Module 2
Module 2
● Internal and External Value: Internally, it serves as a guideline for employees’ behavior.
Externally, it communicates the company’s commitments and values to stakeholders.
● Consistency and Accountability: Ensures universal compliance, provides pre-emptive
guidance to prevent ethical breaches, and serves as a basis for corrective action if
needed.
● A code of ethics can be valuable not just internally as a professional guide but also
externally as a statement of a company’s values and commitments.
Treat everyone with dignity, politeness, and fairness. Respect personal space, opinions,
and privacy. Harassment or victimization (demeaning, offensive, or threatening behavior)
is strictly prohibited.
2. Integrity and Honesty: Tell the truth and avoid any wrongdoing to the best of your
ability.
Avoid any actions where personal interests conflict with organizational objectives.
Examples include using one’s position for personal gain or exploiting company
resources. Even actions appearing beneficial to the company can have long-term risks if
done unethically (e.g., misusing competitor information).
4. Justice: Make sure you’re objective are fair and don’t disadvantage others.
6. Competence and Accountability: Work hard and be responsible for your work
Perform tasks responsibly and to the best of one’s ability. This includes acknowledging
mistakes, addressing them, and continuously striving for improvement to support the
organization’s mission.
Work collaboratively, sharing knowledge and supporting colleagues’ efforts. Being open
to learning and teaching fosters a positive work culture.
● Legal: As set out by national, e.g. the right to be treated equally regardless of age,
gender, marital status, etc.
● Social: The treatment of workers by employers, e.g. payment of a fair wage, prevention
of bullying in the workplace, etc.
● Environmental: A safe and healthy workplace. In addition, the employer must ensure
that they do not damage the local environment
● Ethical: Doing what is right, e.g. fair treatment of employees and suppliers, engaging in
fair trade.
● Employee Rights:
○ Fair pay, safe working conditions, adequate breaks, freedom from harassment,
and the right to join unions.
● Employee Responsibilities:
○ Follow job duties, respect workplace rules, maintain punctuality, and uphold
confidentiality.
● Employer Rights:
○ Set business goals, hire suitable staff, and expect loyalty.
● Employer Responsibilities:
○ Provide a safe work environment, comply with employment laws, and ensure fair
treatment.
Organizations play a critical role in influencing ethical conduct by shaping the environment in
which employees make decisions and conduct themselves. This influence can be exerted
through leadership, training, formal codes, and mechanisms like whistleblowing. Here are key
ways organizations can cultivate ethical behavior:
1. Leading by Example
● Leadership Impact: Employees often model their behavior on that of their managers
and leaders. When leaders demonstrate ethical conduct, it sets a standard for
acceptable behavior within the organization.
● Example: Ben Cohen, former president of Ben & Jerry’s, implemented a policy limiting
salaries, ensuring no one earned more than seven times the salary of the lowest-paid
worker. This approach promoted fairness and unity within the company by making all
employees feel valued and equal.
● Purpose: Ethics training helps employees recognize ethical dilemmas and equips them
with tools to handle challenging situations.
● Program Elements: Effective training begins with methods for addressing ethical
dilemmas. Employees are often presented with hypothetical situations to practice
decision-making, aiming to identify the "best" ethical solution.
● Global Trend: According to the Ethics Resource Center, many modern organizations
worldwide now incorporate ethics training as a standard practice, which raises
awareness and provides guidelines for ethically ambiguous situations.
4. Whistleblowing
Challenges in Whistleblowing
● Secrecy and Loyalty: Many professionals feel a duty to maintain confidentiality in their
roles, which can conflict with the desire to expose unethical practices.
● Moral Dilemma: Whistleblowing often pits an employee’s loyalty to the employer against
their duty to public interest, making it a complex moral choice.
● Whistleblower Protection Laws: These laws ensure freedom of speech for employees,
allowing them to report unethical or illegal practices without retaliation.
● Rights: Whistleblowers have the right to report evidence of:
○ Law violations
○ Gross mismanagement or misuse of funds
○ Abuse of authority
○ Specific threats to public health or safety
● Definition: Acting in an ethical manner is the concern of businesses for the welfare of
society as a whole. It consists of obligations beyond those required by law or union
contract.
Beyond this fundamental responsibility, employers must provide a clean, safe working
environment that is free from all forms of discrimination. Companies should also strive to
provide job security whenever possible.
3. Responsibility to Customers: To be successful in today’s business environment, a
company must satisfy its customers. A firm must deliver what it promises, as well as be
honest and forthright in everyday interactions with customers.
