Business ethics

12.6 Business ethics

In Capitalism and Freedom, the economist Milton Friedman states 4 :

. . . there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, it engages in open and free competition without deception or fraud.

If we refer back to the introduction to this chapter, the limitations of the rules-based system presupposes that we know all the rules. Responsibility must depend on knowledge and intent. This becomes more complex in large organisations when we try to assess collective responsibility that is dependent on the actions of its individual members. Should the head of a hospital resign:

䊉 If a junior technician sets a dial for radiation therapy too high? 䊉 When a patient dies due to a doctor’s negligence?

Could the first be considered to be about the quality of training and understanding, whilst the second concerns an individual’s professional misconduct? Or was the doctor just too tired to function properly? Any organisation has to define the concept of responsibility. Only then can it be clear in attributing responsibilities to each of its employees. To date, the legal system has found it difficult to identify individuals in senior positions directly responsible for an organisation’s misdeeds. The organisation might receive a very large fine, but the operative will lose his or her job.

Whatever the codes of practices that are in place, the level of acceptance and compliance by individuals within the organisation will be determined by how adherence is demonstrated by the directors of that organisation. There should be no gap between espoused values and the values in action. The responsibilities of directors must be tightly linked to the actions of the firm. We might look to the Institute of Business Ethics for a guide to modern

business behaviour 5 :

Rapid changes in the technology, methods and scale of business raise ethical issues to which legislation and experience cannot provide all the answers. Society is increasingly concerned and there is growing involvement with business ethics in political, academic and theological circles. Business must be seen fully to share these concerns. There is also the need to promote practical solutions which combine social responsibility with efficient operations. Otherwise business can find itself fighting constant rearguard actions against well-meaning but inappropriate solutions proposed by people not directly involved.

Media ethics

Our business lives cannot be isolated from our personal moral norms. So far, we have presented the theoretical models of ethical behaviour.

Business ethics can be analysed on three levels:

1 The individual

2 The organisational

3 The national and international. Each has an inpact on the other; the inter-relationship between the

individual, the organisation and the wider economy completes a complex feedback system. People working within an organisational context are influenced by their working environment, by its rituals and practices (see Chapter 8), as they are by their social environment.

The Institute of Business Ethics outlines 12 steps for implementing a code of business ethics 6 to support this tripartite relationship:

1 Integration: produce a strategy for integrating the code into the running of the business at the time that it is issued.

2 Endorsement: make sure that the code is endorsed by the Chairman and CEO.

3 Circulation: send the code to all employees in a readable and portable form and give it to all employees joining the company.

4 Breaches: include a short section on how an employee can react if he or she is faced with a potential breach of the code, or is in doubt about a course of action involving an ethical choice.

5 Personal response: give all staff the personal opportunity to respond to the content of the code.

6 Affirmation: have a procedure for managers and supervisors regularly to state that they and their staff understand and apply the provisions of the code and to raise matters not covered by it.

7 Regular review: have a procedure for regular review and updating of the code.

8 Contracts: consider making adherence to the code obligatory by including reference to it in all contracts of employment, and linking it with disciplinary procedures.

9 Training: ask those responsible for company training programmes at all levels to include issues raised by the code in their programmes.

10 Translation: see that the code is translated for use in overseas subsidiaries or other places where English is not the principal language.

11 Distribution: make copies of the code available to business partners (suppliers, customers etc.), and expect their compliance.

Managing in the Media

12 Annual report: reproduce or insert a copy of the code in the annual report so that shareholders and a wider public know about the company’s position on ethical matters.

Even if you accept that the 12 steps above can provide the required infrastructure, this will not resolve the moral dilemmas confronting the individual. A set of guidelines will only prove their worth when individuals find themselves involved in some action on behalf of the organisation that is at odds with their personal moral framework. Can they use the system above or have they to whistle-blow?