Foundation Principles For A Code Of Business Ethics?

Foundation Principles For A Code Of Business Ethics?
When faced with a decision, few business professionals refer specifically to Kant or Rawls,nor do many of us proceed through formal utilitarian calculations. Instead, we factor ethical norms and personal values into our daily decisions in an informal way. Often, non-explicit consideration of ethical issues is inadequate. Confronting ethical issues requires time and energy-and sometimes courage. All of us are tempted to put ethical issues aside. Ethical theories provide a framework for analyzing and understanding problems, but on a daily basis, we sometimes need more specific and direct guidelines in order keep ethical responsibilities at the forefront. A list of fundamental principles or a code of business ethics can provide this intermediate link between ethical theory and daily decision-making. Numerous professional groups, including legal, medical, engineering, and accounting associations, publish ethical codes and establish review boards to sanction members who fail to abide by those codes. These codes establish guidelines for ethical behavior that can be applied directly to the daily decision-making process. No single association of business professionals has equal penetration within the total business environment; and no single business organization has equivalent sanctioning authority to bar and medical associations. It is probably because of this lack of a single dominating professional organization that no widely accepted code of business ethics has been devised.But the value of such a code is undeniable. It would set terms for evaluating the ethics of business decisions and would provide increased consistency in the standards we use to judge behaviors. In support of the adoption of such a uniform ethics code for businesses, Thomas Dunfee, Chairman of the Wharton School's Legal Studies Department, has proposed a list of eight fundamental principles of business ethics. Dunfee supports each of these principles on three key criteria: he believes that they are realistic, workable, and valid. They are realistic because they can be understood and implemented by managers. They are workable because the principles are not inefficient in the context of general business practice; adoption will not impose serious costs on the workings of the marketplace. They are valid because they can be justified by formal ethical analysis; that is, they are supported by one or more of the philosophical theories of ethics. Although what is generally accepted cannot define what is ethical in a broader sense, recognition by practitioners that a principle is desirable is a necessary condition for widespread observance. Dunfee has found wide-reaching consensus that these principles are correct and applicable, and he believes it is reasonable to expect that managers will voluntarily comply with them.As any list of standards will, the principles on first impression appear to be deontic or duty-based. But most, if not all, of the principles are justifiable on rule utilitarian grounds and on the basis of certain theories of social justice. Few of us adhere rigidly to a single school of ethical theory. We mix deontological, utilitarian, and social justice arguments. It is when arguments coincide that the clearest principles result. Wide-ranging theoretical views and a strong business consensus converge on this set of principles. Foundation Principles of Business Ethics 1. Exercise due care.2. Confidentiality.3. Fidelity to special responsibilities.4. Avoidance of the appearance of a conflict of interest.5. Willing compliance with the law.6. Acting in good faith in negotiations.7. Respect for human well-being.8. Respect for the liberty and constitutional rights of others. Let's examine each of the principles individually. 1. Exercise Due Care. All professionals are held to a special standard of competency and care in their work. Business managers should aspire to a similarly high standard of care. This obligation exists in regard to all work whether it be as an employee of a corporation or as a sole practitioner who provides services to customers. Firms must exercise due care in foreseeing and resolving potential problems. Failing to foresee consequences which prudent circumspection would have revealed represents professional negligence. Examples: Managers have a responsibility to oversee the actions of subordinates. Firms have a responsibility to test products adequately. Firms must assess and justify negative environmental consequences of products and production processes. 2. Confidentiality. Many business relationships require the exchange of confidential information. Managers have a responsibility to restrict uses of that information to the business situation. They should not use that information for purposes other than those expected or approved by the discloser. Managers have further responsibility to safeguard confidential information so that access is restricted to those who have a need to know. Examples: A firm involved in merger negotiations has a responsibility to safeguard information provided by a prospective merger partner. Employees should not use inside information to trade shares of the partner, and confidential information about the partner should not be disclosed to the public. Managers have a responsibility to keep employee performance evaluations confidential and to disclose them only to others in the firm who have a legitimate need to know. Management and union negotiators who have agreed to keep negotiations confidential until a tentative agreement is reached have a responsibility not to leak information to the press. 3. Fidelity to Special Responsibilities. Fidelity is a principle of devotion to duty.Duties may arise from law, contract, or implicit business relationship. Managers having special duties must give first priority to those duties. Examples: Trustees have special responsibilities to clients, as do agents and stockbrokers. Managers have special responsibilities to shareholders, employees, and all stakeholders. Employees have special responsibilities to their employer. 4. Avoidance of the Appearance of a Conflict of Interest. Business people should not place themselves in positions where they have personal incentives to take actions which could be harmful to their firms or clients-whether those incentives result from external business affairs, family relationships, friendships, or even internal firm politics.Full disclosure may in some cases resolve conflicts between competing interests. Disclosure alone may not be adequate where those who may be harmed are unable to take action to resolve their concerns. In such instances, withdrawal from the decision-making process or reference to independent authorities may be required. A personal judgment that objectivity can be maintained, even when made with great sincerity, is inadequate by itself. The standard requires avoidance of an appearance of a conflict of interest. Examples: Financial interest in client and supplier firms should be fully disclosed and resolved. Personnel officers of public companies should refrain from hiring family members or should defer decisions to others who have no personal involvement. Special incentives or unusual compensation deriving from recommendations made to clients should be disclosed. 5. Willing Compliance with the Law. Managers should willingly comply with the law. Further, they should comply with the spirit of the law and avoid attempts to circumvent the intent of legal restrictions. Managers should not readily accept weak justifications for breaking the law, e.g., "Everybody does it," or "The law is not good policy." 6. Acting in Good Faith in Negotiations. Good faith may be defined as acting fairly within the context of a transaction. An individual must be appropriately forthright and make factual statements honestly. Managers acting in good faith will conform to conventions of the industry when representing products to peers and will refrain from using industry conventions to victimize the naive. Firms should not misrepresent their products in advertising or personal selling, nor should they knowingly promise to deliver products or to make payments unless they expect to be able to do so. 7. Respect for Human Well-Being. Managers must respect the physical and emotional well-being of employees, clients, customers, and other stakeholders. Managers must give the highest priority to safety and must fully disclose known risks, both to product users and to employees in the workplace. Further, employees, clients, and suppliers should not be sexually or emotionally harassed. 8. Respect for the Liberty and Constitutional Rights of Others. Workplace restrictions on basic rights, including those pertaining to speech, religion, freedom from invidious discrimination, and access to government, may significantly compromise employees' abilities to experience the full value of those rights. Managers should give extreme priority to preserving liberties and constitutional rights, even where specific legal sanctions do not exist.