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Module 1-1: Business Ethics Participant

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Business Ethics

Overview

This unit covers the following topics:

�� What is ethics?

�� Business ethics

�� Why ethics?

�� Values and social responsibility

�� The work ethic

�� The levels of ethical behavior

�� Managing ethics in organizations

�� Ethical decision making

�� How to deal with specific unethical conduct

�� Ethics in the public service and professionalism

Objectives

By the end of this unit, you will be able to:

�� Differentiate ethical conduct from unethical conduct

�� Discuss the consequences of unethical conduct on society

�� Evaluate an ethics infrastructure in a work environment

�� Follow the steps for ethical decision making

�� Explain the importance of ethical conduct among public servants

�� Analyze the relationship between ethics and professionalism


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I have done no falsehood.I have done no falsehood.I have done no falsehood.I have done no falsehood. I have not robbed.I have not robbed.I have not robbed.I have not robbed.

I have not been rapacious.I have not been rapacious.I have not been rapacious.I have not been rapacious. I have not built a dam on flowing water.I have not built a dam on flowing water.I have not built a dam on flowing water.I have not built a dam on flowing water.

I have not killed men.I have not killed men.I have not killed men.I have not killed men. I have not destroyed food supplies.I have not destroyed food supplies.I have not destroyed food supplies.I have not destroyed food supplies.

I have done no crookedness.I have done no crookedness.I have done no crookedness.I have done no crookedness. I have not stolen the God's offerings.I have not stolen the God's offerings.I have not stolen the God's offerings.I have not stolen the God's offerings.

I have not told lies.I have not told lies.I have not told lies.I have not told lies. I have not taken food.I have not taken food.I have not taken food.I have not taken food. I have not been sullen.I have not been sullen.I have not been sullen.I have not been sullen.

I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water.I have not seen a thirsty man and refused him water. I have not killed a sacred bull.I have not killed a sacred bull.I have not killed a sacred bull.I have not killed a sacred bull. I have not committed perjury.I have not committed perjury.I have not committed perjury.I have not committed perjury.

I have not stolen bread.I have not stolen bread.I have not stolen bread.I have not stolen bread. I have not eavesdropped.I have not eavesdropped.I have not eavesdropped.I have not eavesdropped.

I have not babbled.I have not babbled.I have not babbled.I have not babbled. I have not disputed except as concerned my ownI have not disputed except as concerned my ownI have not disputed except as concerned my ownI have not disputed except as concerned my own property. property. property. property.

I have not diverted water at its season.I have not diverted water at its season.I have not diverted water at its season.I have not diverted water at its season. I have not misbehaved.I have not misbehaved.I have not misbehaved.I have not misbehaved. I have not made terror.I have not made terror.I have not made terror.I have not made terror.

I have not laid anything upon the weights of the handI have not laid anything upon the weights of the handI have not laid anything upon the weights of the handI have not laid anything upon the weights of the hand----balance.balance.balance.balance. I have not been hotI have not been hotI have not been hotI have not been hot----tempered.tempered.tempered.tempered.

I have not been deaf to words of truth.I have not been deaf to words of truth.I have not been deaf to words of truth.I have not been deaf to words of truth. I have not commanded to I have not commanded to I have not commanded to I have not commanded to kill.kill.kill.kill.

I have not hoodwinked.I have not hoodwinked.I have not hoodwinked.I have not hoodwinked. I have not made others to weep.I have not made others to weep.I have not made others to weep.I have not made others to weep.

I have not been neglectful.I have not been neglectful.I have not been neglectful.I have not been neglectful. I have not been quarrelsome.I have not been quarrelsome.I have not been quarrelsome.I have not been quarrelsome.

I have not caused pain.I have not caused pain.I have not caused pain.I have not caused pain. I have not been impatient.I have not been impatient.I have not been impatient.I have not been impatient.

I have not washed out the picture of a God.I have not washed out the picture of a God.I have not washed out the picture of a God.I have not washed out the picture of a God. I have not calumniated a servant to his masI have not calumniated a servant to his masI have not calumniated a servant to his masI have not calumniated a servant to his master.ter.ter.ter. I have not deprived the orphan of his property.I have not deprived the orphan of his property.I have not deprived the orphan of his property.I have not deprived the orphan of his property.

I have not waded in water.I have not waded in water.I have not waded in water.I have not waded in water. I have not been loud voiced.I have not been loud voiced.I have not been loud voiced.I have not been loud voiced.

I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me.I have not daily made labour in excess of what was due to be done for me. I have not impoverished my associates.I have not impoverished my associates.I have not impoverished my associates.I have not impoverished my associates. I have not made distinctions for myself.I have not made distinctions for myself.I have not made distinctions for myself.I have not made distinctions for myself.

I am not wealthy except with my own property.I am not wealthy except with my own property.I am not wealthy except with my own property.I am not wealthy except with my own property. I have not blasphemed God in my city.I have not blasphemed God in my city.I have not blasphemed God in my city.I have not blasphemed God in my city.

Egyptian Book of Egyptian Book of Egyptian Book of Egyptian Book of DeadDeadDeadDead


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Introduction

For thousands of years people have developed “elaborate and

sophisticated rules and codes” of ethics for individual and organizational

behavior (Kast & Rosenzweig, 1986, p. 25-26). For example, the Code of

Hammurabi, 2000 B.C., provided guidelines for merchants and peddlers; as far

back as the Ancient Greeks and Romans the need was felt to regulate

commercial activities. By the end of the sixteenth century, with increasing trade

activities within Europe and with increasing trade with Asian countries, trades

people were introduced to the beliefs and values of other societies.

The capitalistic ethic slowly evolved out of the increase in commercial

activities. During the later centuries, changes in the religious ethic with the

Protestant movement provided the ethical and economic climate, which was

favorable for the development of the capitalistic ideology.

In the nineteenth century, Adam Smith’s An Enquiry into the Nature

and Causes of Wealth of Nations lay the foundations of the capitalistic ethic

that has continued until today. According to Adam Smith maximizing the self-

interest of every individual would also maximize the benefit of the whole society.

The twentieth century has been a period in history when business firms

have gone through a transformation and the idea that the business firm is the

“steward of physical, human and financial resources” has developed in society

(Lessem, 1999, p.366). This philosophy led the business community to the

notion that it is best to act with consideration towards society.

In the twentieth century, the growing social awareness and activism of

minorities, women, consumer protection groups and environmentalists;

increasing trade relations; globalization of the production of goods and services

and growing global capital interaction; the rising tide of individualism and the

emphasis on self-fulfillment and self development led to a transformation of the


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basic values of the capitalistic ethic. Intangible goals rather than substantial

wealth became the main symbols of the new values.

Also all over the world individuals increasingly found out that they have to

face a conflict between their personal ethical beliefs and the organizational

pressures for performance and profits (Kast & Rosenzweig, 1986, p.34-37,

168). These developments furthermore strengthened the drive and striving for

ethical behavior in the business community.

Exercise: How did I Live Today?

Everyone should ask themselves the following questions at the end of each day: How Did I Live Today?

�� Did I practice any virtues (e.g., integrity, honesty, compassion)? �� Did I do more good than harm? �� Did I treat others with dignity and respect? �� Was I fair and just? �� Was my community better because I was in it? �� Was I better because I was in my community?

Have you ever thought about these questions before?


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What is Ethics?

Nowadays much has been said and written about ethics within the

business communities of countries. A number of people in the public and private

sector have introduced the subject into their vocabulary and various business

processes.

Ethics refers to:

�� Well based standards of right and wrong that are prescribed in terms

of human rights

�� Obligations to refrain from rape, stealing, murder, assault, slander,

fraud

�� Virtues like honesty, compassion and loyalty

�� Rights like the right to live, the right to freedom from injury, and the

right to privacy

�� The study and development of one’s ethical standards to ensure that

they are reasonable and well founded

�� Continuous efforts to assess our moral beliefs and our moral conduct

�� Trying to ensure that the institutions we help shape, have standards

that are reasonable and solidly based

How do you define ethics related to your experiences?


