Complete Guide to Ethics Management Essay Example

might take the advice of Bob Kniffin, Vice President of External Affairs, at Johnson and Johnson (J&J) company. The way that J&J handled an ethical issue (the "Tylenol scare" crisis) in the 1980s is probably one of the most inspiring and enlightening examples of how to successfully deal with a major ethical issue in business. Kniffin was one of the key players in helping J&J to handle the crisis so effectively.

Kniffin said that it was not the J&J Credo (a form of a code of ethics) that helped J&J to handle the crisis so well. Rather, it was the ongoing "challenge sessions" that the company regularly held in order for each person to clarify their own perspective and commitment to the J&J Credo. Authenticity Consulting's peer coaching groups are a powerful, yet straightforward, means to organize, facilitate and evaluate challenge sessions.

This guidebook is free in order to make its contents highly accessible to organizations, particularly those with limited resources. The free nature of this document does not in any way indicate that its content are of low value -- high fees and impressive presentation do not necessarily imply high value. The author hopes the online form of this document remains a dynamic community resource that is continually modified and improved by feedback, particularly from leaders and managers -- those people in the trenches who are charged with applying business ethics techniques in the workplace.

Consequently, much of today's literature about business ethics is not geared toward the practical needs of leaders and managers -- the people primarily responsible for managing ethics in the workplace.The most frequent forms of business ethics literature today typically include:

• philosophical, which
  

requires extensive orientation and analysis;

What's Conspicuously Missing is the "How to" of Managing Ethics in the Workplace But it isn't from lack of examples that managers aren't better at managing ethics in the workplace -- they require more practical information about managing ethics. This problem was explained very well by Stark in his article, "What's the Matter with Business Ethics? " published in the Harvard Business Review (1993, May/June, pp. 38-48). Brenner (Journal of Business Ethics, V11, pp.91:399) notes "while much has been written about individual components of ethics programs, especially about codes of ethics, the literature is much more limited on ethics programs.

" Wong and Beckman (Journal of Business Ethics, V11, pp. 173-178) note that "researchers are claiming that current literature is filled with strong arguments for more ethical corporate leadership and incorporation of ethics in business curriculum, but what is conspicuously missing is the "how to" in actually putting ethical goals and theories into practical action. Myths Abound About Business Ethics, e.g. , "Ethics is Simply to Do What's Right" Lack of involvement from leaders and managers in the field of business ethics (again, this is the fault of no one or of everyone) has spawned a great deal of confusion and misunderstanding among leaders and managers about business ethics.

McDonald and Zepp, in their article "What Should Be Done? A Practical Approach to Business Ethics" (Management Decision, 28, 1, 1990, pp. 9-13), note that when someone

brings up the topic of business ethics "...tends to bring up cynicism, righteousness, paranoia, and laughter. " Many leaders and managers believe business ethics is religion because it seems to contain a great deal of preaching. Or, they believe it to be superfluous because it seems to merely assert the obvious: "do good! " Business Ethics Literature is Often Far Too Simplistic -- So Many Leaders and Managers Think Business Ethics is Irrelevant Stark notes that "often ethicists advance a kind of moral absolutism that avoids many of the difficult and most interesting questions.

Case studies to explore ethical dilemmas are often far too simplistic, presented as if every real-life situation has a right and wrong e.g. , "should I lie, cheat or steal? " Consequently, many managers believe business ethics is irrelevant because too much business ethics training avoids the real-to-life complexities in leading organizations. (This document contains samples of real-to-life, complex ethical dilemmas, in a subsection, "Examples of Real-to-Life Complex Ethical Dilemmas" in the upcoming section "Ethics Tools: Resolving Ethical Dilemmas. ) Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, explains, "Ethical decisions aren't as easy as they used to be.

