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chapter four Ethics of Business power point

Business ethics and CSR

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ETHICS OF BUSINESS: MANAGEMENT AND LEADERSHIP BY MELESE ABEBE
OBJECTIVES Recognize appropriate ethical leadership Define and describe the pros and cons of a statement of values. Make the distinction between codes of conduct and codes of ethics. Appreciate the purpose of ethics training in an organization. Define an ethics audit and explain the role of ethics officers and ethics committees  Understand how ethics reporting systems work and define whistleblowing. Know who is responsible for managing the ethics of business. Identify the approaches to ethics programs. Evaluate ethics programs and list their benefits. Recognize that ethical misbehavior may occur despite management efforts and the implementation of ethics programs.
INTRODUCTION ◦ Leadership styles have been extensively researched, but the styles applicable to ethics of business have not ◦ Leaders using an ethical form of leadership communicate ethical standards and encourage ethical conduct. ◦ The operations of the corporation reflect support for socially responsible activities, for example, designing safe products, treating employees fairly, and reducing pollution and other threats to the environment. ◦ The concept of responsible leadership has different orientations A. a narrow one focused on financial performance B. Extended one with a stakeholder view - consistent with corporate social responsibility C. servant leadership, which emphasizes concern for others, and combines the motivation to lead with the need to serve others.
Intro… continued ◦ The third form of leadership would include: the design and implementation of some type of corporate ethics program and there are several components that managers or entrepreneurs can use. Corporate ethics programs comprise some combination of the following: a statement of values, code of conduct and/or ethics, ethics training, ethics audits and consulting services, ethics officers and committees, and ethics reporting systems.
Statement of value ◦ A statement of values: contains a description of the beliefs, principles, and basic assumptions about what is desirable or worth striving for in an organization. ◦ It is also called as : statements of philosophy. ◦ A statement of values also becomes the basis for a code of ethics. ◦ A study of 15 Canadian multinational corporations found the top ten corporate values to be integrity, honesty, justice, equality, objectivity (impartiality), loyalty, devotion, respect, prudence, and tolerance.
Examples of statements of value ◦ "Safety and Environment - The safety of people and protection of the environment are the foundations of our work. All of us share in the responsibility of continually improving the safety of our workplace and the quality of our environment. ◦ People-We value the contribution of every employee and we treat people fairly by demonstrating our respect for individual dignity, creativity and cultural diversity. By being open and honest we achieve the strong relationships we seek. ◦ Integrity-Through personal and professional integrity, we lead by example, earn trust, honor our commitments and conduct our business ethically. ◦ Excellence-We pursue excellence in all that we do. Through leadership, collaboration and innovation, we strive to achieve our full potential and inspire others to reach theirs."
What statement of value includes ◦ There is no uniformity in content or format in these statements. Kooten found that a value statement may contain any combination of components, such as: ◦ The key interests to be satisfied and balanced; for example, the public or community interest, owners, employers, and suppliers; ◦ An emphasis on quality and/or excellence in relation to product and service, employees, and technology; ◦ Efficiency as indicated by low cost, high productivity, and value for money or investment; ◦ The atmosphere or climate of enterprise; for example, a good place to work, an emphasis on teamwork, managers' support of staff, and development of employees; ◦ The observance of codes of conduct to enhance integrity and to ensure fairness in all dealings
Statement of value …… ◦ Values need to be shared by everyone, at least to some degree, so that ◦ the values are reinforced and widely accepted. ◦ It is important that everyone in the corporation is able to identify the shared values and describe their rationale.
Codes of conduct and ethics ◦ A code of conduct explicitly states what appropriate behavior is by identifying what is acceptable and unacceptable. ◦ A code of ethics is a statement of principles or values that guide behavior by describing the general value system within which a corporation attempts to operate in a given environment. Code of conduct Code of ethics Enforced by an external power and authority; convey rules that tell people what they must or must not do. Members of organizations must obey or face penalties for failing to do so Codes of ethics suggest guidelines to follow and empower individuals to act according to their consciences. Penalties are not imposed and writers emphasize the qualities they think members should have. Characteristics •Imposed by others •What must be done or what must not be done •Rules • Self-imposed • Who we are • What we stand for • Guidelines or guiding principles
Levels in the business system codes has been developed ◦ Corporate or business enterprise-Individual corporations prepare codes for their own use ◦ Professional organizations-Professions such as lawyers, accountants, and architects have been early users of codes and are influenced by them when employed by business enterprises. ◦ Industry and sector-Industry associations formulate codes that enterprises in the industry or sector may voluntarily follow. Also referred to as voluntary codes, sometimes these codes are developed in conjunction with government agencies. ◦ Single issue-Organizations develop codes applicable to a particular issue ◦ Codes from national and international bodies-International NGOs or agencies such as the United Nations or the Organization for Economic Co-operation and Development (OECD) prepare codes.
