Code for ethics: Ethics fore code

(c)1999 by Ben Brink

"There is nothing more difficult to plan, more doubtful of success, more dangerous to manage than the creation of a new system; For the initiator has the enmity of all who would profit by the preservation of the old institutions and merely lukewarm defenders in those who would gain by the new" (Machiavelli). [this quote is a bit over used nowadays, but valid nevertheless.]

i. introduction

"Ethical conduct lies at the core of all business. We do business with those we trust; we get business from those who trust us. [For example,] ..the investment manager, being perceived as trustworthy is essential because investment transactions involve the direct exchange of significant volumes of assets, often without a face-to-face meeting or the traditional handshake. Investors base their trust on a firms reputation for financial performance and ethical soundness. When an investment management firms ethical stance comes into question, trust is extremely difficult to rebuild, damaging the firms reputation and ability to compete" ("Ethics at the Core").

Ethics is at the core of decision-making, yet it also is an ever moving target of abstraction. To be most valuable, ethics must be adaptable to situations of uncertainty and change. Ethical code must shed light and insight into how to solve dilemmas, some of which are unique or situationally too infrequent to be practical to code solutions for individually. Ethical codes must act as a set of guiding signposts on the path of life. Yet, increasing the scope of application of ethics and values often results in paradoxical statements, rendering code subject to loopholes and logic/classification or rationalization traps. Consider this existing example of ethical standards retrieved from the Project Management Institute:

"In the pursuit of the project management profession, it is vital that ... [project managers] conduct their work in an ethical manner in order to earn and maintain the confidence of team members, colleagues, employees, employers, customers/clients, the public, and the global community."

The ethical standard refers to ethics in the preamble. The preamble is thereby subject to most any interpretation of ethics. Further in the document, PMI attempts to define ethics by clustering it with a behavioral envelope ie. "ethical and professional manner." One can infer ethical behavior from professionalism. How does PMI define professionalism?

"Professionalism" can be defined as a combination of knowledge, ethics, standards, a service motive, and a sanctioning organization. "Knowledge" refers to the specialized body of knowledge unique to the profession and to the effective transmission of this knowledge. "Ethics" refers to the moral philosophy of the individuals in the field... ( http://www.pmi.org/publictn/inbox/pro.htm )

PMI defines professionalism as part ethics and ethics as part individual morality and professionalism. This is enough to make any confused person looking for guidance or certainty to seek other forms of psychological shelter or help. Can anyone rely on this kind of ethical code for decision making?

Do ethics codes influence organizational behavior?

"When the onus is on the individual, individuals will reach decisions based on the same ethical standards they live by" not necessarily company policy or rhetoric (Naisbitt, page 177).

Naisbitt recognizes that one tends to rely on oneself for better judgment in complex circumstances when the assistance of others does not seem necessary. PMI also recognizes the "moral philosophy of the individuals in the field." Mark Schwartz confirms in his Ph.D. thesis paper that "it is very rare indeed that a code would directly influence the behavior of an employee" (Deck). Still, Schwartz identifies eight metaphors describing how codes seem to at least indirectly influence decisions and behavior (Deck):

1. As a "rule book", the code acts to clarify what behavior is expected of employees.
2. As a "sign post", the code can lead employees to consult other sources to test whether certain behavior is appropriate.
3. As a mirror, the code provides a way for employees to confirm whether certain behavior is acceptable.
4. As a magnifying glass, the code encourages the employee to look more carefully at what is said and done.
5. As a shield, the code can give support to employees in challenging unethical requests.
6. As a smoke detector, the code can help to warn of danger while there is time to prevent harm.
7. As a fire alarm, the code may motivate employees to report violations.
8. As a club, the code spells out the consequences of inappropriate conduct.

These metaphors suggest some kind of foundation for establishing a practical, useful ethical framework or policy. The specific codes are not as important as an ethically aware organizational culture that remains adapting.

I. An Effective Organizational Ethics Policy

An effective organizational ethics policy can reduce legal risk, reduce operational uncertainty, increase organizational flexibility, and provide a foundation for organizational culture and shared meaning. In reducing operational uncertainty, the organization depends less on bureaucracy and therefore runs more efficiently. By increasing organizational flexibility, workers are more able to handle unforeseen circumstances, thereby reducing supervisory resource loads. An ethically aware organization with a publicized ethics code can increase customer confidence and reputation among peers and colleagues.

I.A. Elements necessary for an effective organizational ethics policy

1. organization-wide involvement.