Now, they're the difference between right -- and right. " Preston Townley, in his speech "Business Ethics: Commitment to Tough Decisions" (Vital Speeches, January 1992, pp. 208-211), states that "...it ought to be fairly easy to choose between right and wrong by relying on principles, but business activity often demands that we select from alternatives that are neither wholly right or wholly wrong. " What is Business Ethics?Let's Start With "What is ethics? "

Simply put, ethics involves learning what is

right or wrong, and then doing the right thing -- but "the right thing" is not nearly as straightforward as conveyed in a great deal of business ethics literature. Most ethical dilemmas in the workplace are not simply a matter of "Should Bob steal from Jack? " or "Should Jack lie to his boss? " (Many ethicists assert there's always a right thing to do based on moral principle, and others believe the right thing to do depends on the situation -- ultimately it's up to the individual. Many philosophers consider ethics to be the "science of conduct.

" Twin Cities consultants Doug Wallace and John Pekel (of the Twin Cities-based Fulcrum Group; 651-714-9033; e-mail at jonpekel@atti. com) explain that ethics includes the fundamental ground rules by which we live our lives. Philosophers have been discussing ethics for at least 2500 years, since the time of Socrates and Plato.

Many ethicists consider emerging ethical beliefs to be "state of the art" legal matters, i.e. , what becomes an ethical guideline today is often translated to a law, regulation or rule tomorrow.Values which guide how we ought to behave are considered moral values, e. g. , values such as respect, honesty, fairness, responsibility, etc. Statements around how these values are applied are sometimes called moral or ethical principles.

So What is "Business 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.Wallace and Pekel explain that attention to business ethics is critical during times of

fundamental change -- times much like those faced now by businesses, both nonprofit or for-profit. In times of fundamental change, 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. However, attention to business ethics provides numerous other benefits, as well (these benefits are listed later in this document). Note that many people react that business ethics, with its continuing attention to "doing the right thing," only asserts the obvious ("be good," "don't lie," etc. ), and so these people don't take business ethics seriously.

For many of us, these principles of the obvious can go right out the door during times of stress.Consequently, business ethics can be strong preventative medicine. Anyway, there are many other benefits of managing ethics in the workplace. These benefits are explained later in this document. Two Broad Areas of Business Ethics 1. Managerial mischief.

Madsen and Shafritz, in their book "Essentials of Business Ethics" (Penguin Books, 1990) further explain that "managerial mischief" includes "illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviors and remedies to eradicate them. There has been a great deal written about managerial mischief, leading many to believe that business ethics is merely a matter of preaching the

basics of what is right and wrong. More often, though, business ethics is a matter of dealing with dilemmas that have no clear indication of what is right or wrong. 2. Moral mazes. The other broad area of business ethics is "moral mazes of management" and includes the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, etc.

Business Ethics is Now a Management Discipline Business ethics has come to be considered a management discipline, especially since the birth of the social responsibility movement in the 1960s. In that decade, social awareness movements raised expectations of businesses to use their massive financial and social influence to address social problems such as poverty, crime, environmental protection, equal rights, public health and improving education. An increasing number of people asserted that because usinesses were making a profit from using our country's resources, these businesses owed it to our country to work to improve society. Many researchers, business schools and managers have recognized this broader constituency, and in their planning and operations have replaced the word "stockholder" with "stakeholder," meaning to include employees, customers, suppliers and the wider community.

The emergence of business ethics is similar to other management disciplines.For example, organizations realized that they needed to manage a more positive image to the public and so the recent discipline of public relations was born. Organizations realized they needed to better manage their human resources and so the recent discipline of human resources was born. As commerce became more complicated and dynamic, organizations realized they needed more guidance to ensure their dealings

supported the common good and did not harm others -- and so business ethics was born. Note that 90% of business schools now provide some form of training in business ethics.Today, ethics in the workplace can be managed through use of codes of ethics, codes of conduct, roles of ethicists and ethics committees, policies and procedures, procedures to resolve ethical dilemmas, ethics training, etc.

