Ethics Programs

Ethics

“The branch of philosophy that defines what is good for the individual and for society and establishes the nature of obligations, or du-ties, that people owe themselves and one another. In modern society, ethics define how individuals, professionals, and corpora-tions choose to interact with one another”.

Introduction

• Lack of practical or philosophical consensus re-garding doing what is right so we learnt a frame-work.

• Managers drive company long-term success and social welfare by understanding and meeting stakeholder claims, developing and leveraging mu-tual stakeholder capabilities.

• They have to remember there are some things they should always do and should never do. They should realize which rights and duties can be justi-fiably waived when there are stronger competing obligations.

Introduction

• The third issue is to develop moral character and motivating ethical conduct.

• Practical decision making with little time in-formation or resources.

• Mangers might lack the motivation or organi-zational resources to do the right thing.

Ethics program

• The goal of an ethics program should be to provide a practical framework to implement ethical-organizational integrity that allows in-dividuals to overcome the practical barriers that stop them from coming to and acting upon ethical decisions.

Becoming ethical

• We should exercise our mind by learning and practice (discerning particulars) in order to know what ethics requires and we need certain character traits to be a person who acts on ethical obligations.

• Ethics is not only about applying rules but transforming ourselves and our behavior to reflect higher ideals about what is right.

Aristotle - Ethics

• People desire or aim at having friends and family, working and acquiring money, being proud of what they accomplished, having sense of self-worth, being entertained, hu-mored and experiencing pleasure and being on the side of what is just and right.

• Excessively focusing on work and money may inhibit our ability to maintain meaningful relationships. Greed.

• Vice – failing of excellence.

Aristotle

• Virtue – balanced character traits.• Virtuous people rationally assess situations,

react appropriately, learn from their mistakes and develop their character.

• For example if they give away money they would give it to the right person at the right time in the right amount.

• They do not let out emotions cloud our moral vision.

Excess, Virtues and Vices

• Recklessness, Courage and Cowardice• Gluttony, Moderation and Abstinence• Wasting Money, Generous, Stingy• See table 3.1

Right judgment and action

1. Learning – e.g studying the mechanics of a bike or how to ride well. Studying leadership.

2. Habitual action e.g Practicing riding a bike. Leading teams.

• Don’t exploit children Vs How should we structure our supply chain to prevent exploiting children.

• Supply chain - intellectual knowledge will not pro-vide a conclusive answer to that question.

Right judgment and action

• Also some business persons fail to act even though they know what is ethical.

• Ethical business people require knowledge, practical experience and correct character traits.

• We should make a culture, organizational practices and other environmental conditions to support this kind of improvement.

BB&T values

• Individuals character is very important• Employees should act consistently with val-

ues.

1. Reality

2. Reason

3. Independent thinking

4. Productivity

5. Honesty

BB&T values

6. Integrity

7. Justice

8. Pride

9. Self-Esteem

10. Teamwork

Ethics programs

• Designing processes for continual moral and intellectual development.

• Legal Vs Ethical , Compliance programs Vs Ethics programs

• Compliance – rule definition, dissemination, detection and punishment.

• Ethics – incentivizing ethical behavior, en-couraging active executive leadership and support, ethics training

US federal sentencing guidelines

• Connection between well-defined, shared and culturally embedded organizational values and ethical commitments and lawful conduct

• Large organizations should encourage small organizations to implement effective compli-ance and ethics programs, even across national and cultural boundaries.

• Guidelines give suggestions for structuring compliance and ethic programs

International Organization for Standardization: Quality orientated approach to management sys.

1. Leadership creates and environment where stakeholders are involved in organizational change and provides a clear and inclusive vision of the company’s future.

2. Goals are best achieved when persons and re-sources are managed within clearly established organizational processes.

3. Processes are part of a management system.

4. Commitment to continual improvement

5. Plan-do-measure improvement cycle

Ethics program

1. Planning and documenting clear expecta-tions and objectives.

2. Responsible, accountable, process and sys-tems orientated actions.

3. Measurement and assessment.

4. Systematic commitment to becoming ethi-cal.

Documentation

• Relevant information for employees as well as the principles guiding the ethics of the or-ganization.

• Stakeholder input needed.

Ethics vision statement

1. Long-term success linked to ethical and legal con-duct.

2. Importance of stakeholders e.g. commitments to product quality and safety.

3. Character traits e.g. honesty

4. Executive commitment to ethics program

5. Framework for developing more specific objectives

6. Reference supporting documents e.g. code of con-duct

Higher ideas

http://www.ti.com/corp/docs/investor/gov/statement.shtml

Ethics code of conduct

1. State executive commitment to promoting ethics.

2. Clearly spell out duties and obligations, highlight-ing fundamental rights, special obligations and le-gal compliance duties.

3. Specifically relate to job functions. E.g. sales and marketing, referring to ethics codes for profes-sional groups.

http://www.smei.org/?16

4. Use examples of how to solve common issues

Ethics code of conduct

5. Be clear about repercussions

6. Direct employees to an ethics officer if they have an issue they can’t solve by them-selves.

7. Reference other ethics documentation

Everyday documentation

• Organizational procedures, work instruc-tions, forms etc.

• Closing a sale – should include rules about disclosure and non-deception.

• Mortgage lenders -Customers rights.• Selecting and evaluating suppliers – what

are sweatshop conditions.

