Week 4 – Ethical Codes of Conduct Business Ethics and Sustainability.

Week 4 – Ethical Codes of Conduct

Business Ethics and Sustainability

Ethical codes of conduct

•“Explicit outlines of what type of conduct is desired and expected of employees from an ethical point of view within a certain organisation, profession or industry.”

•“Codes of ethics are voluntary statements that commit organisations, industries, or professions to specific beliefs, values, and actions and/or that set out appropriate ethical behaviour for employees”

Codes of Conduct

A code of ethics consists of general statements, which are often inspirational, that serve as principles and the basis for rules of conduct.

A code of ethics generally specifies methods for reporting violations, disciplinary action for violations, and a structure of due process

A code of conduct specifies acceptable and unacceptable types of behaviour

There should also be a statement of values within the document although it is often hard to enforce broadly across the workforce

The 4 types of Ethical codes

Organisational or corporate codes of ethics Specific to a single organisationOften called codes of conductThey seek to encourage ethical behaviour throughout

the organisation

Professional codes of ethicsThese are for professional groups who often have

their own guidelines for conductMost traditional professions have these, e.g. law,

medicine, accountancy

The 4 types of Ethical codes

Industry codes of ethicsParticular industries have their own codes of ethicsThese codes can be international not just specific to

one company, e.g. Electronics

Programme or group codes of ethicsCodes of conduct within an organisation with codes

of conduct. E.g the Caux roundtable.it is a requisite to join a group or gain accreditation

4 key areas of ethical codes

1. Prevalence of ethical codes of ethics

2. Content of codes of ethics

3. Effectiveness of codes of ethics

4. Possibilities for global codes of ethics

What is the content of ethical codes

Standard of conduct Obeying the law Employees Consumers Shareholders Business partners Community involvement Public activities Environment Innovation Competition Business integrity Compliance/monitoring

The role of Leadership in Developing an Ethics Programme and Codes of Conduct

1 Conduct a rigorous self-assessment of the firm’s values and its existing ethics

and compliance programme

2 Maintain commitment from top managers

3 Publish, post and make codes of ethics available and understandable

4 Communicate ethical standards through multiple channels(e.g paper documents/web pages

5 Provide timely training to reinforce knowledge

6 Provide confidential resources to whom employees can go for advice or to report

their concerns

7 Ensure consistent implementation

8 Respond and enforce consistently, and fairly

9 Monitor and assess using appropriate methods

10 Revise and reform to ensure continuous improvement

Accenture’s Code of Business Ethics

•“The code emphasises critical areas particular to our organisation and business model while highlighting aspects of conduct that are imperative for all employees. Our Code does not incorporate or refer to all policies, but acts as a synthesis of the key policies and principles that should govern all employees’ conduct”

Accenture’s Code of Business Ethics

•Published in 2006 all employees had to read and sign,

It places emphasis on Accenture’s six core values.

It gives practical examples for its employees of what those values mean in relation to their everyday work life.

It incorporates new legal and regulatory developments

It aims to be user-friendly

Supporting the organisation’s ethical code

•Vital to communicate company’s ethical code

•Key to create an ethics training programme

•Work processes today mean less supervision and more opportunity for personal discretion

•The key is to gain support for the organisation’s ethical code

•Follow a 3 – tier approach as prescribed by Trevino and Weaver 2001.

Trevino and Weaver – Supporting the organisation’s Ethical code

Organising Business Ethics Management – Trevino 1999

According to Trevino there are 4 main ways to approach ethics management

Compliance orientation Emphasis is on preventing, detecting , and punishing violations of the law. Employees are informed of the law, does not want employees to beat competition via unethical means

Values orientation Emphasis on defining organisational values and encouraging employee commitment to certain ethical aspirations. Rooted in personal self-governance

External orientation Emphasis on satisfying external stakeholders such as customers, the community and shareholders.

Protection orientation Emphasis on protecting top management from blame for ethical problems or legal violations. Attempt to create legal cover for managers

Organising Business Ethics Management – Trevino 1999

Wittertainment's Cinema Code of Conduct. Radio 5 live

http://www.bbc.co.uk/5live/films/code_of_conduct.pdf

An Effective Ethics Program

•A company should have an effective ethics program to ensure all employees understand its’ values and comply with the policies and codes of conduct that create its ethical culture

•According to a study by the Open Compliance Ethics Group (OCEG), among companies with an ethics program in place for ten years or more, none have experienced “reputation damage” in the last five years

Comparison of codes of conduct

http://www.thecoca-colacompany.com/ourcompany/pdf/COBC_English.pdf

Ethics Officers

•Ethics programs need oversight of high-ranking persons known to respect legal and ethical standards. Responsible for;

•Assess needs and risks in organisation which ethics program must address

•Develop and distribute a code of conduct or ethics

•Conduct the training programs for employees

•Establish and maintaining a confidential service to answer employee’s questions

•Making sure that the company is in compliance with government regulation

•Monitoring and auditing ethical conduct

•Taking action on possible violations of the company’s code

•Review and update the code

Code of Conduct Frameworks

Presence of Ethics training

Common mistakes in Designing and Implementing an ethics program

•Not setting realistic and measurable program objectives

•Not understanding the main principles of ethics and the law

•Senior management’s failure to take ownership of the ethics program

•Maintaining an ethical culture may be impossible if CEOs do not support ethical culture

•Developing program materials that do not address the needs of the average employee

•Transferring an American program into a firm’s operations

•Delivery is often a series of lectures and not practical

•Must make a code a ‘living code’

Problems integrating the Code of Conduct

Ethical crisis management and recovery

•Companies should prepare for ethical disasters and know how to recover from them. Think of organisations such as Nestle and Coca-Cola. In comparison consider Arthur Andersen and Enron.

•A plan should be in place in case of a natural disaster and therefore one should be in place for a potential ethical issue

•Should this be part of the framework or just risk assessment?

•Psychological testing of employees and police checks?

MNCs and SMEs

•“Small and medium-sized enterprises – those classed as employing fewer that 250 – has become one of the fastest-growing sections of the business community. Of the 3.7 million businesses in the UK, small businesses account for 99%” (Fay cited in Hillary, 2000:9)

Who is responsible for ethical business practices in your organisation?

Do you believe that ethical business practices are more important to small and medium sized business or large and multi-national business?

Does your organisation have formal written codes of ethical business practices? (codes of conduct)

Are your organisational codes of conduct based on prescribed rules or values?

Are your employees expected to sign a document signifying that they will adhere to ethical business principles?

At what stage do employees in your organisation receive information on ethical principles or codes of conduct?

Ethical business practices are a worthwhile financial investment: