Business Ethics: Fact Or Fiction
University of Wollongong Thesis Collections University of Wollongong Thesis Collection
University of Wollongong Year
Business ethics: fact or fiction - a look at the applicability, acceptability and adaptability of ethical values in the business sector Colleen Puttee University of Wollongong
Puttee, Colleen, Business ethics: fact or fiction - a look at the applicability, acceptability and adaptability of ethical values in the business sector, PhD thesis, School of Accounting, University of Wollongong, 2005. http://ro.uow.edu.au/theses/481
This paper is posted at Research Online. http://ro.uow.edu.au/theses/481
BUSINESS ETHICS: FACT OR FICTION -
A LOOK AT THE APPLICABILITY, ACCEPTABILITY AND
ADAPTABILITY OF ETHICAL VALUES IN THE BUSINESS
SECTOR
THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE
DOCTOR OF PHILOSOPHY (ACCOUNTING)
From
UNIVERSITY OF WOLLONGONG
By
COLLEEN PUTTEE, BBUS (ACC), MCOM (ACCY)
SCHOOL OF ACCOUNTING
2005 THESIS CERTIFICATION
CERTIFICATION
I, Colleen Puttee declare that this thesis, submitted in fulfilment of the requirements for the award of Doctor of Philosophy, in the
Department of Accounting, University of Wollongong, is wholly my own work unless otherwise referenced or acknowledged. The document has not been submitted for qualifications at any other academic institution.
Colleen Maria Puttee
22 December 2005
ii Content
THESIS CERTIFICATION...... ii Content...... iii ABSTRACT...... vi ABSTRACT...... vi ACKNOWLEDGMENTS ...... viii CHAPTER 1 ...... 1 INTRODUCTION AND OVERVIEW...... 1 1.1 THE EPISTEMOLOGICAL FRAMEWORK ...... 2 1.2 CHAPTER STRUCTURE...... 7 CHAPTER 2 ...... 14 ETHICS -MORAL PHILOSOPHY...... 14 2.1 SOCIAL ETHICS...... 14 2.2 THE DEFINITION...... 16 2.2 ETHICAL ORIGINS ...... 18 2.3 ETHICAL THEORY FROM A WESTERN PERSPECTIVE ...... 19 2.3.1 SOCRATES ...... 20 2.3.2 PLATO...... 22 2.3.3 ARISTOTLE...... 24 2.4 THE RELIGIOUS INFLUENCE...... 28 2.4.1 THOMAS AQUINAS...... 31 CHAPTER 3 ...... 35 THE MODERN VIEWPOINT ...... 35 3.1 MODERNITY ...... 35 3.2 ETHICS V MORALITY ...... 37 3.3 ETHICS THE TOOL OF RATIONAL THOUGHT ...... 38 3.4 THE MODERN ETHICAL THEORIES...... 39 3.5 THE TELEOLOGICAL THEORIES...... 40 3.5.1 THOMAS HOBBES ...... 40 3.5.2 JOHN LOCKE ...... 42 3.5.3 DAVID HUME...... 43 3.5.4 JEREMY BENTHAM ...... 45 3.5.5 JOHN STUART MILL...... 47 3.6 THE DEONTOLOGICAL THEORIES...... 51 3.6.1 EMMANUAL KANT...... 53 3.7 VARIATIONS TO KANT’S THEORY ...... 55 CHAPTER 4 ...... 58 TWENTIETH CENTURY ETHICAL VIEWPOINTS ...... 58 4.1 GEORGE EDWARD MOORE...... 59 4.2 SIR WILLIAM DAVID ROSS...... 61 4.3 LAWRENCE KOHLBERG...... 64 4.4 CAROL GILLIGAN...... 68 4.5 JOHN RAWLS ...... 71 4.6 RICHARD RORTY...... 73 4.7 JÜRGEN HABERMAS...... 75 CHAPTER 5 ...... 80 THE USE OF THE WRITTEN WORD AS A COMMUNICATION TOOL OF BUSINESS ETHICS...... 80