Questions

1. Give an example of excess, virtue and vice accord-ing to Aristotle.

2. What 3 things do ethical business people require?

3. What is the difference between a compliance pro-gram and an ethics program?

4. Give 3 things that should be in an ethical vision statement?

5. Give 3 things that should be in an ethical code of conduct?

Organizational Processes – Ethics in every-day operations

1. Regularly document flow of organizational processes and identify stakeholder interac-tions, expectations and rights within these processes.

2. Regularly conduct gap analysis between theory and practice.

3. Prevent unethical conduct before it occurs. Checking and reducing the likelihood is preferable to increasing the means of detec-tion.

Organizational Processes

• 4. Management should come up with a list of measurable (tied to financial metrics) objec-tives and initiatives relative to each organiza-tional process and assign responsibility for their completion.

Measurable objectives and ini-tiatives

– Improving stakeholders perceptions about ethi-cal performance

– Comply with internationally recognized environ-mental and social standards.

– Promote supplier compliance with standards– Reducing cases of illegal conduct.– Employee awareness training and moral devel-

opment.– Ethical conduct is considered in issues of hiring,

promotion

Ethical decision making and moral philoso-phy

• Principles or rules that people use to decide what is right or wrong– Presents guidelines for determining how to

settle conflicts in human interests– Guides businesspeople in formulating

strategies and resolving ethical issues• No single moral philosophy is accepted by

everyone

Teleology

• Considers acts as morally right or accept-able if they produce some desired result such as pleasure, knowledge, career growth, the realization of a self interest, or utility

• Assesses moral worth by looking at the consequences for the individual, called consequentialist

Deontology

• Refers to moral philosophies that focus on the rights of individuals and on the intentions associated with a particular behavior– Believe that individuals have certain abso-

lute rights • Rule deontologists believe that conformity to

general moral principles determines ethicalness • Act deontologists hold that actions are the proper

basis on which to judge morality.

Cultural Relativism

• From the relativist perspective, ethical be-havior is gained subjectively from experience

• Descriptive relativism relates to observing cul-tures

• Metaethical relativists understand that people naturally see situations from their own perspectives – No objective way of resolving ethical disputes

between cultures• Normative relativists assume that one person’s

opinion is as good as another’s

Virtue Ethics

• What is moral in a given situation is what the situation requires and what a person with a “good” moral character would deem appropriate

Justice

• Involves evaluations of fairness or the dispo-sition to deal with perceived injustices of others

• Distributive justice: An evaluation of the results of a business relationship

• Procedural justice: Based on the processes and activities that produce the outcomes or results

• Interactional justice: Based on an evaluation of the communication processes used in business re-lationships

Ethical decision making procedure

1. Gather the facts

2. Identify all stakeholders

3. Identify stakeholder claims

4. Think about long and short term consequences

5. Identify obligations to stakehold-ers

Ethical decision making pro-cedure

6. Consider your character and integrity

7. Think creatively about potential actions (best practice)

8. Form an argument that supports your deci-sion – An argument is a set of premises or statements that logically lead to a conclu-sion.

Example of an argument

Forcing employees to stand at their worksta-tion for over 12 hours without a break is con-sistent with accepted definitions of torture. The right not to be tortured is a fundamental hu-man right.

Ethical Continual improvement

• From recycling to a sustainable company.• Honest and critical self-reflection• Commitment to eliminating the causes of

unethical behavior• Act on processes in ways to promote ethical

conduct.

Ethical continual improvement

• Have regular audits.• Anonymous stakeholder feedback systems

for reporting unethical conduct. E.g. ethics hotlines.

• Implement a system of corrective action (pre-vent problems from happening again). E.g “5 whys”, purchasing “kickbacks” – systematic changes in hiring and supplier evaluation process.

Ethical continual improvement

• Regular reviews of ethic program effective-ness by executive managers. E.g GRI report framework for economic social and environ-mental sustainability.

Leadership

• All employees should lead by example and ac-tively promote an ethical organizational culture.

• Cosmopolitan leadership models – inquisitive-ness, learning, critical reflection and delibera-tion, a sense of belonging and purpose, a sense of mutual recognition and interdepen-dence.

Leadership

• Transformative leadership model – Leader as a mentor who recognizes individual im-portance and uniqueness, promotes intellec-tual stimulation, conveys an overreaching sense of purpose, acts with the upmost in-tegrity and serves as a role model.

Leadership Styles

• Coercive leaders• Authoritative leaders• Democratic leaders• Pacesetting leaders• Coaching leaders

Leadership and conflict

• Strategic action – exert influence through in-ducements or threats. Can damage the sense of solidarity and integrity.

• Communicative actions – Attempts to reach mutual understanding and co-ordinate be-havior in terms of a collective agreement as to the way things should be. Can build a sense of solidarity and integrity.

Leadership and conflict

• Rules for conversations:– Respect other participants– Able to “put yourself in their shoes”– Respect absent stakeholders– Allow participants to speak freely– Speaking truthfully– Find values and norms supported by all affected

and put them into practice.

Leadership and conflict

• Best solution is conversation and debate, making strong fact-based arguments and rhetoric.

• Agree on what is right and fair.• The result of the conversation should be

used for future ethical documentation.• Can be challenging to implement in practice

but is an important stakeholder management ability. Sometimes strategic action could be needed.

Summary

• There are intellectual and motivational limits to ethical behavior.

• An effective ethics program will create a cul-ture to act with integrity using a systematic and process orientated approach to intellec-tual and character development.

Questions

1. Give a practical example of how ethics can be included in an organizational process?

2. Give 2 examples of how to promote ethical continual improvement?

3. What is the difference between strategic and communicative actions?

4. What is the best way to solve conflict over an ethical decision?