Chapter 1 begins with a story, as all chapters in this book do. It introduces some ideas about people behaving unethically, getting caught, and being sentenced to public service and a fine. The outcome of their actions is left for discussion, which will be more meaningful once we discuss the content of the first chapter.
The text moves on to discuss some related terms. Unfortunately, their definitions are related as well, so it is harder to differentiate between them than it might be. Let's consider a few:
The text discusses some differences between morals (personal beliefs and values) and laws (rules of a governing body). Laws may be broken and lawbreakers may be punished. Morals may be ignored, but there is typically no social judgment. The text moves on to discuss a middle ground, ethics that have been accepted by or imposed on businesses.
When a large, publicly known company or celebrity breaks a code of ethics, it is often newsworthy and the effect of the news stories can affect the entity. The text lists five reasons for a business to have and follow a code of ethics:
The text lists several companies that contribute money and time to charitable causes. It explains that this creates a good image for the company in the minds of customers and stakeholders. (The text defines a stakeholder as someone who stands to gain or lose from outcomes, such as the company stock price changing.) The theory is that a good public image improves the bottom line, and a bad public image hurts it.
Any organization has problems with consistency. No two employees will see their jobs the same way, and differences in attitude, perception, and performance will occur. Ideally, the business managers should want each entity that interacts with the company (stakeholders, customers, suppliers, partners, etc.) to have the same good experience regardless of who they interact with next. To this end, some standard values may be promoted by the organization, which may standardize the experience.
Good Business Practices
The text lists business practices that lead to less trouble, more business, and repeat business. It should be obvious that these are good ideas, since they lead to good outcomes, but some businesses will be pressured to cut corners, to provide a poorer product, or to accept risk of discovery for the gain of making an unsafe or lesser product that brings a large return. Once this sort of thing is brought to light, it becomes hard for a customer or other stakeholder to go back to the illusion that the company cares about doing the right thing. The fact is that the company does not care: the people in it have to do so.
Some good business practices recommended in the text:
Protection from Legal Action
The text defines the legal term respondeat superior as the principle that an employer can be held responsible for the actions of an employee. The text implies that the principle goes back to 1909, but the link provided here indicates it goes back to the seventeenth century. The principle establishes a reason for an employer to be aware of what employees do. Note the qualifier in the text on page 11, that a company with an established ethics program can make a case that they tried to get the employee to act ethically, and should not be held as responsible for unethical actions as they might have been. Does this mean that a company could benefit from an ethics program whether they use it or not?
Avoiding Unfavorable Publicity
This relates to the first concept of good will from the public, since stories about bad actions lead to bad perceptions and a reduction of good will. So should the company make sure there is nothing bad to report, or should it control the media so that nothing bad is reported?
Improving Corporate Ethics
The text lists several several attributes that might be found in a successful ethics program. Several of them may be particularly hard to attain.
Code of Ethics
Skip ahead to page 13 to the discussion of developing a code of ethics. The text mentions some aspects of the Sarbanes-Oxley Act of 2002 (US Pub.L. 107-204, 116 Stat. 745, enacted July 30, 2002) that relate to the subject. Section 404 of the act requires that corporate statements filed with the SEC must be accurate and provides penalties up to $5,000,000 and 20 years in prison for corporate officers who file false corporate reports. Section 406 requires that public companies disclose whether they have a code of ethics and if their code of ethics allows senior management to ignore it (by a waiver).
The text discusses social audits, performed by some companies, that are reports on how the company is meeting ethical and social responsibility goals, and what its plans are for the coming year. This kind of document would give the company an opportunity for disclosure of its efforts to correct faults, and its successful efforts to do some good.
Requiring Ethics Training and Evaluating Ethical Decisions
As noted above, employees who have received ethics training are more likely to act in compliance with the code of ethics in question. This is logical, in that it is hard to comply with something you have not been told about or trained on. The text also discusses including ethical decision making in an employee's performance evaluations. This may be difficult for those employees who don't make that kind of decision on a regular basis.
Implementing these changes in a company can also reduce the company's liability for unethical actions of employees.
Decision Making Flowchart
Page 17 begins a discussion of a decision making process that can include ethical evaluation of the decision.
The ethical evaluation of the decision is addressed in the third step, and the author provides a decription of four types of ethics that could be used to choose an alternative.
Which is the better system? All and none, depending on who stands to benefit from the decision. Sometimes they lead to different choices.
Ethics in Information Technology
The text closes the chapter with a short list of concerns. We will discuss them in class. Be prepared to explain why you believe each is or is not an issue to be concerned about. After the list, the author presents two reasons for writing this text. Consider whether his reasons apply to your situation.