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Ethics is not:

�� Related to feelings. Feelings frequently deviate from what is ethical.

�� The same thing as religion. Religion can set high ethical standards

and provide motivation for ethical behavior. But, ethics is not confined

to religion.

�� Following the law. The law may encompass ethical standards and

may also deviate from ethical standards.

�� Doing whatever society accepts. A society may become ethically

corrupt.

Ethics is concerned with the right and the

wrong and the good or the bad. But generally it

is not an easy matter to decide between “right”

or ”wrong” and to differentiate between them.

Business activity often demands that we select

from alternatives that are neither right nor

wrong as a whole. (McNamara, 1999, p.3)

Therefore, it can be stated that ethics is the

study of moral issues and choices where “right”

versus “wrong”, “good” versus “bad”, and “the many shades of gray” in black-

and-white issues exist side by side.

Ethics is the code of moral

principles and values that govern the

behavior of a person, a firm or a group

of companies with respect to what is

“right” or “wrong” and sets standards

as to what is to be considered “good”

or “bad” in conduct or decision

making.

What is Ethics?

How can you illustrate ethical and unethical conduct related to these

explanations?

I suggest that one of the things which determines whether an act is

ethical or not is its effect on another’s experience or expectation of

happiness.

The Dalai Lama


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The world is full of wrongdoing. Crime, family violence, drug abuse,

employee fraud—each of these problems represents a collection of individual

acts of wrong.

Most people when faced with a choice between the right, the wonderful,

and the good on the one hand, and the wrong, the terrible, and the bad on the

other, would choose to do the right thing. However, sometimes it is tempting to

do wrong, and it often takes moral courage to make the right choice.

The four tests which are given below can be used to find out if the issue

at hand involves an ethical choice. It involves four tests that act together. While

one test by itself may not leave you completely convinced, answering either yes

or no to all four of the following questions will probably leave no doubt in your

mind that an action is wrong.

The Legal Test: Is this choice against the law? It is wrong to

pass a stopped school bus, take a candy bar without paying

the shopkeeper, cut trees on your neighbor's property, or

throw an empty bottle on to the road. More significant, it is

wrong to bribe public officials, refuse to pay the rent, pass bad

checks, or beat your spouse. These kinds of wrongdoing involve breaking the

law. You can break the law by mistake (you may not know a law exists) or on

purpose (you may not agree to follow it).

The Gut-Feeling Test: Do you feel good after making this

choice? Often our intuition can determine right from wrong

before our brains can think it through. Physical reactions often

indicate a need for more thought before taking action.

The Front-Page Test: Would you feel good if your choice

were on the front page of the local newspaper? In imagining

this, you are holding up your choice to be considered by


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everyone you know. What would your parents think? What would your friends

think in the work environment? How would you feel if your child read about your

decision?

The Role-Model Test: Name a person you respect highly --

perhaps a parent, teacher, relative, or local community figure.

If this person had to make the decision you are about to make,

would she or he make the same decision you are considering?

Sometimes imagining how someone else would decide can help clarify your

choices.

When the answer to one of the questions is “no” or “not much!” we can

be reasonably sure that some kind of action we would call "wrong" is in the

offing (Kidder, Rushworth M., 2001).

Ethics is concerned with human consequences of decisions and actions,

in order to achieve more sophisticated technology or larger market share. A

firm with an ethical outlook has a wider consideration beyond its own self-

interest: It is concerned with the interests of a wider community of people which

include the employees, the consumers, the suppliers, other companies, the

general public and even foreign governments. The ethical perspective

advocates behavior, which is better or with higher standards of conduct. This

behavior is related to behavior that is better than the standards of behavior

defended by law (Lane, DiStefano, Maznevski, 1992, p.394).

Ethical and unethical conduct is a subject that concerns the individuals

in a society, the rich and the poor nations; international, multinational and

national companies; and public officials.


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Business Ethics

Business ethics is concerned with the way firms conduct their operations.

It is concerned with truth and justice in conducting their affairs and with:

�� The expectations of society

�� Fair competition

�� Advertising

�� Public relations

�� Social responsibilities

�� Consumers

�� Behavior of companies

Figure 1: Levels of Business Ethics

* This figure was adopted from Weiss p. 142.

International

Societal

Institutional

Organizational

Individual


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Individuals and organizations act within a framework of laws. Their

actions affect other individuals and organizations or the welfare of the society as

a whole. To this degree individuals and organizations have to abide by the rules

and values set by the legal system. Courts enforce these rules and regulations.

However, laws do not regulate all actions of individuals and organizations.

There are areas where they have the free choice when making

decisions. An individual’s decision to buy “x” brand of ice cream or car; an

organization’s decision to produce “y” amount of refrigerators are not regulated

by law. Outside of these two areas, there is a third domain where individuals

and organizations have to abide by the norms of the society in which they

operate. This is called the ethical domain. In this domain the standards of

conduct are based on common principles and values of the society in general.

An ethically accepted decision is also acceptable by legal and moral standards

of the community as a whole (Daft, 1997, p.142).

Figure 2: Three Domains of Human Action * This figure was adopted from Daft, 1997, p. 142.

It is easy to make a decision when there is a law or regulation about it.

However, when individuals and organizations are faced with ethical problems a

difficult situation may arise. The individual or the organization is said to be faced

with an ethical dilemma when it is difficult to distinguish right from wrong and all

Domain of Codified Law

Domain of Ethics

Domain of Free Choice

(Legal Standard) (Social Standard) (Personal Standard)

High Amount of Explicit Control Low


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alternative choices and behaviors are considered undesirable because of the

negative ethical consequences (Daft, 1997, p.142). And, in this case, individuals

and organizations need guidelines to solve these ethical dilemmas. Then, it is

natural that organizations develop some ethical criteria to help them solve the

problems they are facing within the ethical framework. Different ethical criteria

are translated into different basis of behavior in individuals, in organizations or

in the societal framework.

Exercise: Ethical Climate Items

Some employees say that in their organization:

1. Some members of my department use their position for private gain.

2. Members of my department have misused their position to influence

the hiring of their relatives and friends in (city/country) government.

3. My supervisor encourages employees to act in an ethical manner.

4. Managers in my department have high ethical standards.

5. There are serious ethical problems in my department.

6. My superiors set a good example of ethical behavior.

How can you describe your organization’s ethical climate?

Why do we act or have to act ethically in our life?


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Why Ethics?

Basically it appears that being ethical and socially responsible is not

rational for an organization. In the short term, the costs of developing and

maintaining an ethical organization may seem to have large costs in terms of

time, effort and money. However, in the long term, the benefits of being ethical

and having a reputation for being ethical outweigh the costs undertaken in the

beginning. Nowadays investors prefer to put money into stocks of businesses

which have a reputation for being ethical and socially responsible. Investors

quickly run away from shares of unethical companies. In a progressive society,

organizations that are known to have an unethical record have a difficult job

surviving because ethical behavior is exposed to market forces (Donaldson,

1992. p.40).

Unethical conduct always leads to

increased costs for the organization and for the

consumer. It always leads to reduced quality of

the service or product, which also increases

costs and reduces customer satisfaction. It

ultimately decreases the profitability of the

organization. Low morale and cynicism, distrust

and anger dominate the unethical work

environment. Abiding by norms and procedures

becomes the norm. High personal stress levels and high employee turnover

predominate, disrespectful treatment of employees occurs, loss of work pride

and loss of meaning overcome the organization, disregard for integrity leads to

loss of work commitment (Petrick & Quinn, 1997, p.25). The ultimate result is a

decline in the welfare of the society as a whole. When all the parties stay within

Low morale

Cynicism

Distrust

Anger

High stress levels

High employee turnover

Loss of work pride

Alienation

Loss of commitment

Impact of Unethical Conduct

What is the use of running if you are not on the right track?

