Fluent Essays

In readings and class discussions, we have talked about the relationship and distinctions between morality and ethics. Morality deals with basic principles of right and wrong or good and bad. Ethics deals with behavior and actions.Search the Internet or the CSU-Global Library (Links to an external site.) to find an example of a code of ethics for an organization or group (FILE ATTACHED). Websites for professional organizations usually contain a code of ethics. In your paper, provide a cut-and-paste copy of the code or summarize it briefly.Using that code of ethics as a starting point, develop a code of ethics for your organization or an organization you are familiar with. Justify how adherence to this code enables the organization to create greater business value.Discuss and cite the course textbook (FILE ATTACHED) and at least one additional credible or scholarly source to support your analysis and positions.Your paper should be 2 pages in length and well written according to APA Guidelines code_of_ethics.pdf cengage_book.pdf Unformatted Attachment Preview A Code of Ethics for Corporate Code of Ethics ABSTRACT. Are corporate codes of ethics necessarily ethical? To challenge this notion, an initial set of universal moral standards is proposed by which all corporate codes of ethics can be ethically evaluated. The set of universal moral standards includes: (1) trustworthiness; (2) respect; (3) responsibihty; (4) fairness; (5) caring; and (6) citizenship. By applying the six moral standards to four different stages of code development (i.e., content, creation, implementation, administration), a code of ethics for corporate codes of ethics is constructed by which companies can be ethically audited for comphance. The newly proposed code of ethics for corporate codes of ethics was then applied to four large Canadian companies representing a variety of industries: telecommunications; banking, manufacturing, and high technology. The ethical audit ofthe four companies ethics programs based on the proposed code indicates that all four companies have room to improve the ethical nature of their codes of ethics (i.e., content, creation, implementation, administration). KEY WORDS: codes, corporations, ethical audit, ethics Mark S. Schwartz is a lecturer of business ethics at The Wharton School, University of Pennsylvania. He graduated from the Joint M.B.A./LL.B. Program at Osgoode Hall Law School and the Schulich School of Business at York University in 1991. He received his Ph.D. from the Schulich School of Business in 1999, focusing on the subject of business ethics. His research interests include corporate ethics programs, ethical investment, and social responsibility. He is a Research Fellow for the Center for Business Ethics, Bentley Gollege, and has consulted to a number of companies on business ethics-related matters. Mark S. Schwartz Introduction Codes of ethics are now prevalent in large corporations around the world. In the U.S., over ninety percent of large corporations have a code of ethics (Center for Business Ethics, 1992), while in Canada eighty-five percent have a code (KPMG, 2000). Ofthe largest European corporations, fifty-seven percent of U.K. companies have a code (Le Jeune and Webley, 1998), fiftyone percent of German companies have a code (Schlegelmilch and Langlois, 1990), and thirty percent of French companies have a code (Schlegelmilch and Langlois, 1990). The prevalence of codes should continue to increase as governments, industry associations, professional associations, and special interest groups increasingly call for the establishment of corporate codes of ethics. Along with the tremendous growth of corporate codes, researchers have begun to examine a number of code related issues. For example, researchers have looked into the reasons why companies might establish codes, including the provision of consistent normative standards for employees, avoidance of legal consequences, and promotion of public image (Ethics Resource Center, 1980, 1990). By carefully analyzing various samples of codes, researchers have discovered which issues are more prevalent, and which ones are missing (White and Montgomery, 1980; Chatov, 1980; Cressey and Moore, 1983; Sanderson and Varner, 1984; Mathews, 1987; Hite et al., 1988, Ethics Resource Center, 1990, Lefebvre and Singh, 1992). A number of studies have been conducted in an attempt to verify if codes are in fact a variable which influence behavior. The results of the studies are clearly Journal of Business Ethics 4 1 : 2 7 - 4 3 , 2002. © 2002 Kluwer Academic Publishers. Printed in the Netherlands. 