In order for an ethics policy to be used organizationally, it must be formally and informally sanctioned by its members. Sanctioning is most readily accomplished in a group by involving the group in the decision-making or ethics creation process. An ethical climate is more important in affecting ethical behavior than the actual ethics code.

2. recognize diversity in individual and circumstance.

Ethics needs to be respectful of the diverse nature of the collection of individuals and their ethics. Ethics must be accepted by each in order for it to function as an organizational directive. One can surmise that religion is a topic in some businesses because it indicates a level of core ethics and values that predicts behavior and therefore control by senior management (with their interest in security and reducing risk). However, religions, with their narrow perspective and intolerant dogma, are too single-focused for diverse organizational settings. Also, coercion of individuals into ethical behavior is not ethical, nor does it create lasting ethical behavior. Ethics can be nurtured without forcing dry or unsympathetic doctrines on others by practicing critical thinking and other autonomous problem solving strategies. Allowing organizational members to participate in the process increases likelihood that all will be considered in the ethics building process, creating a most natural, respectful and adapting application of ethics.

3. be practical.

Ethics must be practical in application to be useful. Ethics should be one of the first mental tools used in decision-making. Lofty phrases with ambiguous meaning, and complex decision structures do not lend themselves to practical, memorable utility.

4. provide a degree of individual-initiative or opportunity (and self-esteem building).

Organizational sanctioned challenge creates opportunity and risk. These are circumstances useful for learning and practicing ethics which strengthen the ethically focused organizational structure. Providing organizationally sanctioned opportunity also creates an environment for personal growth which empowers workers and increases self-esteem. Self-esteem is an important factor in individuals taking action on decisions with ethical basis. Ethical goals that are steadfast and ideal (visionary), but not necessarily attainable or describable in their purest form, help to maintain a window of opportunity for those who seek opportunity for growth within the organization (and in alignment to organizational values). An organization's culture can shift temporary and moving priorities to more long-term objectives that are focused on ideals.

5. use critical thinking and other functional problem solving strategies.

Without using critical thinking, decisions are based in ignorance. Any action taken on behalf of incomplete or inaccurate conclusions can result in more harm done than if no code existed at all. Intelligent action is an integral part of ethical awareness and decision processes (Kavathatzopoulos). It is more important to nurture the tools needed for ethical behavior than teaching ethical behavior (conclusions of ethical thinking)(Kavathatzopoulos)

"The participants in the program are trained to use the autonomous critical method, which implies analysis of concrete situations and adoption of critical reasoning in order to find optimal solutions. The autonomous critical method in decision making and solving business ethics problems means that decision-makers focus their attention on the concrete problem: they identify it, they make it explicit, and they formulate it in order to be able to work with it. They define their own position, duties, commitments, and feelings. They also take into consideration the interests and needs of other actors. They generate alternative solutions to the problem, they weigh them against all the values involved, and at the end, as a result of this process, they make a decision and choose a course of action. Reflection upon decisions made and evaluation of actual consequences has to follow" (Kavathatzopoulos).

6. ethics code maintenance should be ongoing.

People cycle in and out of an organization sporadically. Without popular acceptance of the ethical code, the system collapses. To keep the system alive in practicing the ethics codes (and therefore organizationally legitimate), the ethical codes or values must always be available for discussion to engage new workers in the ethics codes and so that the members can reach a level of acceptance or commitment to them organizationally. This process suggests that direct manipulation of ethics or declarations of changes made outside of the ethics maintenance process may detract from their value or influence on organizational behavior.

7. consistency between policies and actions (Deck) --reducing hypocrisy

There needs to be some kind of verification or feedback process to confirm that action taken meets the ethical principles and values followed.

8. ethical leadership, fair treatment of employees, and open discussion of ethics in the organization.(Deck)

The ethics building process should be monitored or carefully guided by someone who is familiar with the various aspects and who can help keep the process moving without coercing or directly interfering with or otherwise undermining organizational-wide participation.

9. values based ethics

Values oriented ethics results is smaller code (Kay) and seems more successfully implemented than rule or code based methods (Deck).

I.B. Destructive forces

Ethics programs are not necessarily constructive to an organization. "...The wrong ethics program can actually make things worse" (Deck) This supports Nasbitt's statement that each person tends to rely on their own concepts of ethics. If an organization's ethics are perceived to be secondary in importance to protecting senior management, or giving absolute authority to upper management etc, then the concepts of individual and organizational ethics tends to be undermined, having an ineffective impact on the organization or worse (Deck).

