ethical codes lecture

8/12/2019 Ethical Codes Lecture

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Ethical Codes

John BatemanLecture 8


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By way of introduction:

We are dedicated to conducting business

according to all applicable local and

international laws and regulations.andwith the highest professional and ethical

standards.

Extract from a companys Code of Ethics,July 2000


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Lecture content

Definition

Types of Codes

Focus 1: Company Codes

- Rationale

- Prevalence

- Examples

- Evaluation

Focus 2: Professional Codes

- Professions?

- Role of Code

- Example Accountancy profession

- Justification- Problems/Issues

Focus 3: Principles of Public Life

And finally..


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Definition

Crane & Matten define ethical codes as

..voluntary statements that commit

organizations, industries or professions tospecific beliefs, values and actions and/or

that set out appropriate ethical behaviour

for employees (p191)


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Types of code

Corporate/organisational codes

Professional codes

Industry/sector codes (for example as developedby trade associations for their members)

International codes (Ethical Trading Initiative,

Caux Roundtable) (see lecture on Globalisation) Others - principles for public service, codes for

3rdsector volunteers, ethical research code for

Sussex students


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Prevalence/popularityA must-have for big business?

Crane & Matten estimate that two-thirds of

UK businesses and that virtually all US

large firms have one

Uptake for SMEs is lower


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Sowhat goes into a company

code? General statements of principles and values

(what we stand for)

Practical guidance on what to do (resolvingethical dilemmas?)

Might address particularly sensitive issues suchas

- bribery/corruption (eg for MNCs);- environmental issues (e for oil companies)

- labour exploitation (for clothing industry)


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Some typical buzzwords

1 .Example 1: Hewlett Packards code:

- Honesty

- Excellence- Compassion

- Citizenship

- Respect

- Fairness

- Excellence

- Responsibility


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continued

2. Example 2 Boeings code:

- Avoidance of conflicts of interest

- No personal gain through inappropriate use of

information- Confidentiality

- Fair dealing

- Compliance

- Reporting others who breach the code

NB also see the BAe Systems Code on the Study Directsite


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An ethical culture: key elements

Ethical code

Committed leadership

Ethical training

Advice on ethical dilemmas

Reporting, investigating and disciplining misconduct

Build in to appraisals (rewards)

Stay ahead of regulation

Accountability from the top: do as I do not just do as Isay


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Evaluation: the positives

Reputational advantages: a goodcompany to do business with/trusted

brand Improve risk/crisis management

Create cohesive & ethical corporate

cultureAvoidance of fines/sanctions/boycotts

Helps to achieve kite-marks

Sends out right signals to stakeholders


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Evaluation: the negatives

Raises stakeholder expectations

Can be vague and open to interpretation

If not policed (followed-through) then

wont work

Limited buy-in within organisation

Not perceived as meaningful

Could be overly bureaucratic/time-

consuming


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Focus 2 Professional Codes

Firstly: what is a profession?

Teacher?

Social Worker? Counsellor?

Architect?

Estate agent?

Management Consultant?

Professional footballer?

Racehorse?


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It all depends on.

.what we mean by profession

Pay?

Status?

Expertise?

Autonomy?

Exclusive right to practice?

Self regulation?Professional qualification?

Professional body?

Code of ethics?


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Duties of a doctor

Make the care of your patient your first concern.

Protect and promote the health of patients and

the public. Provide a good standard of practice and care.

Treat patients as individuals and respect their

dignity.

Work in partnership with patients.

Be honest and open and act with integrity.


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FUNDAMENTAL PRINCIPLES IN CODES OF CONDUCT

FOR PROFESSIONAL ACCOUNTANTS

Members should:

at all times maintain the good reputation of the profession and its abilityto serve the public interest,

perform with:

integrity

due care

professional competence

independenceobjectivity

confidentiality, and

not be associated with any misleading information or misrepresentation.


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MOTIVES INFLUENCING PEOPLE AT

KOHLBERGS SIX STAGES OF MORAL REASONING

STAGE DESCRIPTION MOTIVE FOR DOING RIGHT

Preconventional Self-interest

1.Obedience Fear of punishment and authorities

2.Egotisminstrumental

and social exchange

Self-gratification, concern only for oneself

Lets make a deal

Conventional Conformity

3.Interpersonal concordance Role expectation or approval from others

4.Law and duty (social order) Adherence to moral codes,

or to codes of law and order

Post-conventional,

Autonomous or Principled Interests of Others

5.General individual rights

and standards agreed

upon by society

Concern for others, and broader

social welfare

6.Self-chosen principles Concern for moral or ethical principle


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Professional Codes: positives

- Protecting and serving the public (eg CivilEngineering!)

- Guidance for professionals (from professionals)

- Aspiration and inspiration (high standards ofpractice)

- Common & consistent standards

- Professional credibility and back-up

- Deterrence and discipline (sanctionsbeingstruck-off)

- Pre-empts state regulation (keeping your ownhouse in order)


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And problems/issues

A smokescreen behind which professionals can getaway with things?

Keeps a profession exclusive and inward looking?

Self-servingie professional collusion reducescompetition?

Flawedin wording/interpretation/implementation

Maintain professional autonomy at the expense of good

management (eg professionals might be blind tocostings?)


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Focus 3: Ten principles of public

life for politicians Selflessness

Honesty and integrity

Objectivity

Accountability

Openness

Personal judgement

Respect for others Duty to uphold the law

Stewardship

Leadership


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And finally.

1.Boeing

- 2005 CEO forced to resign following an affairwith an employee

- 2005 Chief Financial Officer convicted2. H-P

- 2010 CEO resigns after admitting a closepersonal relationship with a contractor who

received improper payments3. BAe Systems

- 2010 fined by both the US and UK governmentsfor false statements/false accounting


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And our public servants?

- 2009 onwards a series of revelationsabout MPs claiming false expenses

several MPs and Lords imprisoned forfalse accounting

- Remember the companys Code of Ethicswe quoted at the start? The company

was..?

A great code of conduct doesnt (always)make for great conduct!


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Reading

Crane & Matten, Chapter 5 especially

pp191-201

ethical codes lecture

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