iii 5.1 LANGUAGE...... 83 5.2 THE WRITTEN WORD...... 88 5.3 SIGNIFICATION OF MEANING...... 91 5.4 COMMUNICATION OF MEANING...... 94 5.5 THE CULTURAL INFLUENCE ON LANGUAGE ...... 96 CHAPTER 6 ...... 103 THE BUSINESS ENVIRONMENT ...... 103 6.1 INTRODUCING BUSINESS ETHICS ...... 103 6.2 THE BUSINESS SECTOR...... 104 6.3 THE BUSINESS IDEOLOGY ...... 107 6.4 BUSINESS PRACTICES TODAY ...... 109 6.5 THE NEW MORALITY...... 112 6.6 INTERNAL ASPECTS OF THE BUSINESS CULTURE ...... 115 6.7 THE INTERRELATIONSHIP BETWEEN THE BUSINESS AND CLIENTS ...... 116 6.8 THE INTERELATIONSHIP BETWEEN THE BUSINESS AND THE EMPLOYEE ...... 118 6.9 ETHICS IN BUSINESS...... 120 6.10 SOCIAL IMPLICATIONS...... 122 CHAPTER 7 ...... 124 BUSINESS CODES OF PRACTICE A SUMMARY VIEWPOINT...... 124 7.1 DEVELOPMENT OF THE CORPORATE ETHOS ...... 124 7.2 THE PROBLEM WITH THE CURRENT ETHICAL CODES IN BUSINESS...... 125 7.3 CORPORATE ETHICS OF THE NINETEEN NINETIES ...... 129 7.4 BUSINESS AS A MEMBER OF THE SOCIAL STRUCTURE ...... 132 7.5 THE CORPORATE CITIZEN...... 134 7.6 CODES OF PRACTICE: AN EXEMPLAR OF BUSINESS ETHICS ...... 139 7.7 THE DEVELOPMENT OF ETHICAL CODES...... 143 7.8 THE CORE QUALITIES OF AN ETHICAL CODE...... 144 CHAPTER 8 ...... 149 DECONSTRUCTING CODES OF PRACTICE, THEIR CONTENT AND LANGUAGE...... 149 8.1 ETHICAL CODES OF BUSINESS...... 150 8.2 DEMYSTIFYING COMPANY CODES...... 152 8.3 DECONSTRUCTION ...... 156 8.4 THE FORMAT OF COMPANY CODES...... 159 8.5 CONTENT OF COMPANY CODES ...... 163 8.6 ETHICAL VIRTUES OF BUSINESS ...... 170 CHAPTER 9 ...... 173 THE ETHICS OF A PROFESSION ...... 173 THE JOINT CODE OF CONDUCT OF THE ACCOUNTING PROFESSION ...... 173 9.1 WHAT CONSTITUTES A PROFESSION?...... 174 9.2 PROFESSIONAL ETHICS ...... 179 9.3 AREAS OF CONCERN ...... 182 9.4 THE ACCOUNTING PROFESSION...... 183 9.5 THE AUSTRALIAN ACCOUNTING PROFESSION...... 184 9.6 THE ETHICS OF THE ACCOUNTING PROFESSION...... 187 9.7 THE JOINT CODE OF PROFESSIONAL CONDUCT ...... 188 9.8 ROOM FOR IMPROVEMENT...... 192 CHAPTER 10 ...... 196 ETHICAL CODES: THE END OR THE BEGINNING...... 196 10.1 CONCLUDING THOUGHTS...... 196 10.2 WHERE TO FROM HERE?...... 200 REFERENCES...... 202
iv APPENDIX 1...... 214 COMPANY CODE FORMATS...... 214 APPENDIX 2 COMMONALITIES IN CONTENT OF COMPANY CODES...... 216 APPENDIX 3 ASX CORPORATE GOVERNANCE COUNCIL...... 217
EXCERPTS FROM PRINCIPLES OF GOOD CORPORATE GOVERNANCE AND BEST PRACTICE RECOMMENDATIONS MARCH 2003 ...... 217 APPENDIX 4 BASIC CODE OF ETHICS...... 233 APPENDIX 4.1 PREAMBLE...... 233 APPENDIX 4.2 CODE OF ETHICS...... 234 APPENDIX 5 SECTION B OF JOINT CODE OF PROFESSIONAL CONDUCT...... 236 CPA AUSTRALIA MEMBERS' HANDBOOK: CPC CODE OF PROFESSIONAL CONDUCT ...... 236
v ABSTRACT
Is it relevant to associate business with ethics or are the two so polemic that their coalition becomes farcical? Ethics has long been considered as an expression for all things good whilst business represents a forum for the exchange of goods and services with a view to making profits. Note that whilst both incorporate the same word ‘good’ as part of their persona the meaning of the word carries quite different connotations. This pluralistic nature of the term highlights a pivotal point in this thesis. The meaning of a word and or expression is governed by its linkages and or associations with other words and hence acknowledging the relevance of a particular word cannot occur without first evaluating its hermeneutical origins and then contextualizing it within the desired domain.