German Proverb


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the framework of ethical conduct, with reduced costs and increased satisfaction

there is a more equitable distribution of income in society.

Figure 3: Consistency and Integrity

Ethics sets the standards to be applied in making a choice from different

alternatives. In this context, it has some key principles that should be

considered when making a choice. In practice there are two terms that are an

inseparable part of ethics: Consistency and integrity. The same moral standards

must be applied to similar situations unless the two situations differ from one

another in relevant ways. This is the term “consistency” which ethics requires in

terms of moral standards, actions and values. “Integrity” is the term used for

people whose actions are in harmony with their values. Ethics also requires that

there be consistency among our moral standards and how we apply those

standards. Ethics also requires a consistency between our ethical standards

and our actions, as well as among our inner desires. Finally, ethics requires that

there be consistency between how you treat yourselves and how you treat

others (Santa Clara University, Markkula Centre for Applied Ethics, 1998).

Inseparable Parts of Ethics

Consistency Integrity


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The following matrix in Figure 4 shows the relationship among ethical,

unethical, legal and illegal behavior.

Figure 4: A Framework for Classifying Behavior

* This figure was adopted from Lane, DiStefano, Maznevski, 1992 p. 400

The actions or decisions that fall into quadrant 4 are legal and ethical; the

ones that lie within quadrant 2 are illegal and unethical; the decisions that

create dilemmas are the ones that fall into quadrants 1 and 3. For example, if a

manager of a chemical company refuses to promote a pregnant woman into a

job where she will be exposed to toxic chemicals, she would be acting ethically

but illegally. Marketing infant formulas in third world countries is not illegal but

unethical. Apartheid in South Africa was not illegal, but was unethical. In similar

situations one guideline may be finding ways to stay within the local law and

within high standards of conduct as well, which is a difficult decision to make.

Ethical Dilemma No Ethical Dilemma


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Exercise: Which is Correct?

Below are four courses of action which can be classified on an ethical/legal

scale and a set of examples (classified from A to H) to go with them. Please

match the corresponding number to each example and write it into the space

provided on the left.

1. Ethical and legal

2. Unethical and legal

3. Ethical and illegal

4. Unethical and illegal

……... A. To give a minister in a foreign country a present worth $50 000 with the

expectation that he will ensure your company gets a contact in that country; to

show this gift as expenditure in the firm’s accounts.

……… B. To sell 1% of the car tires you have produced although you know that

they are defective; to replace those tires if there are any complaints from

consumers.

……… C. To develop and produce an additive that would decrease petrol

consumption by 10% in cars.

……… D. To promise to give one of the representatives in the local municipal

council $100 000 if she votes in favor of your application for a local television

franchise.

……… E. To publish in your newspaper a story about the governor of the city

(who is a political opponent of your newspaper) not implicating openly but

hinting vaguely that she is hindering the use of educational funds in your state.

……… F. To gain $2 million on the stock exchange by obtaining insider

knowledge about a firm.

……… G. To develop a vaccine for preventing bone cancer which has been

approved by the relevant authorities.

……… H. To develop and sell a drug that is claimed to decrease heart attacks

before completing the necessary legal procedures.


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When conflicts arise in the ethical

domain one needs a set of rules and guidelines

in order to make a decision. Furthermore,

decision making in the ethical domain is difficult

because the meaning of “right” or “wrong” may

differ in different cultures, in different societies and at different times. It is also

accepted that apart from ethical standards legal standards may be different in

different countries and societies (Koontz & Weihrich, 1988. p. 616). Because of

the relative and abstract nature of most of the problems that arise in the ethical

domain, it is necessary to have an agreed set of guidelines and rules to follow.

Such a set of rules and guidelines also provide a guarantee of equitable and fair

treatment of everyone involved in a problem situation.

Although it is the responsibility of the individual to be ethical in any action

taken, the organizational climate has an important influence on the individual’s

conduct. In such instances, the existence of a code of conduct, which states the

clear guidelines for behavior, helps individual behavior in leading the way out of

the dilemma (Kast & Rosenzweig, 1986, p.169-170).

It is claimed by a number of managers

that if a company has a reputation of

being “ethical” it is not usually

subjected to unethical demands.

Setting the Standard

But while it is conceivable that a given act is ethically sound under one

set of circumstances the same act at another time and place and under a

set of different circumstances may not be.

Have you ever been in a situation where you had to choose between your

duties and individual values?


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Values

Values are the determinants of ethical conduct. Any decision is

influenced by the values of the individual, the organization and the society

(Chapman, 1993, p.16).

Figure 5: The Circle of Values

Individual values are guidelines used in decision-making. The individual,

like the organization, internalizes the norms set by the social group to which

he/she belongs.

Organizations exist within society. They are influenced by and operate

within the framework set by the values, norms and ideologies that are dominant

in that society. In other words, values are the guidelines for decision-making

and action in the organization. In turn “values of the organization shape its role

and activities in the society” (Kast & Rosenzweig, 1986, p. 24).

Individual

Organizational

SOCIETY

Governmental/ Educational


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The government and educational

institutions at all levels have an important impact

on societal values. So the simple process of

importing the resources of the environment and

transforming them into the goods and services

demanded by society is an act of influencing the values of society by the

organization.

On a more general context, every society

and culture has different values about how the

world does and should operate. Rules, laws,

operational procedures and perceptions about

performance levels and prescriptions of behavior

are the tools which explicitly define the norms for

most cultures. These values or norms may be

particular to an organization or common to a

society as a whole (Wart, 1998, p. 168-169).

Values are principles or standards

that guide judgment about what is

good and proper.

What are Values?

Honesty

Integrity

Independence

Obedience

Sense of accomplishment

Happiness

Pleasure

Wisdom

Love

Ambition

Some Values


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Exercise: What is Your Ethical Orientation?

Four incidents have been described below. With your personal values,

evaluate the acceptability of the behavior described in each incident. Show your evaluation on the scale below.

1 2 3 4 5 6 7

Never Sometimes Always

Acceptable Acceptable Acceptable

�� A company president was aware that sending expensive gifts to purchasing agents of other companies at Christmas and New Year might compromise their positions. However he continued the policy since it was common practice. He thought that changing it might result in a loss of business.

Your rating: ---------------

�� A government worker concealed from the public the real financial figures regarding the amount of budget money that was spent on an unsuccessful military project. The real figures would have embarrassed the government.

Your rating: -----------------

�� You are working at a customs office and you are responsible for checking documents at a busy border crossing. It is an especially crowded day. You realize that one TIR driver has handed you a fat envelope amongst his documents while at the same time telling you that he is in a hurry. You think at first glance that his documents are correct and complete.

Your rating: -----------------

�� You are a TIR driver. You go to the restrooms at a TIR parking area at a border crossing. There is a guard in the parking area. You take your time. When you come back you see that your truck is gone. After a lengthy discussion you realize that if you pay 5 000 DM the guard will return your truck.

Your rating: -----------------

Share your rating with another participant.


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Social Responsibility

The concept of “social responsibility” refers to the management’s

obligation to make choices and take actions that will contribute to the welfare

and interests of the internal and external stakeholders of a company. In Figure

6, the stakeholders of a transport company are given:

It is a shame for a person to be happy only by himself. A. Camus

Figure 6: The Stakeholders of a Transport Company

* This figure was adopted from Daft, 1997, p.151.

