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A. Scott Carson, PhD Queen’s School of Business. Implementing Codes of Ethical Conduct: From Theory to Practice. Names for codes. Code of conduct Codes of ethical conduct Cannons of ethical conduct Ethical principles Code of business conduct Code of conduct and ethics

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names for codes
Names for codes

Code of conduct

Codes of ethical conduct

Cannons of ethical conduct

Ethical principles

Code of business conduct

Code of conduct and ethics

Code of professional responsibility

Global business citizenship

who establishes a code
Who establishes a code?

Business

Company

Industry

Professional

Global business

Government codes

Everything!: bloggers, internet, warriors, schools, universities, sports, administrators, ecotourism, law enforcement, health alliances, military, etc.

what codes do
What codes do

Codes generally seek to provide direction to employees, management and board members about how to conduct themselves with respect to

Each other

Stakeholders

The organization, profession, etc.

Codes usually contain a combination of ethical descriptions and directions, and non-ethical descriptions and procedural directives

ethical content air canada s conflict of interest policy
Ethical content: Air Canada’s conflict of interest policy

“A conflict of interest may arise in any situation in which an employee's other business or personal interests impair his or her judgment to act honestly and with integrity or otherwise conflict with the interests of the Company.

Ethical Description

All such conflicts should be avoided. The Company expects that no employee will knowingly place himself or herself in a position that would have the appearance of being in conflict with the interests of the Company.”

Ethical Direction

procedural content air canada reporting
Procedural content: Air Canada reporting

In-Person Report

Information about known or suspected violations of this Code or of any laws, rules, or regulations by any employee should be reported promptly and may be reported to the employee's immediate supervisor or the Corporate Secretary.

Anonymous Reporting

An employee may report anonymously any questionable financial reporting, or known or suspected cases of fraudulent or dishonest activities or conflicts of interest. In this regard, please consult Air Canada's Ethics Reporting Program which is available on ACaeronet under “My Work” and “Policies and Procedures”.

Non Ethical Procedures

code formation revision and implementation cycle
Code formation, revision and implementation cycle

Identifying values

Revising the Code

Writing the Code

Monitoring Performance

Implementing the Code

code formation revision and implementation cycle8
Code formation, revision and implementation cycle

Identifying values

Revising the Code

Writing the Code

Monitoring Performance

Implementing the Code

ethicscentre codes project
EthicsCentre: Codes Project

CODES OF CONDUCT IN THE PRIVATE SECTOR: A REVIEW OF THE ACADEMIC LITERATURE FROM 1987 TO 2007

Scott Carson, Mark Baetz, Shelley McGill

Respect the autonomy

of the individual

Identifying values

  • Incorporate universal values
  • Trust
  • Respect
  • Responsibility
  • Fairness
  • Citizenship
  • Caring

Professionals should

incorporate the values

of their practice

Incorporate the organization’s

principles and values

Respect and incorporate the values of the country

slide10

Structure

  • Reflect broad socio-economic concerns
  • Make priorities clear
  • More emphasis on spirit than letter of the law
  • Issue general guidelines
  • Ensure relevance
  • Ensure usefulness
  • Country specific
  • Content
  • Fair reporting
  • Protection for whistle blowers
  • Confidentiality
  • Emphasis on public interest

Writing the Code

  • Language
  • Simple language
  • Minimize the negative
  • Be future oriented
  • Process
  • Teamwork in creating the code
  • Diversity on the team
  • Top level support
  • Assigned responsibilities
slide11

International codes: Environmental

  • training
  • Culture
  • Politics
  • Economic environment

Broadly acceptable

Widely publicized

  • Implementing as
  • Inculcating
  • Re-enforcing
  • Measuring

Implementing the Code

slide12

Revising the Code

Measurement

Verification

Monitoring Performance

Continuous

implementation
Implementation

Identifying values

Revising the Code

Writing the Code

Implement the Code

Monitoring Performance

typical implementation approach teaching rules
Typical implementation approach: Teaching rules

Teaching the content of the code

Workshops

On-line program

Orientation

Seminars

Ethics officer support

Follow-up

implementation as code education a preliminary note
Implementation as Code Education: A preliminary note

Implementing a code cannot be as simple as learning rules because

Codes in themselves do not provide adequate context to enable a full understanding of the rules themselves

The code does not provide sufficient context to develop the overarching rules and principles necessary for accessing the ethical validity of code provisions

Implementing a code should be a broader process involving stakeholders in other parts of the codes formation and implementation cycle to promote a culture of integrity