10 Myths About Business Ethics Business ethics in the workplace is about prioritizing moral values for the workplace and ensuring behaviors are aligned with those values -- it's values management. Yet, myths abound about business ethics. Some of these myths arise from general confusion about the notion of ethics.Other myths arise from narrow or simplistic views of ethical dilemmas.

1. Myth: Business ethics is more a matter of religion than management. Diane Kirrane, in "Managing Values: A Systematic Approach to Business Ethics,"(Training and Development Journal, November 1990), asserts that "altering people's values or souls isn't the aim of an organizational ethics program -- managing values and conflict among them is ... "
2. Myth: Our employees are ethical so we don't need attention to business ethics. Most of the ethical dilemmas faced by managers in the workplace are ighly complex. Wallace explains that one knows when they have a significant ethical conflict when there is presence of  significant value conflicts among differing interests,  real alternatives that are equality justifiable, and  significant consequences on "stakeholders" in the situation. Kirrane mentions that when the topic of business ethics comes up, people are quick to speak of the Golden Rule, honesty and courtesy. But when presented with complex ethical dilemmas, most people realize there's a wide "gray
   

area" when trying to apply ethical principles.

people can take bad actions, particularly when stressed or confused. (Stress or confusion are not excuses for unethical actions -- they are reasons. ) Managing ethics in the workplace includes all of us working together to help each other remain ethical and to work through confusing and stressful ethical dilemmas.

responsibility are the same thing. The social responsibility movement is one aspect of the overall discipline of business ethics. Madsen and Shafritz refine the definition of business ethics to be:  an application of ethics to the corporate community,  a way to determine responsibility in business dealings,  the identification of important business and social issues, and  a critique of business. Items 3 and 4 are often matters of social responsibility. There has been a great deal of public discussion and writing about items 3 and 4. However, there needs to be more written about items 1 and 2, about how business ethics can be managed. ) Writings about social responsibility often do not address practical matters of managing ethics in the workplace, e. g. , developing codes, updating polices and procedures, approaches to resolving ethical dilemmas, etc.

to ensure those behaviors are conducted. One might call this "values management. " Values management is also highly important in other management practices, e. g. , managing diversity, Total Quality Management and strategic planning. 10 Benefits of Managing Ethics in the Workplace Many people are used to reading or hearing of the moral benefits of attention to business ethics.However, there are other types of benefits, as well. The following list describes various types of benefits from managing ethics in the workplace.

Attention to business ethics has substantially improved society. A matter of decades ago, children in our country worked 16-hour days. Workers’ limbs were torn off and disabled workers were condemned to poverty and often to starvation. Trusts controlled some markets to the extent that prices were fixed and small businesses choked out. Price fixing crippled normal market forces. Employees were terminated based on personalities. Influence was applied through intimidation and harassment. Then society reacted and demanded that businesses place high value on fairness and equal rights. Anti-trust laws were instituted. Government agencies were established. Unions were organized. Laws and regulations were established.

Ethics programs help maintain a moral course in turbulent times. As noted earlier in this document, Wallace and Pekel explain that attention to business ethics is critical during times of fundamental change -- times much like those faced now by businesses, both nonprofit or for-profit.During times of change, there is often no clear moral compass to guide leaders through complex conflicts about what is right or wrong. Continuing attention to ethics in the workplace sensitizes leaders and staff to how they want to act -- consistently.

Ethics programs cultivate strong teamwork and productivity. Ethics programs

align employee behaviors with those top priority ethical values preferred by leaders of the organization. Usually, an organization finds surprising disparity between its preferred values and the values actually reflected by behaviors in the workplace.Ongoing attention and dialogue regarding values in the workplace builds openness, integrity and community -- critical ingredients of strong teams in the workplace. Employees feel strong alignment between their values and those of the organization. They react with strong motivation and performance.