4. Responsibility to Society:
It also pays taxes that support schools, hospitals, and better roads.
To slow the erosion of the world’s natural resources, many companies have become
more environmentally responsible. For example, Toyota now uses renewable energy
sources such as solar, wind, geothermal, and water power for electricity to run its
facilities. When its new $1 billion North American headquarters opened in Plano, Texas,
in May 2017, Toyota said the 2.1 million square-foot campus would eventually be
powered by 100% clean energy, helping the auto giant move closer to its goal of
eliminating carbon emissions in all of its operations
6. Corporate Philanthropy:
Engage in charitable activities, such as donations and support for disaster relief.
Examples include contributions from companies like Bayer and American Express to
assist in emergencies.
Examples:
● Board Members: Corporate board members have a fiduciary duty to the company. For
instance, if a board member of an insurance company with a vested interest in a trucking
business votes to reduce premiums for fleet vehicles, their actions may benefit their
personal interests at the company’s expense, creating a conflict.
● Legal Representation: Lawyers or judges with a vested interest in a case outcome
(e.g., personal relationships or financial ties) are expected to withdraw from involvement
to avoid bias.
Example:
● Judicial Recusal: Judges with connections to parties involved in a case, such as
friendships or financial interests, must recuse themselves to maintain impartiality.
1. Self-Dealing
○ Definition: Occurs when a professional engages in transactions that benefit
themselves at the expense of their employer or clients.
○ Example: A company executive partners with a third-party vendor that personally
benefits them, potentially harming the company’s financial interests or credibility.
2. Gifting
○ Definition: Involves receiving gifts or favors that may influence decision-making.
Accepting gifts from clients or vendors can lead to biased decisions favoring the
gift-giver.
○ Prevention: Many companies ban employees from accepting gifts from clients to
avoid favoritism or biased actions.
3. Insider Trading
○ Definition: This conflict arises when an employee gains confidential, non-public
information through their professional role and uses it for personal financial gain.
○ Example: An employee in a finance role might use confidential details about a
company’s merger to buy or sell stocks before the information becomes public.
This is highly regulated in the financial industry due to the potential for market
manipulation.
4. Nepotism
○ Definition: Favoritism toward relatives or close friends in hiring or promotions
can create a conflict of interest, especially if those individuals receive preferential
treatment.
○ Example: A manager hires a relative, promoting them over more qualified
candidates. This can lead to organizational distrust and morale issues, as well as
legal complications regarding fair treatment in the workplace.
● Definition: Personal boundaries are physical, emotional, and mental limits that protect
professionals from getting overly involved in their clients' lives.
● Purpose:
○ Helps professionals maintain psychological safety.
○ Supports objective decision-making in therapeutic or professional processes.
● Risks of Blurred Boundaries: Without clear boundaries, professionals may feel
compelled to "rescue" clients, which can cloud objectivity and professional judgment.
Instead, the goal is to support clients in achieving their own goals.
● Definition: Duty of loyalty means employees must act in good faith, advancing the
employer’s interests rather than their own.
● Common Law: In most cases, common law governs the employment relationship,
outlining the duty of loyalty as refraining from actions contrary to the employer’s
interests.
● Restrictions: Employees must avoid conflicts of interest (e.g., holding a competing
second job) without the employer’s consent, and they should not engage in actions
benefiting themselves at the expense of the company.
1. Implicit Social Contract: Older generations often committed long-term to one employer.
In contrast, millennials are less likely to stay with a single employer for more than three
years, reflecting changing job market dynamics.
2. Perception of Best Option: Loyal employees believe their current organization provides
the best career opportunity and do not actively seek other employment.
3. Organizational Care: A decline in perceived organizational care leads to reduced
loyalty; employees may feel less attached if they sense the company won’t look after
them in return.
4. Two-Way Loyalty: Loyalty is reciprocal. Employers generally do not legally bind
themselves to long-term obligations with employees (e.g., "at-will" employment), which
may cause employees to feel less loyalty.
5. Emoluments and Career Decisions: Financial considerations heavily influence loyalty.
Observing top executives leaving for better offers may prompt employees to look out for
their interests and change jobs for higher pay.
6. Meaning in Work: Beyond financial incentives, employees value purpose and
recognition. Being acknowledged for hard work can reinforce loyalty, though financial
stability remains essential for job satisfaction.
7. Independent Status: Freelancers and contractors typically do not form the same loyalty
bonds as traditional employees since they are hired for specific projects and maintain
professional independence.