International Customers

Foreign Government

Truck Manufacturer

Domestic Customers

International Competitors

Domestic Government

Other Trade Associations

IRU

Transport Company

FIATA

Truck Owners

Arbitration Courts

Environmentalists

Foreign Logistic Suppliers

Media

Special Interest Groups

Investors

Domestic Logistics Suppliers

Employees/ Unions

Domestic Competition

Stockholders


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The Work Ethic

All the terms described up to this point are related to the work

environment. The major part of an individual’s life is spent in

an organization and at work. Therefore the type of work and

one’s involvement in that work defines his/her relationship with

the environment. If a person identifies with his/her work: They derive pleasure

and pride from it, he/she is a happy and content person. If the reverse is true;

then the person becomes unhappy, maladjusted and unhealthy. Therefore,

conditions in the work environment are a major factor in determining one’s job

satisfaction.

Work provides personal status and identity for a person along with other

things such as the setting life goals, providing self-esteem, providing economic

security, enforcing goal oriented activity and providing a sense of fellowship. In

different cultures the importance of work may differ, but in most cases work is a

major part of one’s life. The nature of work is changing rapidly in all societies

and the importance given to job satisfaction is increasing.

The “work ethic” defines the role of work in a society. It reflects the

importance that an individual gives to work. A strong work ethic is related to

greater earnings, initiative, job satisfaction, productivity, need for achievement

and conservative values. And the physical and mental health of an individual is

directly related to work factors such as good pay and meaningful diversity of job

activities as well as his/her self-esteem and personal life.

The factors mentioned above lead us to the conclusion that harmony in

the organization, meaningful work and good interrelationships within the

organization which includes an ethical climate, are necessary for an individual

to perform his/her job and express himself/herself in his/her job and vocation.


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Exercise: The Work Ethic Scale

1. When the workday is finished, people should forget their jobs and

enjoy themselves.

Agree completely 1----2----3----4----5 Disagree Completely

2. Hard work does not make an individual a better person.


3. The principal purpose of a job is to provide a person with the means to

enjoy his/ her free time.


4. Wasting time is not as bad as wasting money.


5. Whenever possible, a person should relax and accept life as it is,

rather than always striving for unreachable goals.


6. A person’s worth should not be based on how well he/she performs a

job.


7. People who do things the easy way are the smart ones.


8. If all things are equal, it is better to have a job with little responsibility

than one with a lot of responsibility.


TOTAL= -------------------


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The process describing the impact of work and non-work factors on the

quality of life can be seen in figure 7 below:

Therefore ethical or unethical behavior cannot be differentiated from the

dominant factors of an organization, society and the culture the individual is a

member of.

Family satisfaction

Quality of Life

\

Work Factors

Good pay

Variety in job activities

Self-esteem

Non-work Factors

Job Satisfaction

Life Satisfaction

Physical health

Mental health

Individual Differences

Figure 7 : The Impact of Work and Non-work Factors on the Quality of Life

* This figure was adopted from Kreitner & Kinicki, 1992, p.59.


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The Level of Ethical Behavior

The Individual

A number of different factors influence an individual towards behaving

ethically in an organization. As seen below, there are the cultural,

organizational and environmental factors in addition to an individual’s

characteristics that influence a person to act ethically or unethically. At the

centre of this model lie the individual’s personality, values and past experience.

The personal experience of being rewarded for certain behavior and being

punished for others shape the individual’s tendency to act ethically or

unethically (Kreitner & Kinicki, 1992, p.109).

Figure 8: A Model of Ethical Behavior in the Workplace

* This figure was adopted from Kreitner & Kinicki, 1992, p. 109.

Cultural Influences

Political/Legal/ Economic Influences

Individual Organizational Influences

�� Ethical codes �� Organization culture �� Perceived pressure

for results �� Reward/Punishment system

�� Personality Ethical �� Values �� History of Behavior

reinforcement

�� Family �� Education �� Religion �� Media/

Entertainment


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Factors like one’s family background, the type of education received,

religion, the values and lifestyles supported by the media and the entertainment

world also influence the decisions made to be ethical or not.

An important set of organizational factors such as the presence of a code

of ethics; an organizational culture which supports or undermines ethical

behavior; role models of the leaders in the organization; the perceived pressure

for results in the work environment; and, the reward and punishment systems in

the organization set the medium and influence the ethical and unethical

behavior in an organization (Kreitner & Kinicki, 1992, p.109-110).

Finally, the focus of the legal, political and economic environments of the

organization are the important influences which will shape an individual’s

perceptions of what is “right” or “wrong”, “good” or “bad”.

The individual has to be conscious of the ethical aspects of different

situations to be able to make a choice on the matter. Ethical consciousness of

an individual can only be developed through education and training which starts

with the family the child is raised in. The schooling system will either reinforce

the teachings of the family or undermine it. In the later years, the other

environmental factors such as the culture of the organization and the dominant

behavior patterns in the society will be decisive in the development of a

person’s consciousness and his/her acceptance of considering ethical issues as

relevant decision making parameters.

Figure 9: Steps of Ethical Awareness

Ethics Perception Ethical Awareness Ethics Sensitivity


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Ethical sensitivity is the

capacity to value the relative

importance of the ethical

dimensions or features of a

situation. Some managers may be morally

perceptive but morally insensitive; that is they

“see” the ethics issue but assign little importance to it. Being morally sensitive

does entail the capacity to appropriately demonstrate four key elements of

sensitivity: Empathy, sympathy, moderation, and indignation.

Ethical perception is the capacity of a person to “see”,

“recognize”, or “discover” the ethical dimensions or features of

a situation.

Ethical awareness is the capacity of the individual to perceive

and be sensitive to relevant moral issues that deserve

consideration in making choices that will have a significant

impact on others. The stage of ethical awareness, therefore, is

composed of two steps: Ethical perception and ethical sensitivity.

The indivudual’s overall state of heart and mind or motivation, in the

moment of action is, the key to determining its ethical content. It’s easily

understood when we consider how our actions are affected when we are

gripped with powerful negative thoughts and emotions such as hatred

and anger.

The Dalia Lama

Empathy

Sympathy

Moderation

Indignation

Key Elements of Sensitivity


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The Organization

An organization’s culture either encourages and supports ethical

behavior or gives no importance to it. If bribery is considered to be the accepted

way of doing business with customs officials, the employees of an organization

doing business at customs will see no harm in bribing them. They will believe

that if they do not abide by the unwritten rules of conducting business; by the

socially accepted way, then they will not be able to achieve their goals. But if

bribery is considered to be an unacceptable way of conducting business, they

will not readily try to bribe customs officials. In turn, the customs officials will not

coerce them to give bribes in return for their legal right to conduct business.

Table 1: Factors that have an Effect on the Ethical Values of an Organization

Another factor which is an important determinant of an ethical

organization is the trust atmosphere in the work place. People working in an

organization have to develop a trustful relationship to be able to perform their

assigned tasks efficiently and form a team.

In your opinion, does developing a trustful relationship or climate in the

workplace affect the employee’s performance and efficiency ?

�� Written formal rules and regulations

�� Policies

�� The reward system

�� Importance given to individuals

�� The recruitment system

�� Emphasis on professional and legal standards

�� The example set by the leader

�� The decision process


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To build and maintain a trustful relationship in a team or an organization,

the following guidelines are to be followed:

�� Communication – The team members and subordinates have to be

kept informed about policies and decisions with accurate feed back.

One should always be open and candid about one’s problems and

limitations.

�� Support – One should always provide help, advice, coaching and

support to team members.

�� Respect – In a respectful relationship there is a delegation of

decision making authority.

�� Fairness – Performance appraisals should be impartial and objective.

�� Predictability – One should always be consistent and predictable.

�� Competence – One should be able to show one’s technical

expertise, business sense and professional attitude (Kreitner &

Kinicki, 1992, p.408.).

The Society

The cultural values of a society have influences on the conduct of those

in that society. The most prominent cultural values related to ethics can be

listed as:

�� Honesty – is the most important value on the list. If people are not

honest it is difficult to maintain a medium of communication amongst

people.

�� Consistency – is the characteristic that relates actions to certain

principles rather than whims.

�� Coherence – is the reasoned attempt to harmonize principles.


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�� Reciprocity – is the reasoned attempt to act towards others as you

would have them act towards you under similar conditions.

