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Codes of Ethics in BusinessEssay

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Organizational Integrity in a Global Environment

Ethics are a normative code of behaviors in a society, or in the case of business, in an organization. Because of the inherent vagueness of the concept of business ethics, each organization operates with its own definitions, underlying philosophies, and in the ways that it operationalizes the idea of business ethics. The topics covered run the gamut from compliance to environmental stewardship to social justice and codes of behavior (Marcoux, 2008). Organizational and professional ethics are ultimately going to reflect the specific context of each organization or profession, and will likely address issues of particular relevance to that profession or organization -- there is not going to be any one-size-fits-all approach to orgagnizational or professional ethics.

To understand the ethical decision-making process, it is necessary to understand to main types of decisions. The first are decisions for which there are established ethics and norms. The second type is the ethical dilemma. Business ethics often gets this wrong -- the decision between doing something ethical and something unethical is not a true dilemma, even when the person makes the wrong decision. An ethical dilemma is a situation where any decision made will have negative consequences, such that the person cannot make a 'good' decision. This is because under normal circumstances, if a person has a choice to make an ethical decision, they should do so, so the dilemma only arises when there is no ethical option, but a decision must nevertheless be made (McConnell, 2014).

Ethical decision-making under normal circumstances usually arises from the contextual norms that define the environment in which the decision is being made (Chmielewski, 2014). There are different layers of ethics that can inform decision-making -- societal, organizational and personal are three of the most important ones. People form their own ethical codes, such that the ethics of most decisions are essentially programmed into a manager. An organization can influence the ways that decisions made within the organizational context, however, and there may be instances where this supersedes the prevailing societal or personal ethics of the individual. The organization, for instance frames ethics in terms of the stakeholders, ensuring that their needs are known and taken into account, and the organization can also create specific rules that can govern certain types of decisions (Scholl, 2008). For example, some companies have return policies that are fairly explicit -- there is no dilemma if a customer is unhappy with a product. Thus, even if society or the person might feel that the customer is being unreasonable and wish to resist the customer, if the organization's specific ethical code is to place priority on customer satisfaction above all else, that is going to be the behavior that manifests.

There is also argument that the decision at hand itself matters. In other words, that the ethical guidelines and norms that matter most to individuals making decisions in the organizational context are influenced by the type of decision (Jones, 1991). Intuitively, this makes sense -- people are strict about societal norms that prohibit murder, but much less strict about societal norms that argue against adultery. A similar phenomenon can be observed at the organizational level -- compare absconding with a bottle of white out vs. absconding with a company laptop. Personal variables such as one's moral code will intersect with the contextual variables such as the organization's specific norms and code of ethics, each making a contribution to how individuals make ethical decisions within the organizational context (Trevino, 1986).

The code, therefore, acts as a complement to the pre-existing ethical decision-making pathways that are informed by societal norms. The most important aspect is to ensure that the organization's code is the one that is used as the final test in decision-making. The reason for this is that the organization's code can be applied universally. Customers and other stakeholders will understand what they can expect from the company, which will allow the company to put more of a consistent face forward to the world. Moreover, there are going to be instances where the company's moral codes are stricter than the local laws, or the local norms. For example, bribery is a normal part of business in many parts of the world. But because of the moral implications, and the Foreign Corrupt Practices Act, an American corporation should ensure that its own code of ethics and norms of behavior are the default within the organization, regardless of what the local norms might be. And certaintly, having the company's own code as the final test in decision-making is essential for managing the risk associated with the variance between individual ethical perspectives.

The Harm Principle

The harm principle comes from John Stuart Mill, in On Liberty, when he wrote that "the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others" (Lacewing, n.d.). In theory, the harm principle makes a lot of sense. In practice, it is impossible to implement. First, there will always be competing interests. For example, if the company's business is shrinking, how should it respond? If it cuts staff, they suffer. If it does not, the shareholders see the value of their equity erode. Somebody must lose -- avoiding all harm is noble, but ultimately futile. The ethical code will be much stronger if it accepts the fundamental futility of the harm principle in many ordinary situations and sets out a code to allow managers to actually make decisions, rather than be paralyzed by the harm principle.

There are a number of ethical codes by which decisions can be made. Deontological ethics focuses on the morality of the situation. Consequentialist ethics focus on outcomes. Where the harm principle is strictly consequentialist, as was Mill's version thereof, utilitarianism, it is by no means the only ethical philosophy that can underpin a corporate code of ethics. Arguably, however, consequentialism is the best option for a corporate code of ethics. First, in the real world, consequences matter. Tort law, strict liability and other legal concepts all but ensure that a company cannot simply hide behind some arcane legal code when it inflicts harm upon others through its actions. Furthermore, when corporate actions influence consumer decisions, again, consumers are not bound to accept what they do not like -- so consequences again matter, where revenues and profits are concerned. A consequentialist base philosophy therefore protects against downside risk for the organization. Moreover, it forces the people within the organization to consider the consequences of their decisions. Not only is this level of critical thinking a stronger thought process than ethical codes that rely on absolute rules, but consequentialism encourages people within the organization to understand the interconnectedness of their organization with the outside world, something that should help managerial decision-making. While the harm principle is impossible and utilitarianism impractical, the reality is that consequentialism does provide the best frame for a corporate code of ethics, due to its practical applicability.

The core values and principles are therefore that the organization's employees should always be honest, and should take into account the outcomes of their decisions on other stakeholders. The laws of the land will be followed, and where there is a dilemma, harm should be minimized. The code was not based on any professional code of ethics -- there may be concepts the same, because they are all rooted in the same societal context, but ultimately the company needs to have its code proprietary code, as noted above, rather than one cribbed from a third party source with an entirely different context.

Ultimately, this code will need to be beefed up, with many pages added to provide examples, so that the employees will be able to operationalize this code in their daily business. The strength of the code is that it will be quite detailed, but remain internally consistent with respect to the general consequentialist outlook. The code will reflect Western norms, so should be fairly easy to apply in the West. In other parts of the world, this will be a weakness as the code is fairly ethnocentric. In addition, the code will never be able to cover every single situation. A last point -- and whether this is a strength or a weakness is subject to debate -- is that the code still requires a high level of critical thought, abstract conceptualization and quite frankly this does not suit everybody. While this allows for the highest standard of ethical decision-making, some people are immensely challenged by having to evaluate complex situations for themselves, so the code will not be a great fit for all people; hopefully it will be a good fit for all people making critical decisions, however.

At the head of the organization, the ethical leader is the person of power within the organization who embodies the organization's ethics, and fights to uphold those standards. The core qualities of an ethical leader are the ability to have a strong moral compass,… [END OF PREVIEW]

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