II. Processes in the development and implementation of an ethics policy

Most of the key elements of an ethics policy are straightforward to understand even if they require some work to implement:

1. organization-wide involvement.
2. recognize diversity in individual and circumstance.
3. be practical.
4. provide a degree of individual-initiative or opportunity (and self-esteem building).
5. use critical thinking and other functional problem solving strategies.
6. ethics code maintenance should be ongoing.
7. consistency between policies and actions. (reducing hypocrisy) (Deck)
8. ethical leadership, fair treatment of employees, and open discussion of ethics in the organization.(Deck)
9. values based ethics

Each one is addressed for clarification purposes, and to suggest ways to initially develop or maintain the ethics policy.

1. organizational-wide involvement.

Motivating all members of an organization to take part in project can be challenging. Focusing intially on opinion leaders can help engage everyone. Some common characteristics of effective team members [opinion leaders] or project leaders include (Meredith and Mantel, page 122):

• High-quality technical skills ...
• Political sensitivity...
• Strong problem orientation...
• Strong goal orientation...
• High self-esteem

These are similar characteristics of people that one hopes to foster in the organization through practicing ethical behavior. One should identify ethically oriented leaders to act as informal mentors to help increase at least the appearance of ethical building activity. The goal is to increase the overall individual input and constructive feedback of others. Each new idea or perspective should be seriously considered at least once prior to open discussion (constructive) criticism --to emphasize the thoughtful and respectful attitude needed to keep an inviting atmosphere and win-win support from most everyone.

2. recognize diversity in individual and circumstance.

Recognizing and respecting diversity is a prerequisite to getting organization-wide involvement. There should be a sense of unity in the diversity of the organization without extraneous or arbitrary conforming pressures.

3. be practical.

An emphasis should be placed on the applicability of the domain and range of the ethical codes to real situations. The following is compelling argument and conclusions by William Kingdon Clifford on the topic of business ethics. No matter how compelling it might be to some (including this writer), it does not lend itself to practical use:

"The goodness and greatness of a man do not justify us in accepting a belief upon the warrant of his authority, unless there are reasonable grounds for supposing that he knew the truth of what he was saying.  And there can be no grounds for supposing that a man knows that which we, without ceasing to be men, could not be supposed to verify."

"In regard, then, to the sacred tradition of humanity, we learn that it consists, not in propositions or statements which are to be accepted and believed on the authority of the tradition, but in questions rightly asked, in conceptions which enable us to ask further questions, and in methods of answering questions.  The value of all these things depends on their being tested day by day.  The very sacredness of the precious deposit imposes upon us the duty and the responsibility of testing it, of purifying and enlarging it to the utmost of our power.  He who makes use of its results to stifle his own doubts, or to hamper the inquiry of others, is guilty of a sacrilege which centuries shall never be able to blot out."

4. provide a degree of individual-initiative or opportunity (and self-esteem building).

Like recognizing diversity, providing a degree of opportunity for individual-initiative in a necessary part of implementing ethical behavior, and increasing its behavioral influence. If individuals do not have the opportunity to practice ethical behavior, then they only get to practice when the organizational risks are greatest, leading to mistakes and less effective ethical conformance. Providing an environment of opportunity is also an important organizational empowering tool for increasing self-esteem --an important under emphasized component of job satisfaction.

5. use critical thinking and other functional problem solving strategies.

The most troublesome element could be critical thinking and other functional problem solving strategies. Thankfully, Total Quality Management and best practices directives have worked out techniques for using a multitude of functional problem solving strategies as part of continual improvement. The following principles and values could provide a set of ethical values and principles to start from for meeting the requirements of this element of ethics. For companies planning on doing business internationally, these principles are aligned with the ISO9000 standards of management requirements that companies usually have to meet in order to do business in Europe and other places. By implementing these values as part of ethics development, the organization can make an easier transition to meeting more detailed requirements later. The key principles in a culture that support continual improvement include (list from Bounds, page 90):

• The importance of determining what customers value as opposed to what management thinks they need.
• A customer versus an organizational focus
• A focus on optimizing organizational performance rather than maximizing functional end results
• A focus on the processes and systems that cause results and not the results themselves
• The importance of experimentation for knowledge and openness to new information
• Mistakes that lead to organizational learning are acceptable
• The importance of continuous improvement versus working to specification or adherence to the status quo.
• Performance improvement comes from process/system improvement and not just improving people.
• To improve processes/systems, managers must seek out root causes of problems.
• Continuous improvement is demanded at every level of the organization.