(Steidlmeir, 1992, p. 29).

Dominant societal values are the key determinants of an ethical climate.

Unless these values are supported by society, it is difficult to devise an ethical

climate both in private and public sector organizations.

Trust relationships arise here as well.

Research shows that in societies where there is

a high level of trust among individuals and

organizations, the economic wealth of the

nation increases faster. In societies where

there is a low level of trust among members economic development is slower

and the country is poorer. Therefore one of the necessary factors of trustful

relationships is an ethical standpoint.

Managing Ethics in the Organization

Ethical dilemmas occur frequently in the workplace both in the private

and public sector. Employees need help in identifying ethical problems and

situations (Boone & Kurtz, 1999, p.48). Organizations are responsible for

making it clear to their employees the type of behavior expected of them.

Managers are also responsible for providing and maintaining an ethical

environment so employees can perform their duties efficiently and provide

guidance to subordinates (Lane, DiStefano, Maznevski, 1992, p.399).

Improving the ethical climate of an organization also improves the

relationships with stakeholders as well as the profitability and image of the

organization in the society.

Trust

Ethical environment

Democracy

Musts for Development

How can these values affect the society as a whole ?


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Management has to build an ethics infrastructure to promote ethical

behavior in an organization. The key variables of an ethics infrastructure are

summarized in Figure 10.

Figure 10: Key Variables of an Ethics Infrastructure

* This figure was adopted from OECD, 1996, p. 28.

These elements are essential for creating an ethical climate in an

organization. They are also the guidelines for managerial action.

Coordinating Body

Professional Socialization

Legislative Framework

Codes of Conduct

Accountability and Control

Public Service Conditions

Commitment

Political Leadership

CONTROL

GUIDANCE

MANAGEMENT

Public Involvement

and Scrutiny

200195190185180

175170165160

1551 50

Mill io

ns

of

Do

llars

19921991199 0

Prod uction Costs

Unit Price

Profi ts


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The most commonly used methods employed to create and maintain an

ethical environment can be described as the example set by the leader, an

organizational code of ethics, ethical structures such as an ethical committee or

an ethical ombudsman and a climate and organization that encourages whistle

blowing.

Leadership by Example

If the chief executive officer in an

organization is committed to high ethical

standards, the employees at lower levels have

a visible and powerful example to follow. When

middle level managers and lower level

employees see that their superiors are taking

ethical problems seriously and trying to resolve them, it becomes the most

expressive message for them that their company values ethical behavior

(Wood, 1990, p. 246).

The top management of an organization plays an important role in setting

up an environment which is morally encouraging to employees. The actions and

decisions of top management are the guidelines for employees to follow.

Also, it is important that top management should not force others in the

organization into unethical conduct in order to accomplish unrealistic results

(Kast & Rosenzweig, 1986, p.168-169).

To improve and maintain an ethical

environment in the organization is the

job of top management and should be

linked clearly to a reward and

punishment system.

Top Management Role


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Organizational Code of Ethics

Sometimes individuals and organizations find themselves faced with

issues which are not defined by laws and regulations. Mostly, these areas can

easily be regulated by a code of ethics within or outside an organization.

Usually organizations and professions tend to devise a code of ethics to guide

the behaviors of their members.

A code of ethics mainly defines the

values and principles that should guide

decision-making. It shows the world the values

and principles the organization abides by in the

conduct of its operations.

A code of ethics is the values statement

of an organization.

Code of Ethics

Exercise: Who do you respect?

Who do you respect most of all? We are not talking about people you love,

like, envy or choose to be around, but the people you respect.

You may not know some of the people you respect. Some of these people

may be a world leader like Atatürk or Mother Theresa, who dedicated her life to

helping others. Maybe you think of your parents who raised you well against

heavy odds. Maybe your most respected person is an athlete who overcame a

handicap. Whoever they are, they are the people who have earned respect by

being hard workers who are true to their values.

Managers don’t earn the respect of their subordinates by dressing in the

corporate uniform or being “nice people”. They earn respect by being

principled, acting fairly, deciding reasonably, respecting rights. You will have

to earn the respect of your subordinates before you can expect their

commitment to your agenda.

How can you describe respected people?


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A code of ethics may also list the principles within which the company

treats its stakeholders. Or, it may be a statement of policies which guide the

decisions the managers make. These statements may be concerned with

marketing practices, conflicts of interest, law abiding, gifts, political

contributions, bribes and kickbacks, handling of corporate assets and equal

opportunities or confidentiality of information. The code should be kept simple,

easy to understand at all levels of the hierarchy.

Such an ethical code should also have an accompanying information

system to detect any violations. And, all the violators of the code should be

treated equally in punishment.

It is advisable for businesses to develop and maintain policies and

procedures that will assist them in conforming to the principles set down by the

code of ethics. These policies and procedures may include control instruments

such as forms, report formats and checklists to ensure adherence to the code of

conduct.

Or they may be defined through job descriptions by highly valuing

technical knowledge, creativity or systems thinking; or they should be described

in the criteria for performance appraisals by rewarding advanced degrees,

design skills, patents etc; or in addition, they should be declared in the policies

regarding responsiveness to customer inquiries.

These policies and procedures should also include measures to

implement in case of unethical behavior or in a grievance policy for employees

to resolve disagreements with supervisors and staff (McNamara,1999, p. 14).


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Figure 11: Developing a Code of Ethics Process

A Code of Ethics that has been developed for the Transport Industry is

given in the following table.

Data Intake & analysis

Keep leadership informed

Draft your code of ethics

Field test the code& make

any final revisions

Decide on goals & meaning

of success

Revise & update regularly

Create a code development

task force

Obtain Board approval of final draft

Get leadership

buy-in

Submit code to leadership

for review

Have the code reviewed by your legal counsel

Decide on communication

& education strategy

Does your organization or sector have a code of ethics?


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Table 2: A Model Code of Ethics for the Transport Industry

A Code of Ethics for the Transport Industry

1. To avoid misrepresentation in all business dealings, recognizing that

permanent business relations on a professional level can be maintained only

on a basis of honesty and fairness.

2. To buy and sell on the basis of value, recognizing that value represents that

combination of quality of service and price which assures the greatest

ultimate economy to the user.

3. To respect obligations incurred and neither express nor imply a performance

which you cannot reasonably expect to fulfill.

4. To adjust and settle disputes on the basis of facts and fairness only.

5. To recognize that character is the greatest asset in commerce, and to give it

consideration in all business transactions for the betterment of the profession.

6. To avoid statements tending to injure or discredit and to divulge no

information acquired in confidence with the intent of giving or receiving an

unfair advantage in a competitive business transaction.

7. To provide, accept or demand no gifts or entertainment in the guise of sales

expense, where the intent or effect is to unduly prejudice the recipients in

favor of the donor; and to renounce all forms of commercial bribery.

8. To strive consistently for knowledge and the growth of knowledge within the

profession.

9. To counsel and accept counsel from colleagues whenever the occasion

permits, in the furtherance of the profession.

10. Not to use the fraternity or allow the fraternity to be used for overt commercial

purposes.


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Ethics Committees and Ethics Ombudsman

Organizations may set up different structures to shape and maintain the

ethical environment of their company. A code of ethics should make it clear to

all members of an organization the behavior expected from them. In addition,

measures should be taken to enforce the code. Ethics committees are one of

the most common structures to follow up adherence to the code. The members

of the committee may be selected from among the directors of the organization

and should include members from outside the company. Outside members will

ensure that organizational relationships and politics do not interfere with

decisions of the committee.

Table 3: The Job of the Ethics Committee (Koontz & Weihrich, 1996, p. 611-617).

An ethics committee will be an agent to enforce the code.

