Corporate Policies

Companies often have corporate ethics statements or codes that identify ethical expectations and offer guidance.

Learning Objective

Examine how corporate policies may lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters in an organization

Key Points

A corporate ethics statement is usually broad and more general than a corporate ethics code, which tends to be more detailed and identifies more specific situations that may arise.
Ethics training also takes place, in the form of seminars, discussion groups, and case studies. Often, a company will require an employee to sign an agreement stating that they will adhere to an ethical code of conduct.
There are critics of ethical requirements. Some claim that employees should be free to use their judgement to deal with ethical problems. Others feel that these requirements or codes of conduct are borne less out of a need to be ethical, and more to limit legal liability.

Terms

corporate philanthropy
charitable monetary donations (not political contributions or commercial sponsorships) by companies
utilitarianism
The theory that action should be directed toward achieving the "greatest happiness for the greatest number of people"; hedonistic universalism.

Example

There is often a disconnect between a company's ethics policies and its actual practices. For example, in financial trading environments, lying is often expected, even though it goes against any code of ethics. The 2012 Barclays LIBOR price fixing scandal is an example of grossly unethical behavior that occurred after Barclays admitted that its traders sought to intentionally manipulate LIBOR rates for financial gain.

Full Text

Due to the increase in comprehensive compliance and ethics programs, many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters. An increasing number of companies also require employees to attend seminars regarding business conduct, which often include discussion of the company's policies, specific case studies, and legal requirements. Some companies even require their employees to sign agreements stating that they will abide by the company's rules of conduct.

Many companies are assessing the environmental factors that can lead employees to engage in unethical conduct. A competitive business environment may call for unethical behavior. Lying has become expected in fields such as trading. An example of this is the issues surrounding the unethical actions of the Saloman Brothers .

Employee competition

Competition can lead to unethical behavior by employees.

Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by employees using their own judgment.

Others believe that corporate ethics policies are primarily rooted in utilitarianism concerns, and that they are mainly to limit the company's legal liability, or to curry public favor by giving the appearance of being a good corporate citizen. Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly.

Sometimes there is a disconnection between the company's code of ethics and actual practices. At worst, whether or not such conduct is explicitly sanctioned by management, the policy is duplicitous; and, at best, the code is merely a marketing tool.

Jones and Parker write, "Most of what we read under the name business ethics is either sentimental common sense, or a set of excuses for being unpleasant. " Many manuals are procedural form filling exercises unconcerned about the real ethical dilemmas. For instance, the US Department of Commerce ethics program treats business ethics as a set of instructions and procedures to be followed by 'ethics officers'. Some others claim being ethical just for the sake of it. Business ethicists may trivialize the subject, offering standard answers that do not reflect a situation's complexity.

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