure better reputation risk management. Nevertheless we felt it could do more to embed a culture of good risk management in a decentralised business and made a series of recommendations. These were adopted and augmented by the company. The experience not only addressed our concerns but gave us an insight into the quality and culture of management.

Niall O’Shea
Engagement Manager
The Co-operative Asset Management