The CEO Refresher Websites for Professionals
Take control of your online presence
with your own professional website!

Establishing Corporate Ethics - Part 1
by Bruce Hamm


To determine what ethics we should adopt, we must first decide what ethics are or what being ethical means. In other words, what are the right ethics to have? Another way to ask that question is, "How do we determine whether an action is ethical or not"? To arrive at the final answer of this question let us review the classic ethical theories and determine if they shed any light on the initial question. There are two main theories about what constitutes an ethical action. The first is Rule-based and the second is Virtue-based.

Rule-based ethicists state that we should base our ethical actions on some sort of rule or system of rules that guide behavior. Many variants of this set of theories exist. Sub-sets exist within some of the theories, each offering a slight distinction on the main theory. One may review these various theories in detail on the Internet or there is a very good brief review of ethical theories by William Frankena, titled: Ethics published by Prentice-Hall Inc.

Rule based theories include:

Teleological (teleo - in Greek meaning the "end", sometimes referred to as consequentialist theories) theories, including sub-theories: Ethical Egoism and Utilitarianism with its variants.

Deontological (deon - in Greek meaning "duty", sometimes referred to as non-consequentialist theories) theories, including sub-theories: Act-deontology with its variants, Decision-based systems, Rule-deontology and Divine Command theory.

If we analyze and accept the basic tenets of above theories, we can see that according to philosophers we can base our judgment of ethics on several key elements. First, teleological theorists tell us that the outcome of an action must achieve some good and reduce harm to others for us to consider it ethical. Second, we find that deontological theorists base ethical action on duty to a given set of acceptable rules or precepts because of the critical nature of those rules. The highest of these rules is that any maxim we accept, we must be able to will it to be a universal law (Kant's dictum).

The idea behind the Virtue ethics theory is that a person's acts are ethical because of the person's disposition or motivation for acting a certain way. The commitment to acting ethically rests in the agent, not in any acceptance of an external plan of action or set of rules. The agent must feel, in the sense of acting from a disposition or from an internal basis rather than a judgment based on external criteria, that an act is right before the agent can do it.

From this summary, we can see that philosophers tell us that ethics has at its basis some sense of disposition; the agent experiences a sense of requirement to act a certain way and does so, thus making their actions ethical. Therefore, we have seen three sets of criteria for ethical action. First, some good actually must be performed and distributed as an outcome of an action. Second, there is a set of rules we can follow, determined from our sense of duty about our behavior. Third, closely related to the second, is that a disposition, developed from our internal self, requires us to behave in a certain way. Some philosophers find conflict in these approaches. I believe they represent three basic requirements such as the sides of a triangle or the legs of a stool and are thus complementary but not mutually exclusive.

Basing our ethics on the first principle, we must see some good come out of any action for us to consider it ethical. A mere disposition to see good come about is not enough. For example, suppose there is a situation where construction is occurring on a particular stretch of highway. A man has driven by this particular stretch of highway daily for several months and feels he knows the area very well. One day he arrives to find several of the bright orange barriers out of place. He feels obligated and stops to return the barriers to their former position.

Has the driver acted ethically? If disposition is the only criteria for ethical action, then indeed he has. Do we agree? The actions of the driver could cause an injury to another person by guiding them in a dangerous direction, because the initial driver may not have full information about the project. Yet, the initial driver's disposition was one to do good. Thus, disposition cannot be the sole criterion on which we base ethics. Some good has to come or at least be possible from our actions for us to consider the actions ethical.

Moving on to the rule-based criteria, we see that basing our ethics on mere rule following is not complete either, regardless of which category of the rules we may choose. Michael Stocker in his article The Schizophrenia of Modern Ethical Theories shows us how empty rule following for its own sake is. For example, a rule states that you must visit a friend in the hospital who is recovering from traumatic surgery. You go because your sense of following the rules is strong. Your friend may even inquire as to why you came. Your response is that you have a requirement to go and therefore must follow the rule.

This approach to visiting a friend seems oddly cold. To base the visit merely on meeting a requirement to go to the hospital seems devoid of any feeling or passion for your friend. I believe most people would be appalled to find that someone visited them only to meet some sense of requirement to a set of rules. There is something missing from the entire affair. The human connection or rather the disposition to be connected to your friend is missing in this example.

So at the very least, we see that to be ethical, an action must be able to demonstrate the three pronged approach. Ensuring that some good comes from an action, following a duty as described by a rule and a disposition to do good are all required for an action to be ethical.

How do we translate these ideals into useable precepts? Michael Hoffman, Director of the Center for Business Ethics at Bentley College, answers this question most eloquently. He lays out three basic precepts that establish what it means to be ethical. His three precepts are:

  1. Avoid causing unjustifiable harm.
  2. Correct self-caused harm.
  3. Prevent harm caused by others or by accident.

Turning these prescriptive decrees into positive declarations, he restates them as:

  1. "Do unto others as you would have others do unto you" - New Testament (Virtue Ethics).
  2. Act always out of respect for the intrinsic dignity and worth of all human beings (Deontology).
  3. Act to bring about the greatest good for the greatest number of people (Utilitarianism).

