Managing Business Ethics

A. Definition and Key Aspects

•       Crane & Matten (2010): Business ethics management is the direct attempt to formally or informally manage ethical issues or problems through specific policies, practices and programmes.

They identify some typical components of business ethics management:

•       Mission or values statement

•       Codes of ethics

•       Reporting/ advice channels eg ethics hotlines

•       Risk analysis and management

•       Ethics managers, officer and committees

•       Ethics consultants

•       Ethics education and training

•       Stakeholder consultation and partnership

•       Auditing, accounting and reporting

4 types of codes of ethics

•       Organisational or corporate codes of ethics

•       Professional codes of ethics

•       Industry codes of ethics eg electronics

•       Programme or group codes of ethics eg International Fairtrade standards (FLO)

Issues about codes 1

•       Prevalence? About two thirds of large UK firms have ethical codes - Crane & Matten (2010)

•       Main content? OECD (2001) labour standards and environmental management are main 2 areas, but with consumer protection and bribery/corruption also significant

•       Examples? Remember Unilever code from first seminar

•       Effectiveness? Not just important what a code says – important to develop, implement and follow it up eg via some audit instrument  Crane & Matten (2010, p196)

•       Can you have a global code? May need to adapt for culture differences eg re gift giving eg recruitment of family members eg equal treatment of men and women. Global initiatives include CAUX Roundtable, UN Global Compact and Interfaith Declaration: A Code of Ethics on International Business for Christians, Muslims and Jews

B. Managing Stakeholders

Types of stakeholder relationship
Crane & Matten (2010)

•       Challenge

•       Sparring partners

•       One way support

•       Mutual support

•       Endorsement

•       Project dialogue

•       Strategy dialogue

•       Task force

•       Joint venture/ alliance

Problems with Stakeholder Collaboration

•       Resource Intensity

•       Culture clash

•       Schizophrenia

•       Uncontrollability

•       Co-optation

•       Accountability

•       Resistance

C. How do we measure ethical performance?

•       Crane & Matten (2010):

•       Toyota - sustainability report

•       Total – CSR report

•       Microsoft – citizenship report

•       Body Shop – values report

•       Others: ethical report, environmental report, social report

Crane & Matten (2010, p.212)
Social Accounting

•       Social Accounting is the voluntary process concerned with assessing and communicating organizational activities and impacts on social, ethical and environmental issues relevant to stakeholders

•       No standard measures – though SA 8000 auditing global workplace standard or Global Reporting Initiative (reporting on social, economic and environmental “triple bottom line”)

•       Stakeholder satisfaction surveys/ focus groups

Advantages and disadvantages

•       Company worries: perceived high costs, insufficient information, inadequate info systems, lack of standards, secrecy, unwillingness to disclose sensitive data

•       Advantages: helps identify risks eg audit of international factories; improvement management of stakeholders – clearer picture of their own goals; enhanced accountability and transparency

Reasons for adopting ethics programmes?

•       Compliance

•       Values orientation

•       External orientation

•       Protection orientation