Why People / Organizations Act Ethically?

Check this very interesting discussion in the Ethics and Responsibility forum of 12manage: Why are people and/or organizations acting in an ethical way? Tons of  interesting views...

Interview with Professor Gardner on the Ethical Mind

The Harvard Business Review of March 2007 contains an interview worth reading with Harvard Graduate School Professor of Cognition and Education Howard Gardner.
Gardner became well known by his 1983 book Frames of Mind, in which he argued that people don't have one, but multiple intelligences: linguistic, logical-mathematical, spatial, bodily-kinesthetic, musical, interpersonal and intrapersonal intelligence.

Likewise, Gardner now proposes to distinguish between Five Types of Cognitive Minds:

1. The Disciplined Mind - What we gain through applying ourselves in a disciplined way in school.
2. The Synthesizing Mind - Surveys a wide range of sources, decides what is important and is worth paying attention to.
3. The Creating Mind - Looks for new ideas and practices, innovates, takes chances, dicovers.
4. The Respectful Mind - The kind of open mind that tries to understand and form relationshipss with other human beings.
5. The Ethical Mind - Broadens the respect for others (see 4) into something more abstract. Asks: "What kind of a person, worker, and citizen do I want to be?"

The Ethical Mind grows at home and in the surrounding community. Bad behavior of others can undermine it. Gardner mentions cheating MBA students as an example of this undermining, and thinks that it is more difficult for businesspeople to adhere to an ethical mind than it is for other professionals, because business is strictly not a profession, has no guild-structure, no professional model, no standards and no penalties for bad behavior. The only requirement is to make money and not run afoul of the law.

In order to stay on the right track, Gardner advises business leaders to:

1. Believe doing so is essential for the good of the organization, especially during difficult times.
2. Take the time to step back and reflect about the nature of their work.
3. Undergo "positive periodic inoculations", being forced to rethink what you're doing.
4. Use consultants, which should include a trusted advisor within the organization, the councel of someone completely outside the organization (an old friend), a genuine independent board.

See also the related website The Good Work Project, an "effort to identify individuals and institutions that exemplify good work—work that is excellent in quality, socially responsible, and meaningfulto its practitioners—and to determine how best to increase the incidence of good work in our society".

Create and evaluate a Code of Conduct

A corporate Code of Conduct, sometimes also refered to as Code of Ethics, helps a company to show to all involved parties, internal and external, the standards that govern its conduct, thereby conveying its commitment to responsible practice wherever it operates.

As you know, there have been many recent legal and paralegal initiatives to promote or require good conduct by corporations. Because there are now so many of these guidelines, it is not simple to get an overview, so that you're able to quickly assess if your firm's Code of Conduct is 'worldclass'. A useful article in the HBR of Dec 2005 by Professors Lynn Paine, Rohit Deshpandé, Joshua D. Margolis, and Kim Eric Bettcher may help: it provides a useful overview of all (?) things that should be considered in any Corporate Code of Conduct.

The authors suggest 8 governing ethical principles which taken together they call: The Global Business Standards Codex (GBS Codex). These 8 principles to create or evaluate a Code of Conduct and their most important aspects are:

1. The Fiduciary Principle (Diligence, Loyalty).
2. The Property Principle (Protection, Theft).
3. The Reliability Principle (Contracts Premises, Commitments).
4. The Transparency Principle (Thruthfulness, Deception, Disclosure, Candor, Objectivity).
5. The Dignity Principle (Respect for the Individual, Health and Safety, Privacy and Confidentiality, Use of Force, Associatiation & Expression, Learning & Development, Employment Security).
6. The Fairness Principle (Fair Dealing, Fair Treatment, Fair Competition, Fair Process).
7. The Citizenship Principle (Law & Regulation, Public Goods, Cooperation with Authorities, Political Noninvolvement, Civic Contribution, .
8. The Responsiveness Principle (Addressing Concerns, Public Involvement).

The article itself is already a summary of regulations and best practices. So if you want to assess or create a Corporate Code of Conduct, you are advised to read the article completely.

ethics global study 2005

Mention corporate names such as, Enron, Worldcom, Adelphia, and Tyco and immediately it brings to mind the increases in unethical business behavior. The growing disgust and the resulting miasma has become a global Pandora's Box. What exactly are the reasons behind the rise in corporate unethical behavior, and what, if anything, is being done to clean up their behavior? As one of the authors of The Ethical Enterprise, A Global study of Business Ethics, I would like to share the findings with you.