A crucial piece of code implementation is understanding

the ‘regulatory regime’ of which a code is a part

Overall corporate strategy which the ‘regulatory regime’ and code impacts

following a code implies an underlying theory of rationality theoretical disputes
Following a code implies an underlying theory of ‘rationality’: Theoretical disputes

Some researchers maintain that codes are sets of rules that employees and others follow without rational reflection

Rules are non rational because of rote procedures (Schwartz, 2000)

Moral conduct (hence acting in accordance with codes) is mainly acting on intuition (Sonenshein, 2007) not rational reflection

A significant part of moral conduct is acting virtuously, which by its nature is instantaneous not a matter of reflection (Solomon, 1993)

If rules are followed by rote, they are not only non rational, they violate the moral autonomy of the individual and reflect a political control mechanism by management over employees (Schwartz, 2000)

underlying theories of rationality in ethics the potential irrelevancy of rules
Underlying theories of ‘rationality’ in ethics: the potential irrelevancy of rules

Procedural Models

Deductive reasoning procedure

Step 1: Consider the situation

Step 2: Generate alternatives

Step 3: Apply a principle or rule in making a judgment

Stage theory (e.g., Kohlberg, Piaget)

Invariant stages of human moral development from simple rule following at the beginning to application of social principles at end

Person-situation model -- Treviño (1986): Moral responsiveness

Individual factors: Moral responsiveness: ego strength, proximity, control

Organizational factors: culture, characteristics of job

rationality models continued
Rationality models continued

Psychological Process Models

Issue-contingent model (Jones, 1981)

Characteristics of the issue itself

Intensity: benefits/harms, social consensus, probability of consequences, time between action and consequences, feeling of nearness, concentration of affect

Intensity correlates with moral issue recognition

Sensemaking-Intuitionist Model (SIM) (Sonenshein, 2007)

A critical response to ‘rationalist’ models above

Phase 1: Issue construction: social and personal influences

Phase 2: Intuitive judgments based on experience and social pressures

Phase 3: Post facto explanation and justification

rationality models continued19
Rationality models continued

Philosophical Models

Non-rationalist – Virtue ethics (Solomon, 1993)

Business virtues: honesty, openness, integrity, collegiality

Spontaneous, no thought, no deliberation

Not the application of rules

Not rule/principles governed because no clear universals

Non-classical rationality Model (Deinhart, 1995)

Classical rationalist theory: necessary, universal, rule-guided

Brown’s theory: defensible, reliable non rule-guided judgments

Body of background knowledge

Relevant information about the case at hand

rationality models continued20
Rationality models continued

Classical rationality (R.M. Hare, 1952/72)

Learning something (or to do something) involves learning a generalizable rule or principle

Moral learning is necessarily learning of principles/rules – learning to do moral acts of a certain kind

Could not make a moral judgment without

Subsuming it under a principle

Indentifying the kind of judgment or act that it is

What is means for something to be a rational decision

Understand the context of the situation and why it is a moral issue

Understand alternatives and their consequences

Apply a moral rule or principle to the alternatives in order to select the best moral decision or action

discussion and critique
Discussion and critique

The ‘deductive procedure’, ‘person-situation’ and ‘issue contingent’ models are rule-governed either because they prescribe rule-following processes or presuppose rules in making judgments

The ‘sensemaking-intuition’, virtue ethics and non-classical rationality models reject rules as necessary for ethical decision making (SIM is mixed)

Hare’s classical rationality model does not prescribe any decision making procedure or psychological process. Only necessary conditions for something to count as a rational ethical decision:

Context

alternatives/consequences

Principle or rule

discussion continued
Discussion continued

Hare’s position is compatible with rule-governed models and accommodates SIM objections to them

Subjectivity and situation construction

Uncertainty and equivocality

No rigorous time sequence deliberation

SIM collapses into rule-governed models

Becoming experienced starts with rule-governed actions/judgments

Situations with less uncertainty and equivocality can be rule-governed

SIM’s final stage is explanation/justification which is a rule-governed condition

discussion continued23
Discussion continued

Virtue ethics and non-classical rationality are both vulnerable to claim that without some form of generalizable rule or principle, there would be no way of telling what kind of act or situation is being considered.

Everything is an instance of something more general

This is compatible with creating new rules which Dienhart/Brown contend

Rules are logically necessary to moral decision making and behavior

Codes provide at least some of the rules in organizational life

a moral challenge respect for persons
A moral challenge: Respect for persons?