Major issues in Codes of Conduct and Codes of Ethics A general statement of ethics, values, or philosophies Criteria for decision making and compliance with laws Responsibility toward employees, including items such as health and safety, non-discrimination, and privacy Conflicts of interest, their identification, and how to handle them Protection of corporate assets, including accurate accounting, security or property, and insider information Appropriate business practices, including honesty, fairness, obeying the law, and information disclosure
Major issues in Codes of……… Appropriate conduct on behalf of the corporation; for example, relationships with customers, suppliers, competitors, creditors, and government Responsibilities to society at large, including contribution to political parties, responses to media, treatment of communities, and concern for environmental protection Implementation procedures, including familiarity with the code, reporting of violations, refusing unethical requests, and seeking help on ethical matters Specification of enforcement/compliance procedures and the penalties for inappropriate or illegal behavior
Criticisms • It is difficult to enforce the codes and, even if they are enforced, the penalties may be insignificant. • The codes are idealistic or written in meaningless generalities. • Sometimes, codes of ethics are developed merely to control competitive conduct among business corporations or individuals.- e.g. . such as pricing practices in some industries. • Nevertheless, the use of codes and their reasons for existing are no longer issues for many corporations. Some critics claim that codes of ethics or conduct are at best a minimal but unenforceable standard and at worst a hollow pretense
Ethics training, audits and consultants ◦ Ethics training involves teaching employees about the values and policies on ethics they should follow in their decision making. ◦ It includes - Orientation on values or ethics and related policies Deal with reputation and legal risks. o Training involves giving participants practical checklists and tests to evaluate their actions o Training usually also includes a description of cont1ict of interest, something that inevitably arises in a discussion of ethics.
Questions and tests assist managers in making ethical decisions Have you defined the problem accurately? How would you define the problem if you stood on the other side of the fence? How did this sin1ation occur in the first place? To whom and to what do you give your loyalty as a person and as a member of the corporation? What is your intention in making this decision? How does this intention compare with the probable results?
Questions and tests assist managers in making ethical decisions 7. Whom could your decision or action injure? 8. Can you discuss the problem with the affected parties before you make your decision? 9. Are you confident that your position will be as valid over a long period of time as it seems now? 10. Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family, society as a whole? 11. What is the symbolic potential of your action if understood? If misunderstood? 12. Under what conditions would you allow exceptions to your stand?
Conflicts of Interest ◦ Conflicts of Interest: occurs when there is a clash between the interests of an individual and the organization that employs the individual. ◦ It is a situation in which an individual has a private or personal interest that is sufficient to appear to influence the objective exercise of that individual's duties Personal interest Financial gain Gifts Promised future promotion Duties Responsibilities of individuals was hired to perform in good faith and loyalty
Common Conflicts of Interest Self dealing • Employee takes an action in an official capacity that involves dealing with one self in a private capacity and that confers a benefit for oneself. Accepting gifts and benefits • Involves the acceptances of some benefits Using confidential information • The use of personal or private purposes of confidential information obtained from different sources Influence peddling • The practices of soliciting some form of benefit • E .g Asking for a gift or kickback from a supplier if purchase is made. Use employers property • Inappropriate use of employer’s property • E .g taking office supplies to home
Common Conflicts of Interest …… Outside employment or moonlighting • Intentionally engages on outside normal working hours for additional remuneration Post employment • Arranging future employment based on information obtained from employment Personal conduct • When an employees behavior in private life may reflect adversely on the employer.
Ethics audits and consultant ◦ It is a systematic effort to discover actual or potential unethical behavior in an organization. To uncover unethical behavior, To identify existing opportunities for unethical behavior Audits are particularly useful when used in conjunction with a code of ethics, as the code can be the basis for comparison to establish how well or poorly the organization is doing. Regular audits foster ethical practice. Ethics audits or surveys can be conducted by consultants to ascertain compliance to ethical standards, and consultants may be involved in training and code development.
Ethics audits and consultant….. ◦ The consultants are usually persons external to the organization who have some education and experience in ethics management. ◦ Some corporations have gone beyond implementing codes, training, audits, and the use of consultants and established ethics officers, indicating that ethical issues are being treated seriously ◦ An ethics officer is an independent manager, reporting to the board of directors or CEO, who reviews complaint or information from anyone in the organization or any stakeholder, studies the situation, and recommends action if applicable. ◦ An ethics committee is a group comprising directors, managers, or staff formed to monitor ethical standards and behavior.
Ethics Reporting Systems and Whistleblowing ◦ The practice of reporting alleged wrongdoing, code violations, and irregularities in corporate operations is commonly referred to a whistleblowing ◦ Whistleblowing is an act of voluntary disclosure of inappropriate behavior or decisions to persons in positions of authority in the organization. ◦ The most frequent form of whistleblowing occurs in the workplace where employees, managers, or directors are concerned about some matter. ◦ Whistleblowers are also referred to as do-gooders, bell-ringers, lighthouse keepers, people's witnesses, rats, tattletales, and squealers.
End of chapter four