According to the study, the number 1 answer from the 1,100 respondents to the question, Factors Most Likely to Cause People to Compromise Ethical Standards was Pressure to meet unrealistic business objectives/deadlines. Considering that marketplace competition was cited as a major business driver of ethics today and the respondents believe, according to the American Management Association/Human Resource Institute 2005 study, to remain a major driver 10 years into the future in addition to the desire to further one’s career and protect one’s livelihood, what can companies do now to protect themselves from future scandals?

Answers to these questions, and more, are addressed throughout the study. Areas where organizations can draw the line of first defense are found in their ability to make transparent current business cultures, Leadership support and modeling ethical behavior, training programs (through a Train-the-Trainer Certification Program where individual accountability and a responsibility is tied to promotional opportunities, bonuses/incentives, retention, future assignments and departments which includes new-hires straight up to the C-Levels and into the Board of Director), the development of an Ombudsman Program with 24/7 anonymous hotline, an enforceable Code of Conduct and ethic audits addressing technology, Corporate Social Responsibility Program are just to name a few.

This report:
>Discusses what’s driving business ethics today
>Describes today’s state-of-the-art business ethics practices
>Forecasts what will drive business ethics over the next 10 years
>Discusses what the best-in-class practices may look like in the year 2015
>Provides a summary of the Business Ethics Survey 2005 results.

I believe, as one of the authors of, The Ethical Enterprise,: A Global study of Business Ethics 2005, the information, insights, and enlightenment you will provide to your readers will be of immense and timely value. In troubled times, people look for truth and answers. Let’s give them what they seek!

Please feel free to contact me for a copy of the survey, or any questions you may have.

Thank-you for your time.

Respectfully,

Rick Keller,

Executive-In-Residence,
The Human Resource Institute
President, The Healthy Business Doctor: Proactive Business, Leadership & Coaching Solutions

Contact information:
(352) 288-9002
hbizdr@yahoo.com

ETHICS: A GLOBAL STUDY 2005

Did you know that the number 1 factor most likely to cause people to compromise ethical standards is, "pressure to meet unrealistic business objectives/deadlines." The second answer was, "a desire to further one's career" and in at number three, "desire to protect one's livlihood."

This information comes from a global study I helped research and write for the American Management Association. If you would like the free download of the study in pdf, let me know! . . . hopefully I haven't broken any of the rules by offering this?

Interview with Stuart Hart on the Bottom of the Pyramid

Here are a few interesting quotes I found in a short interview with Professor Stuart Hart on the latest developments around the Bottom of the Pyramid concept in an interview in Business Ethics Magazine.

"Western capitalists need to enlist the entire human community in the capitalist dream, which is about pulling yourself up. Unless we can do that for everyone — in a way that respects local culture and doesn’t destroy underlying ecosystems — global capitalism is in trouble".

"When C.K. Prahalad and I started working on this in 1998, people thought we were nuts. Nobody would publish it. It became an underground paper on the Internet, getting a fair amount of corporate visibility. The inflection point was Sept. 11. After that, it was published almost immediately, coming out in Strategy and Business in January 2002. Suddenly people could see how this way of thinking had implications for security, because it deals with the roots of terrorism".

"We’re also looking at creating a worldwide network of collaborating BOP labs at other business schools".

If you have thoughts or experiences to share around this intriguing BOP concept, please enter your Comments.

The Value of Corporate Values

An outstanding in-depth article on the Value of Corporate Values can be found in an article by Reggie Van Lee, Lisa Fabish, and Nancy McGaw in this month's S+B.

Based on a survey at 365 companies in 30 countries, the authors claim "increasingly, companies around the world have adopted formal statements of corporate values, and senior executives now routinely identify ethical behavior, honesty, integrity, and social concerns as top issues on their companies’ agendas".

The highlights of the survey and article are:

1. A large number of companies are making their values explicit. That’s a change — quite a significant change — from corporate practices 10 years ago. The ramifications of this shift are just beginning to be understood.
2. Ethical behavior is a core component of company activities.
3. Most companies believe values influence two important strategic areas — relationships and reputation — but do not see the direct link to growth.
4. Most companies are not measuring their “ROV.”
5. Top performers consciously connect values and operations.
6. Values practices vary significantly by (continental) region.
7. The CEO’s tone really matters.

The article provides quantitative data about these 7 findings and concludes with "A commitment to corporate values may be in vogue, but the public will remain suspicious until corporations both understand and can demonstrate that they are committed to using values to create value".