Codes of conduct do not respect the moral autonomy of the person (Schwartz, 2000)

No agreement by employees of ethical standing of rules: devoid of ethical content

Not an outcome of a process of ethical evaluation

Management tool of control, paternalism, indoctrination, organizational protection

Codes constrain ethical independence

Codes alienate employee from his or her own morality

rebuttal of the moral challenge
Rebuttal of the moral challenge

The non-rational following of rules thesis reflects a simple misunderstanding of codes

Contain some procedural rules that require little reflection but many principles in codes require in-depth reflection

Even simple rules require the application of moral principles and rules in order to establish their moral validity (following Hare’s account)

How some organizations implement codes is not necessarily how they should be implemented, especially as regards the active involvement of employees and other stakeholders in code formation, implementation and revision (more detail later)

implementation education and the regulatory regime rr
Implementation, education and the Regulatory Regime (RR)

Guiding corporate conduct in the marketplace

Legislation: corporate, tax, workplace health and safety, bribery, securities dealing, banking, insurance

Regulations and regulatory bodies to implement legislation: securities commissions, stock exchanges

rr continued
RR continued

Self-regulatory bodies: investment dealers, public accountants, advertising, engineers, lawyers

Rules internal to the organization: byelaws, policies (employment, harassment, whistle blowing, safety, environmental)

Informal policies: circulated by memo, stated verbally

Principles as ‘rules’: mission, vision, values

In aggregate, all of these directives constitute the ‘regulatory regime’

codes and the rr
Codes and the RR

Codes are imbedded in the RR

The RR guides conduct in an organization

How to behave

As a context for the organization’s pursuit of business objectives

rr and strategy
RR and strategy

Organizational strategies reflect a further layer of directives

The RR is both a decision making framework and catalyst for strategy

Framework: Appropriateness of proposed strategies and actions

Catalyst: Suggests strategies to promote parts of the RR (e.g., CSR strategies)

regulatory regime and strategy
Regulatory regime and strategy

Mission, Vision, Values

Regulatory Regime

Shared Principles/Values

Code of Ethics

Legislation, Regulation

Organizational Policies

CSR Strategy

CorporateStrategies

Business Strategies

Action Plans

internal inter connectedness
Internal inter-connectedness

Codes can contain reference to policies

Principles and norms of the company can be imbedded in the code

Codes sometimes restate required legal compliance

two approaches to ethics in business
Two approaches to ethics in business

Compliance culture

Reactive: externally and internally

Rule-guided behaviour

Legislation

Regulations

Company policies

Conforming to expectations

Codes are compatible with a compliance culture

approaches continued
Approaches continued

Culture of integrity: Robust ethical climate

Proactive

Broad principles

Aspirations

Codes to establish expectations

Unwritten norms

Stories, symbols

Expectation that members of the organization will always try to act with integrity

implementation and the culture of integrity
Implementation and the culture of integrity

Identifying values

Revising the Code

Writing the Code

Organizational Stakeholders

Monitoring Performance

Implement the Code

the culture of integrity and involving stakeholders
The culture of integrity and involving stakeholders

Direct involvement of stakeholders, especially employees

Identifying values

Writing the code

Revising the code, which includes revising values identification

Culture of integrity requires greater level of understanding to be effective

Good decision makers are able to draw sound conclusions from what the RR makes available

Alternative courses of action which the RR helps to understand

Ethical principles which the RR provides in the Code

Outcomes of decision making drawn in part from the RR

organizational strategy to promote integrity
Organizational strategy to promote integrity

Increasingly comprehensive grasp

of RR combined with improving

ability to employ ethical principles

in judgments

Rudimentary knowledge of the code and modest

Understanding of the RR

Sophisticated knowledge

of the RR and relationship

to strategy. Adept at using

ethical principles to make

decisions.

integrity and gradations of knowledge
Integrity and gradations of knowledge
  • Advanced Decision Making
  • Extensive knowledge of RR
  • Sophisticated grasp of
  • ethical principles
  • Ability to apply principles
  • to knowledge of RR in decision making
  • Three tasks for ‘code education’
  • Promote learning of the RR
  • Reinforcing the principles in the code
  • Developing ethical decision making ability
  • using principles and the RR

Gradations of improvement

as knowledge of the RR becomes

broader and deeper.

  • Basic Decision Making
  • Knowledge of code
  • content
  • Some knowledge of
  • ethical principles
  • Constrained ability to
  • apply principles in
  • decision making
implementing codes as ethics education
Implementing codes as ethics education

Education – not just in the specific provisions of the code, but in the RR in which it is imbedded

Five principles of code education

Highest quality of learning and development in each employee

Experience, educational background and role in the organization should guide depth of required understanding in the RR.

ethics education continued
Ethics education continued

Education in the RR should not be confining to career advancement and new responsibilities

Go beyond simply learning principles and the RR. Should encourage critical assessment

Education should be full and complete: ongoing over time. Too much to absorb all at once