28 Mark S. Schwartz mixed. Several studies (7/17) have found that codes are effective [e.g., Ferrell and Skinner (1988); Hegarty and Sims (1979); Laczniak and Inderrieden (1987); McCabe et al. (1996); Pierce and Henry (1996); Rich et al. (1990); and Singhapakdi and Vitell (1990)]. Other studies (2/17) have found that the relationship is weak [e.g.. Murphy et al. (1992); Weeks and Nantel (1992)], while numerous other studies (8/17) have found that there is no significant relationship between the two variables [e.g., Akaah and Riordan (1989); Allen and Davis (1993); Brief et al. (1996); Calian (1992); Chonko and Hunt (1985); Clark (1998); Ford et al. (1982); and Hunt et al. (1984)]. Despite the growth of corporate codes of ethics and corresponding research, codes appear to have been used and discussed in somewhat of a normative vacuum. An assumption appears pervasive among both academics and the business community that codes of ethics are prima facie ethical in terms of their content and use. Few studies (see below) examine the normative foundations for the existence of codes or their application. Those making recommendations regarding the content and use of corporate codes typically offer little or no normative justification (e.g., Cressey and Moore, 1983; Benson, 1989, p. 315; Ethics Resource Center, 1990, p. II-3; Pitt and Groskaufmanis, 1990, p. 24; and Moiander, 1987). As a result, researchers have called for standards by which to evaluate codes (Montaya and Richard, 1994). To address the gap in the normative research on codes of ethics, this paper attempts to challenge the fundamental assumption that codes of ethics are always ethical, and to generate a set of ethical criteria by which to ensure that the future use of codes of ethics remains within an ethical framework. Normative research on codes A code of ethics by most definitions is a written, distinct, formal document which consists of moral standards which help guide employee or corporate behavior (e.g., Stevens, 1994; Hosmer, 1991; Townley, 1992). Virtually every code. although quite often legalistic in nature, discusses behavior which goes beyond the law or addresses the spirit in addition to the letter of the law (White and Montgomery, 1980; Cressey and Moore, 1983). In other words, codes of ethics by their very definition imply that they contain normative guidelines for behavior. If codes are essentially normative in nature, what normative research has in fact taken place with respect to corporate codes of ethics? Utifortunately, there have been relatively few studies which are clearly normative in nature and related to corporate codes of ethics. Based on the assumption that companies have responsibilities beyond those to their shareholders, Cressey and Moore (1983) and Benson (1989, p. 315) conduct one type of normative critique by criticizing corporate codes as having too much of an inward focus, or merely being concerned with the welfare of the company, as opposed to the welfare of external stakeholder groups. Other evaluations tend to rely on moral theory for guidance of which standards to apply in evaluating codes. For example, one study addresses the question of how ethical principles (i.e., integrity, justice, competence, and utility) can be utilized to write the provisions of a code of ethics (Raiborn and Payne, 1990). A secotid study uses the tool of philosophical ethics (i.e., deontology and utilitarianism) to evaluate codes of ethics (Robin et al., 1989). Two other studies attempt to provide a moral justification for codes of ethics, one based on rule-utilitarianism (Starr, 1983), the other based on Kantian theory (LEtang, 1992). Only one study considers which specifications must be met in order for a code of ethics to have ethical validity: (1) participation by employees in the codes development and promulgation (the principle of participation); (2) coherence with general ethical principles and the dictates of conscience (the principle of validity); and (3) code coherence with the lived commitments of the companys officers (the principle of authenticity) (Newton, 1991). Other than the few studies mentioned above, researchers and practitioners of codes of ethics appear to accept that as long as codes are at least somewhat effective in either reducing harmful A Code of Ethics for Corporate Codes of Ethics behavior or promoting good behavior, then codes of ethics necessarily possess ethical legitimacy. In other words, as long as codes work, there does not appear to be any need or desire to further question their use. Directly counter to this approach, this study is based on the premise that beneficial consequences are not sufficient to establish that codes of ethics are ethical, i.e., the means in addition to the ends of codes are deserving of examination. For example, if a country possesses a law that restricts polluting, and as a result no one pollutes (i.e., the law and its enforcement are effective in reducing pollution), can one jump to the conclusion that the law (both its content and process) are ethical? Shouldnt other questions be asked such as: Did the law arise as a result of a democratic process, or by authoritarian rule? Is the law understandable and achievable? Does the punishment for violation of the law fit the crime? Were citizens made aware ofthe law and possible punishment? Do the leaders ofthe country abide by the law? Without asking such questions, even an effective law remains subject to ethical critique. None of the studies on codes of ethics discussed above have attempted to systematically address such ethical concerns related to code content and the process involved in developing a code. This study attempts to do so. First, in order to answer the question of when a code of ethics can be considered ethical, an initial set of universal moral standards is required by which all corporate codes of ethics can be evaluated. Based on a proposed set of universal moral standards, a code of ethics for corporate codes of ethics can be developed. The four code development stages to be considered include: (i) code content, (ii) code creation, (iii) code implementation, and (iv) code administration. Once the newly created code is established, it can be used as the basis for evaluating companies, as part of an ethical audit of any corporations code of ethics. To provide a preliminary illustration, the newly proposed code of ethics for corporate codes of ethics is applied to four large Canadian companies representing a variety of industries: telecommunications; banking, manufacturing, and high technology. 