Ethics programs support employee growth and meaning. Attention to ethics in the workplace helps employees face reality, both good and bad -- in the organization and themselves. Employees feel full confidence they can admit and deal with whatever comes their way.Bennett, in his article "Unethical Behavior, Stress Appear Linked" (Wall Street Journal, April 11, 1991, p. B1), explained that a consulting company tested a range of executives and managers. Their most striking finding: the more emotionally healthy executives, as measured on a battery of tests, the more likely they were to score high on ethics tests.

Ethics programs are an insurance policy -- they help ensure that policies are legal. There is an increasing number of lawsuits in regard to personnel matters and to effects of an organization’s services or products on stakeholders.As mentioned earlier in this document, ethical principles are often state-of-the-art legal matters. These principles are often applied to current, major ethical issues to become legislation.

Attention to ethics ensures highly ethical policies and procedures in the workplace. It’s far better to incur the cost of mechanisms to ensure ethical practices now than to incur costs of litigation later. A major intent of well-designed personnel policies is to ensure ethical

treatment of employees, e. g. , in matters of hiring, evaluating, disciplining, firing, etc. Drake and Drake (California Management Review, V16, pp. 07-123) note that “an employer can be subject to suit for breach of contract for failure to comply with any promise it made, so the gap between stated corporate culture and actual practice has significant legal, as well as ethical implications. ”

Ethics programs help avoid criminal acts “of omission” and can lower fines. Ethics programs tend to detect ethical issues and violations early on so they can be reported or addressed. In some cases, when an organization is aware of an actual or potential violation and does not report it to the appropriate authorities, this can be considered a criminal act, e.. , in business dealings with certain government agencies, such as the Defense Department. The recent Federal Sentencing Guidelines specify major penalties for various types of major ethics violations. However, the guidelines potentially lowers fines if an organization has clearly made an effort to operate ethically.

Ethics programs help manage values associated with quality management, strategic planning and diversity management -- this benefit needs far more attention. Ethics programs identify preferred values and ensuring organizational behaviors are aligned with those values.This effort includes recording the values, developing policies and procedures to align behaviors with preferred values, and then training all personnel about the policies and procedures. This overall effort is very useful for several other programs in the workplace that require behaviors to be aligned with values, including quality management, strategic planning and diversity management.

Total Quality Management includes high priority on certain operating values, e. g. , trust among stakeholders, performance, reliability, measurement,

and feedback.Eastman and Polaroid use ethics tools in their quality programs to ensure integrity in their relationships with stakeholders. Ethics management techniques are highly useful for managing strategic values, e. g. , expand marketshare, reduce costs, etc. McDonnell Douglas integrates their ethics programs into their strategic planning process. Ethics management programs are also useful in managing diversity. Diversity is much more than the color of people’s skin -- it’s acknowledging different values and perspectives.Diversity programs require recognizing and applying diverse values and perspectives -- these activities are the basis of a sound ethics management program.

Ethics programs promote a strong public image. Attention to ethics is also strong public relations -- admittedly, managing ethics should not be done primarily for reasons of public relations. But, frankly, the fact that an organization regularly gives attention to its ethics can portray a strong positive to the public.

People see those organizations as valuing people more than profit, as striving to operate with the utmost of integrity and honor.Aligning behavior with values is critical to effective marketing and public relations programs. Consider how Johnson and Johnson handled the Tylenol crisis versus how Exxon handled the oil spill in Alaska. Bob Dunn, President and CEO of San Francisco-based Business for Social Responsibility, puts it best: “Ethical values, consistently applied, are the cornerstones in building a commercially successful and socially responsible business. ”

Overall benefits of ethics programs: Donaldson and Davis, in “Business Ethics? Yes, But What Can it Do for the Bottom Line? (Management Decision, V28, N6, 1990) explain that managing ethical values in the workplace legitimizes managerial actions, strengthens the coherence and balance of the organization’s culture, improves trust in relationships

between individuals and groups, supports greater consistency in standards and qualities of products, and cultivates greater sensitivity to the impact of the enterprise’s values and messages. 10. Last - and most -- formal attention to ethics in the workplace is the right thing to do.