The committee will:

�� Review and update the code periodically

�� Recommend rewards for personnel that are diligent in adhering to

the code

�� Advise punishments to those who violate the code

�� Organize meetings to introduce and explain the code to all working

in the organization

�� Make decisions on issues which are not clear on ethical grounds

�� Check all actions for possible violations of the code

Do you have an ethics committee in your organization?


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Whistle Blowing

If an employee thinks at some point that the practices of his/ her

organization are illegal, immoral or inefficient, he/she informs legal authorities or

others in the organization of the problem. This is whistle blowing. One other

imperative is to resign without telling anybody. However, a lot of people would

consider whistle blowing rather than resigning without informing anyone about

the misdeeds. However, whistle blowing may be an embarrassing experience

for the organization as a whole. And, especially in the public sector the media

serves as a very powerful watchdog over the actions of the public officials and

big companies.

* This case was adopted from Solomon, C. Robert & Hanson, R. Kristine, 1983.

Case Study: Unstable Worker

A worker in an airplane manufacturing firm’s design department is

convinced that the latch mechanism on a plane’s cargo door is not sufficiently

secure and that the door has to be redesigned in order to insure against the

possibility of an accident. He goes to his supervisors with this information and is

told that the Federal Aviation Administration has given the legitimize approvals and

that he should not “rock the boat”. He goes to the president of the firm and gets the

same answer.

Would the worker be justified in taking this information to the media?

Some Comments:

�� Yes, if he is prepared to accept the consequences.

�� No, he should go first to the Federal Aviation Administration.

�� The worker, if he is absolutely sure of his belief, he should go to the media.

�� Yes, after resigning.

�� What do you mean, “justified”? If he’s right, of course the answer is “yes”.

1. How would you answer the question?

2. Have you ever been in a similar situation to this?


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It is necessary for top management to take precautions in order to

decrease the chances of whistle blowing in the organization.

Below are the possible measures that can be taken to discourage whistle

blowing:

Table 4: Precautions to Decrease Whistle Blowing (Kast&Rosenzweig, 1986, p.170-171).

Management Development and Training Programs

Management development and training programs that have ethical

themes and guidelines about ethical decision-making and that contain some

case studies that deal with resolving ethical problems may help all concerned to

identify ethical issues, these will equip organization with the knowledge of

possible approaches to ethical issues, provide them with a key to assist in the

making of an acceptable decision in order to resolve the ethical issue at hand.

These programs should interpret the code of ethics of the organization in order

to make clear all the issues that may be encountered. A development or training

program will also evaluate and emphasize the decision processes on ethical

issues in the organization and enable participants to apply the steps of the

�� Encouraging an open environment where employees may freely express

controversial views.

�� Develop an effective grievance procedure so that employees can get a

direct, fair and prompt hearing.

�� Develop awareness of the social responsibilities of the organization

whereby all employees have a contribution to the organization’s social

performance.

�� Recognize and communicate to all employees a respect for their

individual consciences.

�� Recognize that dealing harshly with a whistle blowing employee may

result in negative publicity and public reaction.


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decision making process. Such programs will also help participants to become

aware of the possible outcomes of ethical situations and decisions.

Ethical Decision Making

Do you think that training programs are an effective way of increasing

sensitivity and awareness towards ethical issues?

Exercise: Decision Making

Take the quiz below and see if you have any trouble in reaching a decision.

If you were given a choice, which option would you choose?

a) Abandon marketing a very profitable product, or b) Maim thousands of babies

a) Earn an honest profit, or b) Steal millions from taxpayers?

a) Tell a few lies, or b) Save a few people from serious injury?

It is easy to make a choice in the above questions. However, there are situations where the choice is not as clear, not as black and white:

�� It becomes clear that after trying every possible avenue within the company that no one is going to correct a safety problem you have pointed out in the new trucks under production. Should you “blow the whistle” and take your information outside?

�� A senior executive in your company insists that you offer a summer job to his niece in your department. Should you do it?

�� The chief engineer gives you a batch of test data to write up and tells you to “smooth the curves”. Should you do it?


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In decision making situations it is best to approach each situation

according to its unique set of characteristics. In addition, a person that is fully

aware of the situation and who has access to all the facts should make the

decisions.

Ethical decision-making is first based on the distinction between

statements that are factual and those that are value-based. Factual statements

may be divided into true ones and untrue ones. It is wise to base decisions on

truth, rather than build them on lies.

Value statements may be divided into those involving right and wrong,

and those that involve two rights, both of which can claim some influence on the

decision. When you come to the latter, you must decide on what the two rights

is based, and which has precedence. Some perspectives may involve the end

outcome: others the rules and still others care and love. Some are a mixture of

all three. Ethical thinking and decision-making deals with the defense and

evaluation of that value perspective that eventually decides the case.

In addition to the above considerations, the ethical decision making

process has to take into account:

Ethical Decision Making

Factual Statements

True

Untrue

Value Statements

Right

Wrong

Figure 12: Statements of Ethical Decision Making


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�� The personal traits of the decision makers

�� The organizational traits

�� The decision process of the organization

Steps in Ethical Decision Making

In organizations people should have a clearly defined path to follow in

tackling ethical decisions. The first step when making a decision about a

problem is defining the problem. Therefore, before starting the process it is

necessary to decide if there is an ethical problem at hand.

Figure 13: Steps in Ethical Decision Making

Defining Ethical Situations

To identify if one is involved in an ethical situation, one may ask the

following questions:

�� Is someone likely to be hurt in this situation?

�� Is anyone being coerced, manipulated or deceived?

�� Is there anything illegal about the situation?

�� Does the situation feel wrong?

Step 1

Evaluate Alternative Actions

Get the Facts

Define Ethical Situations

Choose One of the Alternatives

Act, Then Reflect on the Decision Later


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�� Would you be ashamed to tell your best friend, your spouse or your

parents?

�� Do the outcomes; appear to be positive or negative?

�� Do you have the right or a duty to act in this situation?

�� Are you denying and avoiding the situation?

If the answer to any of the questions is positive, then you are faced with

a choice involving ethical values (Wood, 1990, p.218-219).

Get the Facts

After answering the above questions, you should then answer the

following questions in order to develop alternative courses of action:

�� What are the relevant facts of the case?

�� What individuals and groups have an important stake in the outcome?

�� What are the options for acting?

�� Have all the relevant persons or groups been consulted?

Evaluate the Alternative Actions

To be able to evaluate alternative courses of action you should first

answer the following questions:

�� Which option will produce the most good and do the least harm?

�� Which option respects the rights and dignity of all stakeholders?

�� Which option would promote the common good?

�� Which option would enable the deepening or development of those

virtues or character traits that we value as individuals? As a

profession? As a society?

Step 2

Step 3


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Choose One of the Alternatives

Finally, by answering the following questions, one should choose

the alternative best suited to their conditions:

�� Which of the options is the right thing to do?

�� If you told someone you respect why you chose this option, what

would that person say?

Act, and then Reflect on the Decision Later

Once you make a decision, it is best to take action as decided.

After taking action you will have to evaluate the decision and the

results achieved. You should answer the question below for an

evaluation of the decision and its outcome. Such an evaluation will serve as a

guideline for future ethical problems and decisions.

�� How did it turn out for all the concerned? If you had to do it over

again, what, if anything, would you do differently? (Santa Clara

University, Mark Kula Centre for Applied Ethics, 1998).

Step 4

Step 5


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Exercise: Make a Decision

�� You are negotiating the wording of a proposed new customs rule with a

customs official. She hints that she will soon be leaving government service

and will be ready for a new position. Should you offer her a new job in your

transport company?

�� You arrive at your new international post, and your new boss tells you that

everyone here is “on the take” and you are expected to grease some palms in

order to do business in the country. Should you do it?

�� Your boss gives you the petty cash accounts of your department and tells you

to work on it so it conforms to legal accounting rules.

1. Make a decision about the above by using the ethical decision making steps.

2. What are your solutions? Discuss.


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How to Deal with Specific Unethical Conduct

Figure 14: Actions against Perceived Unethical Practices

* The figure was adopted from Kreitner&Kinicki, 1992, p.112.