29 Set of universal moral standards In order to conduct an ethical evaluation of corporate codes of ethics, it is necessary as an initial step to establish and justify the moral standards which will be used in the evaluation. Although there are a number of potential moral standards to choose from, the objective for the purposes of this study is to attempt to identify those moral standards which can be considered to be universal in nature. In other words, to the greatest extent possible, the selected moral standards should retain their significance despite differences in culture, religion, time, and circumstance. The standards should be accepted by a large and diversified number of individuals and social groups as being of fundamental importance in guiding or evaluating behavior, actions, or policies. The attempt to identify a set of universal moral standards is not without difficulty. It is a goal which has been strived for by moral philosophers and cultural anthropologists for thousands of years with only moderate success. Yet, the objective of determining such a set of standards is clearly a prerequisite to conducting a normative assessment of codes. What must be clear from the outset is that it is beyond the scope of the study to provide a philosophical justification for each of the selected moral standards, although it is recognized that such justification would strengthen the normative grounds for their use. Rather, it is assumed that if a set of universal standards can be drawn from a number of different sources, that their initial legitimacy can be established. In establishing a set of universal moral standards, Schwartz (1998), reviewed four distinct sources: (1) employees; (2) company codes; (3) global codes of ethics (e.g., Caux Principles and the Interfaith Declaration); and (4) the business ethics literature. Convergence from the four different sources resulted in the following proposed set of universal moral standards: 1. Trustworthiness (including notions of honesty, integrity, reliability, and loyalty); 2. Respect (including notions of respect for human rights); Mark S. Schwartz 30 3. Responsibility (including notions of accountability); 4. Fairness (including notions of process, impartiality, and equity); 5. Caring (including notion of avoiding unnecessary harm); 6. Citizenship (including notions of obeying laws and protecting the environment). Although not determinative of their normative legitimacy, based on the degree of convergence from four distinct sources of standards, an argument can be raised that these moral standards are universal in nature, in that they can be considered of fundamental importance regardless of time, circumstance, cultural beliefs, or religious convictions. In this respect, these core moral standards are suggested as forming a normative basis by which to construct a code of ethics for corporate codes of ethics. Code content Are there moral obligations with respect to what must be included in a code? Do companies have the right to include any set of standards or guidelines they desire? What specific substantive content are companies obligated to include in their codes? Consideration of the six moral standards generates a number of moral minimums in terms of code content: (i) inclusion of six universal moral standards; (ii) obligations to stakeholders; (iii) consistency with moral standards; (iv) prioritization of standards; (v) sufficient rationale; (vi) inclusion of procedural provisions; (vii) comprehensible; and (viii) achievable. (i) Inclusion of All Six Moral Standards: There are several arguments suggesting that companies are morally obligated to include all six moral standards in their codes. First, leaving out any of these standards would result in a morally deficient code of ethics. As demonstrated by the previous analysis, each of the six moral standards has fundamental importance and must be included if the code is to be morally comprehensive and complete. Second, the moral standard of responsibility suggests that companies are obligated to include each of the six moral standards in their codes. Only by explicitly including all of the standards in the code document can the company be evaluated and held accountable for not living up to such standards. This requirement implies that it would not be sufficient for a company to merely restate the law in its code, as the law would not sufficiently express the moral standards (other than possibly citizenship). Finally, unless the six moral standards are explicitly