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Establishing Corporate Ethics: Part 2
by Bruce Hamm

 
   
 
   

In the previous paper, "Establishing Corporate Ethics: Part 1", we saw that to be ethical, an action must be able to meet three distinct criteria. 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.

We also reviewed Michael Hoffman's answers to what ethics are. His three precepts are:

  1. Avoid causing unjustifiable harm.

  2. Correct self-caused harm.

  3. Prevent harm caused by others or by accident. (Hoffman 2001).

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 - (Teleology).

How can we translate these lofty goals into statements appropriate for a for-profit business?

A broad term that describes those entities concerned with a company is "stakeholder". Who are these stakeholders? First are the owners (either private or public owners via shares), without whom the business would not exist. Second are the customers or clients, without whom the business would have no purpose. Third are the employees. A healthy company provides the employees with work and compensates them for their effort. Fourth is the community where the company produces the product or service and the community where consumers use it. Though not a person, the environment is the fifth stakeholder in this process. Vendors are the sixth stakeholders. They provide the raw materials, components or services that support the producer. Some include competitors as an additional stakeholder in a company. Though this is arguable, competitors provide motivation for continuous improvement.

What kind of statements represents these ethical concerns? Below, are three value statements based on the three noted criteria for ethical standards. These statements are examples only. Each company should determine their own values. Though there are only three, there is no absolute reason for limiting them. However, a recommendation is that companies cap the number at six. Any more gets too complicated for executives to manage and employees to remember.

The three statements are:

  • CARE - We will demonstrate appropriate concern for each person and situation we encounter.

  • RESPECT - We recognize the fundamental dignity of each of the stakeholders in our company.

  • VALUE - We believe that all our activities are worthy of our utmost effort and regard.

Few businesses, if any at all, are altruistic agencies. They are in existence to obtain profit for the owners and to continue to increase that profit. While doing that, businesses still must meet the requirements of the law and society's expectations. Can we expect businesses to meet these ethical expectations in addition to meeting the law's requirements? I believe we can and should require them to do so.

How do we do that?

First, we structure our public systems so that regulators can review company conduct and make appropriate decisions, where necessary, to prosecute and thus discipline. If a company has broken its covenant with society (i.e. acted unethically but not necessarily broken the law), then the public must take its own actions. Removing money from the company's stock, filing resolutions at stockholder meetings to change management practices or replace management, filing lawsuits to restore illegitimate losses and talking with their legislators to change the law to hold management more accountable are all possible avenues of redress.

What can companies do to take a proactive stance about corporate ethics? They can commit to establishing a code of conduct and require their employees, including senior management, to conduct themselves by that code. They can forge a set of values that represent the company's standards both in productivity and in character. They can create systems to ensure that employees report ethical violations, without fear of retaliation. They can discipline their employees appropriately to obtain desired behaviors. They can encourage other companies to join them in these same endeavors. One measure would be to require that all vendors or business partners adopt and publish their own set of standards and operate according to them. The final item is to act according to their chosen values and standards.

How do companies actually apply these values?

They deal fairly with their business partners and customers. They pay their employees fair wages for the work they do. They account for their expenses, revenues and profits according to Generally Accepted Accounting Principles. They meet their obligations as outlined in contracts and the law, they bargain honestly with their vendors, they engage in legitimate market intelligence practices and do not take or use competitors' technology or intellectual property without appropriate agreement and compensation. If there are issues, the company addresses them honestly. While ethics do not require public disclosure of everything, the company makes relevant disclosures where warranted. The company makes its business decisions based on the values they profess.

Recent events have significantly shaken consumer and investor confidence. As corporate citizens, we must continuously examine, refine and modernize our standards. In doing this, companies need not forsake the pursuit of profit. It is in everyone's interest to follow and foster ethics in the marketplace.


     
   
     
   

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 info@compasssolutions.biz and visit www.compasssolutions.biz.

       
   
 
       
   
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