Public Relations: A Practitioner's Guide (part 8)

Ethics (part B)

By

Charles Lamson

Ethics in Business

For many people today, regrettably, the term business

ethics is an oxymoron. Its mere mention stimulates images

of disgraced CEOs being led away in handcuffs after

bilking their shareholders and employees out of millions

of dollars. 

Many believe the term “crooked CEO” is redundant. One book, written by former management consultants, described CEOs thusly:

Among the more than 14,000 publicly registered companies in the U.S. and the even larger number of privately held companies there is a class of people who will lie to the public, the regulators, their employees and anyone else in order to increase personal wealth and power (A. Larry Elliot and Richard J. Schroth. How Companies Lie: Why Enron Is Just the Tip of the Iceberg (New York Crown Publishers, 2002)).

Corporate Codes of Conduct

A code of conduct is a formal statement of the values and business practices of a corporation. A code may be a short mission statement, or it may be a sophisticated document that requires compliance with articulated standards and has a complicated enforcement mechanism.

The reasons corporations adopt such codes vary from company to company.

• To increase public confidence. Scandals have shaken investor confidence and have led to a decline of public trust and confidence in business. Many firms have responded with written codes of ethics.
•  To stem the tide of regulation.  As public confidence declines, government regulation of business has increased. Corporate codes of conduct are perceived to serve as a self-regulation mechanism.
•  To improve internal operations. As companies become larger and more decentralized, management needs consistent standards of conduct to ensure that employees are meeting the business objectives of the company in a legal and ethical manner.

•  To respond to transgressions. Frequently, when a company itself is caught in the web of unethical behavior, it responds with its own code of ethics.

Ralph Waldo Emerson once wrote, an organization is the lengthened shadow of a man. Today, many corporate executives realize that just as an individual has certain responsibilities as a citizen, so, too, does a corporate citizen have responsibilities to the society in which it is privileged to operate. 

As business becomes globalized, companies are being encouraged by interest groups, governments, educational institutions, industry associations, and others to adopt codes of conduct. Accordingly, formal ethical codes, addressing such topics as executive compensation, accounting procedures, confidentiality of corporate information, misappropriation of corporate assets, bribes and kickbacks, and political contributions, have become a corporate fact of life for every company executive, up to and including the members of the board of directors.

 Corporate Social Responsibility

Closely related to the ethical conduct of an organization is its social responsibility. Simply stated, corporate social responsibility is about how companies manage the business processes to produce an overall positive impact on society. This implies that any social institution, from the smallest family unit to the largest corporation, is responsible for the behavior of its members and may be held accountable for their misdeeds.

In the late 1960s, when this idea was just emerging, initial responses were of the knee-jerk variety. A firm that was threatened by increasing legal or activist pressures and harassment would ordinarily change its policies in a hurry. Today, however, organizations and their social responsibility programs are much more sophisticated. Social responsibility is treated just like any other management discipline: analyze the issues, evaluate performance, set priorities, allocate resources to those priorities, and implement programs that deal with issues within the constraints of the organization's resources. Many companies have created special committees to set the agenda and target the objectives.

Social responsibility touches practically every level of organizational activity, from marketing to hiring, from training to work standards. A partial list of social responsibility categories might include the following:

• Product lines---dangerous products, product performance and standards, packaging, and environmental impact 
• Marketing practices---sales practices, consumer complaint policies, advertising content, and fair pricing
• Corporate philanthropy---contribution performance, encouragement of employee participation and social projects, and community development activities
•  Environmental activities---pollution control projects, adherence to federal standards, and  evaluation procedures for new packages and products
•  External relations---support of minority enterprises, investment practices, and government relations
•  Employment diversity in retaining and promoting minorities and women---current hiring policies, advancement policies, specialized career counseling, and opportunities for special minorities such as the physically handicapped
• Employee safety and health---work environment policies, accident safeguards, and food and medical facilities

More often than not, organizations have incorporated social responsibility into the mainstream of their practice. Most firms recognize that social responsibility, far from being an add-on program, must be a corporate way of life. They recognize that in a skeptical world, business must be responsible to act ethically and improve the quality of life of their workforce, their families, and the broader society.

Ethics in Government

Politics has never enjoyed an unblemished reputation when it comes to ethics. In the first two decades of the 21st century, politicians seem to be losing further ground in terms of trustworthiness and ethical values.

*SOURCE: THE PRACTICE OF PUBLIC RELATIONS, 10TH ED., FRASER P. SEITEL, PGS. 112-116*

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