mentioned in their codes, companies may run a greater risk that the moral standards may be violated by their employees, which suggests that there is a practical benefit as well to include the standards in the code. How the standards should be included (either as values, principles, or specific behavior provisions) is discussed below. (ii) Reference to Stakeholders: It has been argued that corporations have a moral obligation to address their obligations to their stakeholders in their codes of ethics (Cressey and Moore, 1983). Stakeholders are those individuals who are impacted by a companys operations. Based on the moral standards of trustworthiness, respect, responsibility, and caring, companies would appear to be required to address their obligations to their stakeholders in the code document. The obligation would consist essentially of living up to each of the six universal moral standards in relation to all of the companys stakeholders. (iii) Compliance with Moral Standards: N o t only should the six moral standards be explicitly stated in the code, but all other code provisions would have to remain consistent with each of the six moral standards. To do otherwise could result in the creation of an unethical code of ethics. This requirement pertains no matter who acts as the codes authors, whether that be the companys employees, senior managers, lawyers, CEO, outside consultants, or other stakeholders. (iv) Prioritization: The six moral standards, based on their universal nature and fundamental importance, would necessarily be required to take priority over other values such as profit maximization or self-interest. This would therefore require that a specific provision must be included in the code to the effect that profits or selfinterest must not receive greater priority than the fulfillment of the six moral standards. By doing A Code of Ethics for Corporate Codes of Ethics so, the company will be providing its agents with a set of moral standards which act as an ethical framework within which the financial goals of the firm or self-interest of its agents can be pursued. The inclusion of such a provision will make it clear to employees that the ends do not justify the means, or that the company does not support winning at any cost. To help ensure integrity, companies are obligated to continuously ensure that their policies, processes, programs, structures, systems, and objectives are not creating undue pressures on employees making it difficult to respect the stated moral standards. One of the features of demonstrating responsibility is to exercise self restraint and to avoid winning at any cost. 31 complex, legalistic code understood only by lawyers would not provide a means by which stakeholders could hold the company accountable for its actions. Second, unless codes are written in a manner which is understandable to employees, it cannot be considered fair or just for an employee to be dismissed for violating a code. This concern intensifies if the company fails to provide employees with an opportunity to get clarification on what the provisions mean or how they apply. How can companies ensure that their codes are comprehensible? If a code consists merely of broad, vague concepts (e.g., we act according to the highest ethical standards), the code may also not be sufficiently clear and specific to allow (v) Prouiding Sufficient Rationale: Although most employees to understand what conduct is of the rationale underlying code content may be expected of them. To avoid being assessed as self-evident, there may be certain provisions non-understandable, companies may be obligated which are not based on common sense. Based on to not only list the moral standards, but to state the standard of demonstrating respect to the them as guiding principles as well, and then employees, in those cases where the rationale is to relate those principles to specific behavior. not self-evident, companies are obligated to Table I below illustrates examples of how the six provide the rationale either in the code standards would be listed as values, guiding prindocument itself or during training on the code. ciples and expected behavior. (vi) Procedural Provisions: If companies possess Although, a number of commentators have the right to discipline their employees for code attempted to suggest hsts of provisions which infractions, based on notions of procedural companies are mandated to include in their codes fairness, companies are obligated to provide (Moore and Dittenhofer, 1992; Hancock, 1995; employees with fair notice of the implications Ethics Resource Center, 1990; Driscoll et al., of their actions. A provision in the code which 1995), an attempt to suggest such a hst is beyond indicates that employees can be disciplined the scope of this study. The difficulty is that each including dismissal for violating the code would company possesses its own unique characterisconstitute fair notice. tics (e.g., history, culture, regulatory framework, (vii) Comprehensible: Unless a code is written levels of unethical activity, relationships with in a manner which renders it potentially understakeholders) which would generate different standable, sev ... Purchase answer to see full attachment