Is this all that is required to be ethical? There is one more element for ethical judgment. This newly described requirement is not so much attached to a specific action or situation but rather upon the actor's overall character. That new area is the requirement for the actor to learn about ethical principles and to develop their own ethical character. I call this combined approach "Cultivation Ethics".

As an example of this sense of character development, let us examine slavery in the US. In recent history, it was perfectly legitimate and some would argue ethical for white landowners to keep slaves to work the land. Even in the US Constitution, society considered transplanted African males only 3/5 of a man in value but certainly not in status and it did not consider females at all. Many well meaning, otherwise intelligent white men considered Africans not much more advanced than the farm animals they used as tools to work the land.

Why do we now understand that slavery is inherently unethical yet in a different time society considered it at the very minimum acceptable? It now seems obvious why it is unethical, but to many people in that earlier time it was not so obvious. Does that make it right? Hardly, very few people would now say that slavery was ethical simply because it happened at a less enlightened time. It has always been unethical, remains so today and will be so tomorrow but overall the people of that era did not understand or accept this.

This illustrates the fourth criteria for a person to be ethical. One must strive to develop or rather cultivate an ethical vision and then put that developing vision into action. Is this really how ethics work? Must we strive to be more ethical in order to be an ethical person? To get a clearer view of the kind of progress this requires, let us look at how a child learns a behavior.

For example, how does a child learn to play games? First, one must teach the child the basic rules of a game. With very few exceptions, the child will not be a master of any game only recently learned. They will know only the basic concepts. As a child, I learned to play chess, though I had no competent teachers. Very young, I wanted to learn more about the game and came to read the term "gambit". As most know, it is the opportunity for a person to offer an opponent a piece in exchange for a more favorable position. I took that to mean a verbal offer, as in "here is my pawn you may have it, just remove it from the board". After I had been playing the game for a time, I realized this was not a verbal offer, but rather it is a move one makes that an opponent accepts by taking the piece with a move of their own, or rejects by making a move elsewhere. Only by playing over time did I eventually realize my error in interpreting the rules.

To master any behavior or activity we first learn the basic rules. We accept what others, with more experience, have determined to be the correct procedures. Second, we learn the concepts for mastering that behavior. We practice consistently and repeatedly, always with the prescribed rules in mind, often making mistakes along the way. Finally, as we mature, we begin to see inside the nature of the activity, where we can even modify the rules if we deem it appropriate. This learning process is how we become moral as well. We learn the current, rigid rules to ethical behavior. We then learn about the concepts that would allow us to master an ethical life while practicing it. As we exercise this life, we refine our understanding of what it means to live well with others. We constantly review our behavior, if indeed we have an interest in living ethically. Finally, we come to see into the nature of the activity or behavior.

Having become masters, do we forget about the basic rules with which we began? Not if, in reality, we are masters of the game. Rather, the basics permeate our disposition in all the preparations and acts of the game. We must continuously examine, refine, and modernize the ethical game. In doing this, people need not give up their current life and retake all the philosophy classes they slept through in college. It merely means that at whatever level one finds themselves, they must strive to grow in their understanding of what ethics is and what it requires. This requires a conscious effort, recognizing there is always something more we can learn about what it means to be ethical, what it means to act rightly.


The Author

Bruce Hamm

Bruce Hamm studied for the Catholic priesthood obtaining a BA in philosophy with an emphasis on ethics.  He has experience as a volunteer police officer.  He has over eight years in US Navy combat operations, coordinating a tactical data link between various battle group elements, controlling combat aircraft and instructing combat operations.  Then entering corporate management, Bruce conducted numerous workplace investigations, managed compliance for one employer and developed a Business Ethics program for another.  In 2001, he completed the “Managing Ethics in Organizations” Executive Development Course from the Center for Business Ethics at Bentley College and the Ethics Officer Association.  Combining his practical understanding of how organizations work with his desire to create healthy corporate cultures, he earned an MBA in Organizational Effectiveness at Marylhurst University.  Bruce is now also an adjunct instructor with DeVry University Online teaching Business Ethics and other general business topics.  Bruce is WatchIT’s Business Ethics and Compliance, Subject Matter Expert.  With two other professionals, Bruce was instrumental in the formation and continuing development of The Greater Omaha Alliance for Business Ethics.  Contact Bruce at and visit

Many more articles in Ethics in The CEO Refresher Archives
The CEO Refresher

Copyright 2002 by Bruce Hamm. All rights reserved.

Current Issue - Archives - CEO Links - News - Conferences - Recommended Reading

Refresher Publications