6. ethics code maintenance should be ongoing.

Ongoing refers to the continuous process of keeping ethics and ethical behavior as a guiding tool in decision making. Putting the tool to use periodically sends a nonverbal message of lacking commitment to the process and detracts from its importance and the need for relying on ethics to shape behavior at any moment. Maintenance of ethics should be integral to functions and operational training ("Ethics at the Core").

7. consistency between policies and actions --reducing hypocrisy

Ethical policies loose significance if after making ethical decisions, the organization or its members take different action than what is supported in the decision process. Ethics as a guiding set of principles and values becomes undermined, lacking credibility for relying on it in the future.

8. ethical leadership, fair treatment of employees, and open discussion of ethics in the organization

Ethical leadership includes fair treatment of employees, and open discussion of ethics within the organization. Ethical leadership is having others share in the commitment of ethical behavior, and includes capitalizing on peoples strengths, covering for their weaknesses, knowing when to take a dominant role, when to punish or reward, and when to let others take the forefront of activities. (Meredith and Mantel, page 130)

9. values based ethics

In defining ethics, one has to consider the multidimensional aspect of ethics. One must inevitably consider the expression of knowledge which can be expressed in two ways; one kind uses the mind to rationalize with words, and the other something else. An illiterate person may not be able to read a code of ethics yet know ethics and practice ethical behavior. Value based ethics tends to reduce the number of words to express ethical knowledge, while increasing the scope of its application. This is the best one can hope for in describing the ideal ethics of spontaneous, principled action based on knowledge and experience.

Management considerations in ethics development and implementation

A considerable amount of management's time is spent persuading outsiders, senior management, clients/peers and operations team members of the benefits of one part or another of the organizational process. Part of motivating and persuading others in the benefits of a continuous process such as ethics includes understanding and being able to express why it exists. Managers must understand its intent and how its success (or failure) can be verified. They need to express it naturally in their own language and in the language of others. They should maximize conditions for success. Support from top management is critical; As is a network of individuals strategically providing advanced notice of impending dilemmas or operational stressors. Its management's role to experientially know the process and environment surrounding it (Meredith and Mantel, page 126-7). Management needs to lead by listening and responding to the needs at the front-line or organizational boundary.

Scope of ethics management

One of management's guidelines rests in understanding the practical limits of management and where its boundaries of influence should stop. "Ethics is about people and process" ("Ethics at the core"). The elements of ethics helps define these guidelines for management. Ethics should be an integral part in defining objectives and implementation of each process. This keeps ethics central to management and a priority in organizational operations. Ethics becomes a part of doing work well. ("Ethics at the Core")

Ethical conduct and operations success

Organizational behavior (of its people) is the embodiment of organizational ethics. Worker performance should consider the method or process used in reaching accomplishments more important than the accomplishments reached."Organizations with a shared commitment to recognizing and examining ethical dilemmas stand the best chance of prospering through [situations of] dramatic change" ("Ethics at the Core").

III. Safeguards necessary for employees who report behavior contrary to the corporate ethics policy

Culturally practicing ethics is the primary safeguard for organizational members --from an organizational standpoint. Having most organizational individuals drawing from an ethical foundation translates into organizational support. Without organizational sanctioned action, unethical action becomes subject to numerous individual and process filters that tend to resist the unethical action, especially at collective points of individual opportunity and group effort.

Organizations that manage vast amounts of resources also manage risk. Rules and regulations are adopted to manage risk objectively and consistently. Regulations are shaped by ethics. So, enforcement of regulations can mirror ethical compliance safeguards. The Securities Institute of UK states that enforcement code has these requirements ("Higher Standards"):

1. be sufficiently broad to be effectively complied with
2. make financial sense [read: practical] if they are to become accepted norms
3. have the strong support of opinion leaders [read: managers and organizational, cultural acceptance]
4. have an effective implementation mechanism
5. be transparent and easy to interpret

The elements of ethics previously outlined suggest that implementation of ethics in operational/functional processes naturally includes safeguards for employees who report behavior they believe is contrary to the ethics policy. Some of these factors include critical documentation, fair investigation processes, and consistent discipline when indicated ("Ethics at the core").

Safeguarding ethical behavior can be also be a priority in auditing organizational operations, policies and records. Through the review process, an additional look at questionable behavior from professionals, outside the day-to-day local processes, can reinforce ethical standards and suggest compliance or corrective action where questionable behavior is documented (or more strictly, where there is a lack of documentation to support critically needed ethical behavior).

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