until the 21st century that greater attention was paid to how companies operate and how the operation
impacts employees and the communities in which they serve.
According to the Ethics and Compliance Initiative, which is comprised of organizations that are committed to
creating best practices in ethics, each decade has been influenced by external factors, such as war or economic
turmoil, combined with major ethical focal areas, and the result has been the development of ethics and
compliance programs. For example, in the mid-1980s, the United States was thrust into a recessionary period.
During this period, government contractors were billing outrageous amounts for equipment and services,
further increasing the government’s deficit.
At the same time, larger companies began downsizing to cut costs, which eroded the trust that employees
once had. People felt the need to look out for themselves. Greed appeared to be everywhere, from political
bribes to the earliest financial schemers. As a result, General Dynamics established the first business ethics
office in 1985 to crack down on this kind of activity, and other companies created ombudsman positions to
help ethics officers identify and prosecute corporate ethics violators.
Ethical Decision-Making Policies
In any organization, sound moral, business, and financial practices must be followed at all times. No one is
above the law or has special privileges when it comes to ethics. Decision making needs to happen with
corporate governance in mind. According to Michigan State University, the six steps to ethical decision making
are:
1.
Make sure leaders understand the issue at hand and have gathered all of the facts related to it.
2.
Leaders should list all of the facts they know, and list any assumptions they are making about the issue.
This step ensures that the leaders keep the facts and assumptions differentiated and in mind.
3.
Note all of the concerns related to the issue, including all of the people concerned, the laws related to the
issue, and any corporate or professional ethical guidelines that may be involved.
4.
Construct a potential solution to the problem.
5.
Evaluate the proposed solution, making sure to consider all of the ethical aspects noted in step 3.
6.
Once leaders have come to a solution, they recommend it, as well as any actions that need to be taken.
Establishing a Code of Conduct
To educate and guide others in the organization, a set of ethics, or a code of conduct, should be developed
and distributed. Kimberlee Leonard, who writes for the Houston Chronicle, states, “A code of ethics is
important for businesses to establish to ensure that everyone in the company is clear on the mission, values
and guiding principles of the company.” While it takes some time to create a code of conduct, the ideals
involved should already be present in the company’s culture.
The elements that belong in a code of conduct, according to Kimberlee Leonard, are:
Legal considerations. The business is a legal entity, and therefore all employees should be thinking about
their behavior and how it could easily turn into a lawsuit. Establishing conduct rules at this level can clear up
any gray areas. For example, a company should define what sexual harassment is and what to do if an
employee experiences it. New items that detail specific codes of conduct can be added as they come up.
Value-based ethics. These are specific ethics that dig under the surface of a corporate culture. A business
should think about how it wants to be viewed by the community. Examples could be a commitment to green
office practices, reduction of a company’s carbon footprint, giving a certain percentage of a company’s profits
34
Chapter 3 Business Ethics and Social Responsibility
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