Code of ethics Course Instructor: Shd What is business ethics management? Business ethics management is the direct attempt to formally or informally manage ethical issues or problems through specific policies, practices and programmes Typical components of business ethics management Mission or values statements Codes of ethics Reporting/advice channels Ethics managers, officers and committees Ethics consultants Ethics education and training Stakeholder consultation, dialogue and partnership programmes Auditing, accounting and reporting Evolution of business ethics management (BEM) Take-up of different components increasing Change in emphasis concerning the purpose of business ethics management Previously primarily focused on managing employee behaviour Increasing attention to management of broader social responsibilities behaviour
Designing and implementing
codes of ethics Codes of ethics Codes of ethics are voluntary statements that commit organizations, industries, or professions to specific beliefs, values, and actions and/or set out appropriate ethical behaviour for employees Four main types of ethical codes Organisational or corporate codes of ethics Professional codes of ethics Industry codes of ethics Programme or group codes of ethics Prevalence of codes and ethics Increasingly prevalent Substantial rise in usage during 1990s 2/3 of large UK firms have some kind of formal ethical code whilst almost all large US firms have a code of ethics Less prevalent in Europe Content of codes and ethics Codes of ethics typically attempt to do one or both of the following: Define principles or standards that the organization, profession or industry believes in or wants to uphold; Generalized codes ----- Set out practical guidelines for employee behaviour, either generally or in specific situations (such as accepting gifts, treating customers etc.) Specific codes ------- Content of codes and ethics (cont.) Generalized code of Unilever All Unilever employees are expected to avoid personal activities and financial interests which could conflict with their responsibilities. Specific codes of Unilever To define financial interest they have specific codes for bribery, gift etc. Transparency International have specific codes only whereas bureaucratic organizations have general codes. Difference between general and specific codes General codes Specific codes Flexible and applicable to Not flexible and so multiple situations cannot be applied in different situation General statements lack a Specific codes have framework of meaning and clarity of expression purpose and clarity General statements Specific codes creates sometimes create loopholes as it may not ambiguous situation be possible to cover every aspect. Critical views on ethical codes Generalised statements of obligation (Hosmer 1987) Suppress individual moral instincts and emotions in order to ensure bureaucratic conformity and consistency Type of Content Highly guided Low guided
Rule-based Cell: 1 Cell: 2
externally driven Specific codes Generalised codes Or both generalised and specific Or both generalised and codes specific codes High guidance of management and Low guidance of management strict monitoring and less or no monitoring Value-based internally driven Cell: 3 Cell: 4 Generalised codes Generalised codes Managers try to develop employees Not enough guidance and ethical values through different initiative to create values programs like, ethical training Depends mainly on individual employees ethical values
Figure: Type of content of code of
ethics Effectiveness of codes of ethics Not what a code says but how it is developed, implemented and followed up Suggestions for successful implementation Maximise participation of organisation members in development stage to encourage commitment and buy in (Newton, 1992) Discipline employees found in breach (Webley 2001) Follow-through. Global codes of ethics Can organizations devise one set of principles for all countries in which they operate? Cross-cultural issues most commonly addressed are: Gifts (hospitality and bribes) Conflicts of interest Insider dealing Equal opportunities and discrimination Protection of the environment MNEs should be guided by 3 principles ( Respect of core human values Respect for local traditions Belief that context matters when deciding right and wrong Importance of code of ethics Specific guideline for particular situation or problem Demonstrate organization's concern internally and externally Generate economic efficiency Codes can complement other ethical management activities Factors to be considered for developing COE Type of content Compliance with relevant Law Provisions regarding exposing wrongdoing Provisions regarding the problem to be solved, e.g. procurement policy Encompass accountability mechanism Specific provision for punishment Cross-cultural issues Highlight relationship with the particular stakeholder involved