Fighting with unethical conduct in an organization is a difficult endeavor.

As with all managerial action, one needs courage, patience and support from

others in the organization. Some luck is also necessary. As some unethical

actions may also be illegal or against regulations, it is essential that all actions

be documented in order to support one’s case.

Have you ever been in a situation where the type of action you took was

individual or collective?

Degree of Situational Support

High/Much Low/Little

Type of Action Taken

Individual

�� Amount of time available �� Personal leadership ability �� Trustworthiness of authority figures �� Tolerance of dissent in organization’s

culture �� Potential for win-win outcome

Type of Action Taken


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The key contingency variable is the situational support one can obtain in

an organization. The amount of time available to follow up the case, leadership

ability, trustworthiness of authority figures, the organizational climate in respect

to dissent and the effects the end result will have on the parties involved in the

case will decide the degree of support one can receive. If these factors are low,

then one has to act alone.

Depending on the situational factors one

can blow the whistle publicly or secretly inside

or outside the organization. Instead of blowing

the whistle the offenders may be warned.

Another strategy may be to refuse to implement

an unethical policy, practice or order. Or,

alternatively if the case is relevant, one may

refuse to take part in any cover up action.

Ethics in the Public Service

In the private sector ethics concerns the stakeholders of

the companies involved in unethical conduct. However, in the

public sector unethical behavior has wider repercussions on a

larger number of stakeholders and mostly the public.

Therefore unethical conduct concerns the whole society and results in the

allocation of scarce resources inequitably among the participants rather than

the equitable distribution of wealth amongst the population.

Can you give an example of unethical behaviour which can be observed

both in the private and the public sector?

Collect support

If not, go alone

Whistle blow publicly

Whistle blow secretly

Refuse to implement an unethical policy, practice, order

Refuse to take part in a cover up

Situational Support


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In the public service, the main goal is to optimize public value that is a

completely different concept from optimizing the market value of a firm.

Furthermore, public officials deal with decisions that affect ordinary people’s

lives; they decide on behalf of the public and make decisions concerning the

use and allocation of public resources. In making these decisions they have to

consider the political demands of their public. Although their decisions have a

relevance to the political environment they are operating in, public officials are

in a position of trust. And, theoretically they are expected to consider and

maintain the society’s diverse economic, social and political values. In addition,

they are not under pressure to rapidly improve quantity, quality, costs and the

time of service delivery like the private sector. Overall, they are expected to be

fair. The public sector has the responsibility of being efficient and effective in the

use of the public’s resources (Wart, 1998, p.146).

The integrity of politicians and public servants is a critical ingredient in a

democratic society. Public servants use discretionary power in their work all the

time in the allocation of public resources, in their interface with the public and in

their policy making. And, ethical decision-making is an important ingredient in

the use of this discretionary power and ensures the quality and credibility of the

public service (OECD, 1996, p.15).

Ethics in the public service is also

important because it provides the preconditions

for the making of a good public policy

(Thomson, 1992, p.255). The maintenance of

What are the effects of the actions of politicians and public servants in the

public sector?

Why are public service ethics important?

Public service ethics are a prerequisite

to public trust, and are a keystone of

good governance.

Ethics is for Good Governance


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democratic values, such as individual dignity, liberty, freedom, fairness,

neutrality, responsiveness, equity, due process, participation, openness and

accountability depends on the existence of an environment where ethical

behavior is an accepted norm. Ethics make democracy safe for debate on the

substance of public policy (Thomson, 1992, p.256). And, public confidence for

government depends on ethical conduct (OECD, 1996 p.62).

Trust is a prerequisite of ethical behavior. Building trust in public

institutions is a major challenge for the governments of today.

The public servant’s position amongst his/her superiors, the public and

the laws of the country puts him/her in an especially difficult position when

making decisions. He/she has to be loyal to his/her superiors; he/she has to be

considerate of the citizens; and he/she has to be exemplary in obeying laws.

Figure 15: The Bureaucrat’s Ethical Relations

Superiors Citizens The Bureaucrat

CONSIDERATION LOYALTY

The Law


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Obedience to law is the cornerstone of public service ethics.

And in the legal domain, the constitution of a country is the

guideline to all the values and constraints in daily decision-

making. The constitution also defines the duties of public

servants, to guide the public on what they should expect of public

administrators. The public servant is also the most knowledgeable expert on the

workings of the government and is therefore able to advise the public on the

making and interpretation of the constitution and laws (Chapman, 1993 p.162-

163).

The constitution and laws serve as a check and balance system against

public servants or public administrators wielding excessive power. And, they

also serve as the guidelines for expected conduct.

In the public sector political commitment is the key ingredient in the

existence of an ethical climate. If government leaders do not openly condemn

unethical conduct in public, all efforts to improve ethical conduct in the public

service will be useless. In the public service, in some countries, external

mechanisms such as legislative and parliamentary committees or whistle-

blowing provisions are used.

It is particularly difficult to reach a

decision in the public sector if no guidelines

of proper conduct are devised for different

situations. Public service codes of ethics are

statements of principles and standards that

define and regulate the right conduct of civil

servants this is the same in the private

sector. In the public sector codes of conduct

are more widely used because they concern the whole society rather than the

particular stakeholders of a company.

Care values

Impartiality

Legality

Integrity

Transparency

Efficiency

Equality

Responsibility

Justice

Core values in OECD Countries


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ANNEX

International Code of Conduct for Public Officials

I. GENERAL PRINCIPLES

1. A public office, as defined by national law, is a position of trust, implying a duty to act in the

public interest. Therefore, the ultimate loyalty of public officials shall be to the public interests

of their country as expressed through the democratic institutions of government.

2. Public officials shall ensure that they perform their duties and functions efficiently and

effectively, in accordance with laws or administrative policies, and with integrity. They shall at

all times seek to ensure that public resources for which they are responsible are administered

in the most effective and efficient manner.

3. Public officials shall be attentive, fair and impartial in the performance of their functions

and, in particular, in their relations with the public. They shall at no time afford any undue

preferential treatment to any group or individual or improperly discriminate against any group

or individual, or otherwise abuse the power and authority vested in them.

II. CONFLICTS OF INTEREST AND DISQUALIFICATION

4. Public officials shall not use their official authority for the improper advancement of their

own or their family's personal or financial interest. They shall not engage in any transaction,

acquire any position or function, or have any financial, commercial or other comparable

interest that is incompatible with their office, functions and duties or the discharge thereof.

Also, in the public sector professional codes of conduct are necessary to

define the guidelines for the particular profession with reference to the specific

problems faced by those professionals.

Table 5: International Code of Conduct for Public Officials

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Do you think that all countries can have the same code of conduct in their

public services?


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5. Public officials, to the extent required by the officials' position, shall in accordance with

laws or administrative policies, declare business, commercial and financial interests, or

activities undertaken for financial gain that may raise a possible conflict of interest. In

situations of possible or perceived conflict of interest between the duties and private interests

of public officials, they shall comply with the measures established to reduce or eliminate

such conflict of interest.

6. Public officials shall at no time improperly use public moneys, property, services or

information that is acquired in the performance of, or as a result of, their official duties for

activities not related to their official work.

7. Public officials shall comply with measures established by law or administrative policies in

order that after leaving their official positions they will not take improper advantage of their

previous office.

III. DISCLOSURE OF ASSETS

8. Public officials shall, in accord with their position and as permitted or required by law and

administrative policies, comply with requirements to declare or to disclose personal assets

and liabilities, as well as, if possible, those of their spouses and/or dependents.

IV. ACCEPTANCE OF GIFTS OR OTHER FAVOURS

9. Public officials shall not solicit or receive directly or indirectly any gift or other favours that

may influence the exercise of their functions, performance of their duties or their judgement.

