CORPORATE ETHICS

Ethics (from the Ancient Greek, "ethikos" meaning "Theory of living") is one of the five major branches of philosophy, which attempts to understand the nature of morality; to distinguish that which is right from that which is wrong. The Western tradition of ethics is sometimes called moral philosophy. Ethics in plain words means studying and analyzing right from wrong; good from bad. (Wikipedia)

So What is "Corporate Ethics"?

The concept has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders. Attention to business ethics is critical during times of fundamental change where values that were previously taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass.

A History of Corporate Ethics

The term 'corporate ethics' is used in a lot of different ways, and the history of business ethics will vary depending on how one conceives of the object under discussion. . The primary sense of the term refers to recent developments and to the period, since roughly the early 1970s, when the term 'corporate/business ethics' came into common use in the United States. Its origin in this sense is found in the academy, in academic writings and meetings, and in the development of a field of academic teaching, research and publication.. As the term entered more general usage in the media and public discourse, it often became equated with either business scandals or more broadly with what can be called "ethics in business." In this broader sense the history of corporate/business ethics goes back to the origin of business, again taken in a broad sense, meaning commercial exchanges and later meaning economic systems as well. Another thing to be considered is that business/corporate ethics is a movement within business or the movement to explicitly build ethics into the structures of corporations in the form of ethics codes, ethics officers, ethics committees and ethics training. The term, moreover, has been adopted world-wide, and its meaning in Europe, for instance, is somewhat different from its meaning in the United States.

Corporate Ethics Programs

Corporate ethics programs usually consist of a variety of elements aimed at: communicating the corporation's values, describing what constitutes acceptable behavior in problem areas, providing resources for employees with questions or accusations about wrongdoing, and establishing a mechanism for oversight and enforcement. The most extensive ethics programs, generally found in the defense industry, include: statements of corporate values, codes of conduct, ethics workshops, hotlines, even corporate ethics offices and board level ethics committees.

A good example is the program at General Dynamics. This was established in 1985 following the decision by the Secretary of the Navy to suspend contracts with two of the company's divisions because of investigations suggesting problems with the corporation's integrity. General Dynamics responded to the government's concerns by establishing an especially full corporate ethics program which aims to integrate and maintain ethical standards in the daily business affairs of the corporation. The program is structured so that it spans every level of the company. It starts with a Board Committee on Corporate Responsibility. This is made up entirely of outside directors and is responsible for overseeing the ethics program. Next comes the Corporate Ethics Steering Group, which consists of the heads of major departments within the corporation, and directs the ethics program's policies and general administration. (There are similar steering groups at some of General Dynamics' divisions.) There's a Corporate Ethics Program Director at corporate headquarters who reports to the Chairman and CEO. And there are also Ethics Program Directors for each division. The Program Directors work with the company's general managers in implementing the program and serve as ombudsmen when necessary. Finally, line management is given the responsibility for overseeing the implementation of proper standards among the company's employees. At the heart of the program is a set of standards which defines acceptable behavior in a variety of areas: conflicts of interest; selling and marketing; antitrust; pricing, billing and contracting; time card reporting; suppliers and consultants; quality and testing; expense reports; company and consumer resources; security; political contributions; environmental actions; and international business. Violations of these standards carry mandatory sanctions which range from warnings,demotions, and temporary suspensions to discharge and referral for criminal prosecution. Every member of the corporation receives a copy of these standards and also attends an "ethics awareness workshop." These training sessions explain the aims of the ethics program and include exercises that let people practice using the standards. Participants are also told how to get help from the ethics office with resolving ethical problems and how to report infractions. A critical part of the program is a hotline.

The Family Medical Leave Act:

An Ethical Model For Human Resource Policies and Decisions
The Family and Medical Leave Act of 1993 (hereinafter FMLA) provides an ethical basis for human resource decisions involving conflicts between an employer's interest in having an employee at work to pursue the organization's needs and an employee's need to be away from work to attend to serious family needs that include the serious health condition of the employee, a family member, or the addition of a new child to the employee's family.
Family medical leave laws promote ethical human resource decisions because they give employers a framework for making decisions that balance important and conflicting needs in an employee's personal life with the needs of the employer. Ongoing application of this framework allows employers to develop ethical habits that are the core of ethical business decisions. The habits formed by employers in complying with family medical leave laws may then serve as the basis for ethical human resource decisions in areas not currently regulated by family medical leave laws.
From an ethical standpoint, the FMLA is a wondrous tool. It provides an ethical framework for employers to use to make human resource decisions involving leave for family purposes. That framework is ethically sound because it reflects two key attributes: recognition that both employers and employees have important and legitimate needs that must be balanced and promotion of consistent and fair treatment of groups of employees.
Employers apply the ethical framework of the FMLA when they engage in efforts to comply with the law. In so doing, employers practice some important ethical habits that include the following: providing job security to employees on FMLA leave, helping employees adjust to new responsibilities when a new child joins the family, accommodating employees who are temporarily disabled from working, and exercising flexibility with regard to employees' work schedules and attendance policies.

CORPORATE ETHICS: A CORPORATE ADVANTAGE

What Advantages do Business Practices Programs Provide to Organizations?

Business leaders increasingly recognize the direct relationship between fulfilling a company's responsibilities and corporate survival. An effective business practices program ensures:
? A Marketplace Advantage: Customers and investors cite corporate practices and values as primary considerations in their decision-making.
? Superior Employee Performance: Companies with sound business practices and established values report improved employee morale, reduced employee turnover and increased productivity.
? Reputation Management: Once damaged by scandal or unethical behavior, a company's reputation may never recover - resulting in lost revenue, low employee morale and increased governmental and public scrutiny. Emphasizing responsible business conduct is the surest means of preserving a company's intangible assets.
? Powerful Legal and Financial Incentives: International regulatory developments provide strong legal and financial incentives to corporations that establish standards of conduct and provide ethics education and training to employees.