Top banker enters "business ethics" fray

The head of Switzerland’s largest bank has outlined his vision of how companies can regain public trust, in the context of a growing debate about "business ethics".

Peter Wuffli, group CEO of banking giant UBS, condemned what he called the "almost cyclical abuse of power by business leaders" that led to a series of high-profile corporate collapses in recent years.

However, he told the 35th annual ISC conference at St Gallen University that society now ran the risk of "going too far" and "crushing" business with arbitrary new regulations.
Wuffli said the time had come to "give corporations the chance to earn back the trust of society", and argued that businesses – like individual human beings – "need freedom".

"For a large, global listed corporation, there is simply no alternative to maximising the profit potential relative to relevant competitors."

However, he said this did not mean only "cold-blooded short-term profit maximisers [would be] rewarded by the financial markets".

He said companies could only be successful if they "balanced the interests of various stakeholder groups" – particularly customers and employees.

"Responsible corporate leadership means delivering on a profit-oriented mandate in a way that is fully transparent and in line with its stated values, vision and strategies," he said.

However, he concluded: "It is only individuals who can act responsibly. A company is as ethical as its people – every single one of them." Article in Swiss Info

What is an "outside accounting firm"?

Our home association bylaws mandate that an "outside accounting firm" be employed to do our accounting. Members of the Board maintain that that would not preclude a resident of the home association being contracted as our accountant so long as he or she is not an employee; being paid a salary, payroll deductions; etc.h, but not an employee of the association. Those on our newly formed ethics committee maintain that the intention of the authors of the bylaws was to preclude the use of a resident as accountant in that he or she would have a personal interest as a member of the homes association, and therefore, would be considered as an "inside accounting firm," not an "outside accounting firm." That "outside accounting firm" is meant that the firm is outside the physical residences of the Homes Association. We need to have an opinion from an ethics organization to support our position to ask for the release of this one-person resident accountant and hire the services of a firm outside the premises of our homes association. Please help.

Business Ethics for SMEs

This month, Ethics Today (the Newsletter from the Ethics Resource Center) focuses on ethics initiatives in smaller organizations. More often than not, resources and new insights for organizational ethics are assumed to have universal appeal. However, their research and experience have revealed that organizations with fewer than 500 employees represent a very different mix when it comes to effective ethics program efforts.

On the one hand, small businesses exist as streamlined examples of the impact of organizational leadership on a company's ethical culture.

On the other hand, smaller organizations are much less likely than larger ones to have in place what we now consider to be "formal elements" of an ethics program, namely written ethics standards, ethics training, a dedicated ethics office/advice line, and a means to report misconduct anonymously.

In May 2004, the U.S. Department of Commerce published a manual for corporate responsibility programs that integrates corporate governance, organizational ethics, and social responsibility. "Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies" was co-authored by ERC Principal Consultant Kenneth W. Johnson and Igor Y. Abramov, Senior Advisor, Market Access and Compliance, International Trade Administration, Department of Commerce.

Because the bulk of businesses in all economies, especially emerging market economies, consist of small to medium-sized enterprises (SMEs), note the authors, most chapters discuss specific issues facing SMEs. Some chapters have tables comparing the best practices of large, complex enterprises and cost-effective solutions for the SME.

Chapter 6 (pages 129-140) examines business ethics infrastructure -- the structures and systems that help enterprise owners and managers address issues of responsible business conduct. The manual details the best practices that have been developed by large, complex enterprises (LCEs). While valuable for similarly situated enterprises in emerging market economies, they can also serve as models for small to medium-sized enterprises (SMEs). By considering the best practices that have been generated over countless hours by larger organizations, SMEs can design business ethics infrastructure that meets world-class standards but is tailored to the requirements of an SME.

According to the authors, leading enterprises, government agencies, and NGOs have found that an effective business ethics program addresses functions at seven levels of responsibility. Table 6.1 describes how a typical SME might staff these seven responsibility functions. Also in this chapter is a box that lists "Ten Ways Small Business Owners can Prevent and Detect Fraud."

The book contains numerous practical examples, worksheets and checklists, a bibliography, a glossary, and-in its nine appendices-numerous examples of business ethics policies adopted by various countries and organizations.

The manual can be downloaded for free at:
http://www.ita.doc.gov/media/Publications/blurbs/ethics2004blurb.html. (Printed versions are available for sale also at that site.)

More on Business Ethics in SMEs can be found at the Ethics Resource Center , a great source of information on Business Ethics.