V. CONFIDENTIAL INFORMATION

10. Matters of a confidential nature in the possession of public officials shall be kept

confidential unless national legislation, the performance of duty or the needs of justice strictly

require otherwise. Such restrictions shall apply also after separation from service.

VI. POLITICAL ACTIVITY

11. The political or other activity of public officials outside the scope of their office shall, in

accordance with laws and administrative policies, not be such as to impair public confidence

in the impartial performance of their functions and duties.


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Professionalism

A profession is defined as “a calling requiring

specialized knowledge and often long and intensive academic

preparation; a vocation”.

A professional is someone “engaged in one of the learned professions”;

or “one that engages in a pursuit or activity professionally”.

Professionalism is defined as “the conduct, aims or qualities that

characterize or mark a profession”.

The three main tasks which are the purpose of public service have been

listed as being:

�� A facilitator of a dialogue in society

�� Being a steward of the society’s resources and

�� Providing leadership in the resolution of technical and social problems

And in performing these tasks it is advocated that the public service

should have a vocational calling which is defined as “professionalism”.

There are some attributes for an ideal profession. These characteristics

are given in the table below:

Universal responsibility also leads us to commitment to the principle of

honesty. The Dalai Lama

Do you think that transport industry is well organized as a profession?


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Table 6: Characteristics of ‘Ideal’ Professions

Values of Professionalism

Professionalism has values of its own that guide behavior in its practice.

It brings many values to the public sector and helps its legitimization.

The expertise of professionals allows them to have greater control over

their work that is a determinant of job satisfaction. Professionalism requires

one to keep abreast of new developments in their field, which is an innovative

approach for the public service.

�� The professional practice is based on a body of abstract knowledge which to

be adequately mastered requires a lengthy period of education, training,

apprenticeship and/or internship.

�� Standards for preparatory training, entry into journeyman status, and

continuing competence are established and enforced by the profession.

�� The sternest measure a profession can take against one of its members is

expulsion from the profession.

�� The profession’s primary purpose is to serve a given societal need, and

practice of the profession is done under the legitimization of that society.

�� Members of the professions are bound by an oath and/or ethical code which

place altruistic service and the good of society among its goals.

�� There is collegial sense among the members of the profession, where each is

subject to the dictates of the profession, yet charged with insuring the

integrity of it at the same time. One’s behavior is controlled by rules made by

his/her compatriots while at the same time each individual, as part of the

larger group, is prescribing and monitoring the behavior of colleagues with

whom they share a professional and, not infrequently, a personal bond.

�� Viewed in the strictest sense, members of a profession must be prepared to

make the supreme sacrifice when their society is in chaos.


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This innovative approach is necessary for

the public service to serve the needs of the

society which is evolving at a faster rate then

ever before. Thus, client satisfaction, which is a

requirement in professional practice, in turn

means the satisfaction of the needs of the

community as a whole (Wart, 1998 p.74-75). Professionalism in the public service makes sure that there is continuing

professional training and education; that public servants are involved in

professional associations which have codes of conduct and ongoing

improvements in the practice of the profession; they are continuously required

to follow the literature related to their field; and, keep a sense of responsibility

for the professional role (Gartner, 1991, p.155). Professionalism in the public

service ensures that diverse viewpoints and values in a pluralistic system are

used in policymaking and implementation (Gartner, 1991, p.155).

Professional socialization mechanisms, such as orientation programs for

new entrants to the profession, training programs and good role models from

the profession are essential elements of the vocation. In most professions it is

common practice to have an official body like a professional institute, which

prescribes the principles of conduct for the whole profession. Such an institute

usually also reviews the codes of conduct and makes the necessary

improvements in the principles and regulations according to the changing

values in society. Such an institute also gives counseling services to its

members and acts as the controlling agent for adherence to the code of conduct

with special rights to deal with grievances. And, it may impose remedial or

disciplinary measures against those who breach the regulations for proper

conduct.

Expertise

Autonomy

Profession as a calling

Service to clients

Self regulation

Some Professional Standards


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Summary

Ethical conduct is a global subject that concerns the individuals in a society, rich

and poor nations: International, multinational and national companies and public officials.

Meaningful work and good interrelationships within the organization of which an

ethical climate is an important area are necessary for an individual to perform his/her job

and express him/herself in his/her job and vocation.

Individuals and organizations act within the framework of laws when their actions

affect other individuals and organizations or the welfare of the society as a whole.

However, laws do not regulate all the actions of individuals and organizations. There are

areas where they have free choice in making decisions. Outside of these two areas, there

is a third domain where individuals and organizations have to abide by the norms of the

society in which they operate. In the ethical domain the standards of conduct are based

on the common principles and values of society in general. An ethically acceptable decision

is also that which is accepted by the legal and moral standards of the community as a

whole.

Principles guide the behavior of the individual: Whereas rules and procedures

guide behavior in an organization and laws and professional codes guide behavior in a

society. Therefore, it is natural that organizations develop some ethical criteria stated in

codes of conduct to help them solve the problems they are faced with.

Ethical conduct is also important in the public sector where decisions affect the

welfare of the whole society. Therefore, professionalism is an important factor in the public

sector in developing and maintaining an ethical environment.


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Key Terms

Business Ethics Sensitivity

Code of Ethics Ethics Ombudsman

Ethics Professionalism

Ethics Awareness Social Responsibilities

Ethical Behaviour The Work Ethic

Ethics Committee Values

Ethical Decision Making Whistle Blowing

Ethics Perception


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Progress Check

1. What is ethics concerned with?

a. The right and the wrong, the good and the bad

b. Feelings

c. Abiding by the law

d. Doing whatever is socially acceptable

e. The same thing as religion

2. What is considered an ethical dilemma?

a. If a person cannot decide if an action is right or wrong

b. When there are clear guidelines to behavior

c. When all alternative choices and behaviors are considered

undesirable

d. Free choice of the individual

e. The common principles and values of the society in general

3. Why is business ethics important?

a. It is nice to be seen as an ethical and responsible organization

b. Because investors prefer to buy the stocks of ethical companies

c. It is costly to be ethical

d. Unethical conduct leads to loss of consumer satisfaction with reduced

quality and bad consumer relations

e. In order to be a famous organization


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4. Why are clear statements of ethical rules necessary in an organization?

a. It makes it easier for employees to differentiate between right and

wrong

b. It makes decision making easier

c. It guides behavior

d. It creates a motivating, respectful and trustful environment

e. All of the above

5. The major factors that induce ethical or unethical behavior in the

workplace are:

a. The laws and regulations of the country

b. The ethical conduct of competitors

c. Ethics of the system, ethics of the organization and ethics of the

individual

d. None of the above

e. All of the above

6. Trust is an important matter for an ethical environment because:

a. In a trustful environment wealth of a nation increases faster

b. Trust flourishes in an environment where rules, laws and regulations

are abided by

c. It creates a motivating, respectful and orderly environment


e. All of the above


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7. Why is it important to get support from your superiors in the organization

to deal with unethical conduct?

a. It is more rational to act as a group if the situation is favorable

b. It is easier to stand up to threats as a group than as an individual

c. Support will make it easier for one to prove that he /she is right

d. All of the above

e. None of the above

8. Why is ethical conduct in the public sector more important than in the

private sector?

a. Because the public servants are trusted with the stewardship of public

resources

b. Because public servants get lower pay than their counterparts in the

private sector

c. Because public servants represent the top administrators of a country


e. All of the above

9. Why is building trust important in the public sector?

a. Because the welfare of the citizens are in the hands of public

servants

b. Because it is necessary for democracy to flourish

c. Because the public servant has to obey his/her superiors


e. All of the above


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10. Professionalism in the public sector is a necessity because:

a. It is a facilitator of dialogue in society

b. Public resources are trusted to the public officials

c. They are the leaders in solving social, economic and technical

problems in society

d. All of the above

e. None of the above

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