This thesis is divided into three sectors with the first addressing the issue of the meaning of ethics from a western cultural perspective. Whilst any cultural position would be valid this perspective was chosen due to the strong influence western cultures have on business dealings. Ethics is researched philosophically from the initial orations of Socrates through to the Postmodern discourse of Rorty and that of Kohlberg and Habermas. Each stage of its historical development adds definition to its meaning in current day language.
The second section of the thesis addresses the multiplicity of meanings of words and the general use of language as a tool of communication. The written word plays a dominant part in the daily management of an organisation’s operations and as such the concept of clarity of expression becomes a crucial element in the development of company policies or manuals to ensure a successful transition to actions. The language of the written word plays multiple roles in its deliverance of meaning and direction. For example it has to be sufficiently descriptive so as to guide intended meaning yet at the same time it has to restrict interpretation to reduce the opportunity for misunderstanding and or inappropriate actions. The cues adopted must be suitably strong enough to compensate for the lack of visual interaction between the writer and the recipients. The language of ethics is even more complex in that it has no absolute definition but rather a set of principles that draw meaning from the time and context within which they are being
vi adopted. Hence it can be considered relevant to business if appropriately situated and defined.
The final section of the thesis identifies the multi-layers of business practices and the plethora of cultures that impact upon their operations and how these factors skew the interpretation of ethics in business. Whilst most businesses acknowledge the need for ethics to form a part of their operations they fail to take the time to fully implant its intent. A survey of a number of top Australian companies identified that companies tend to adopt an applied version of ethics which serves more as a protection against social censure, or worse litigation, rather than addressing the basic tenets of ethics. There is no identification of its principles or even an attempt to define the term in context with the company profile. The same is also found when evaluating the professional occupations which profess to practice such virtues in exchange for autonomy and social service.
In summation, the oxymoron that is often touted against the expression business ethics only holds because business has yet to define ethics in context with their practices. An exemplar of a code of ethics is offered as a basis for businesses to develop their own model, one that embraces personal, social national and international sentiments.
vii ACKNOWLEDGMENTS
I wish to take this opportunity to thank a few people who have been instrumental in helping me complete this thesis.
Firstly I would like to acknowledge the support and sage advice given to me by my supervisor, Professor Michael Gaffikin. His unfailing support throughout my academic journey has ensured that I have remained focused on my goal, even in times when its achievement seemed remote, whilst his mentoring of my progress has enriched my understanding of research and the rewards it offers. I shall be eternally grateful to you Michael for opening the door of knowledge and learning.
Secondly I would like to say thank you to my Children for their unfailing loyalty and support throughout my time of study. They have always supported my studies and have had faith in my ability to complete the task. I believe my having undertaken this project has instilled in them the love of learning and the importance of commitment and completion.
Finally I would like to thank my academic colleagues for their moral support. Throughout my period of study I have made many valued friends and potential co- writers and hopefully in the future I will have the opportunity of sharing my learning with them
viii CHAPTER 1
INTRODUCTION AND OVERVIEW
The perfect moral virtue is a habit that inclines us to do a good deed well
(Thomas Aquinas, circ. 1265-1277, I-II, 65)
The past fifteen years has seen a proliferation of books, articles and media debates on the topic of business ethics. Central to the discussion is the question of whether and how ethics is relevant to business. In most instances it is presented as a fundamental attribute of the business function but this is not always evident in business practice. How is it possible to infuse business practices with such a metaphysical philosophy? Is it appropriate to consider such an esoteric concept in association with business or is the combination of the two simply an oxymoron? ‘Given how complicated the business world has become, it is hard for many people to accept that philosophising about ethical matters can be relevant.’ (Adams & Maine, 1998:6) The primary impetus behind this thesis has thus come from the problematical question of the definition and relevance of ethics to the business sector. If such relevance is evident then a secondary question arises as to how ethics can be successfully incorporated within the business province.
Historically, ethics has been embedded in religious and social practices whilst business has related more to the economical allocation of community resources. Ideally the integration of the two is considered to produce a sustainable and satisfied community lifestyle. It is not so much the independent contribution made by each sector that shapes the community mindset but rather the interrelationships and overlaps between the two that act to define and form its position. ‘The relationship of business to society is one of interdependence where the long-run health of one determines that of the other.’ (Brooks, 1 2004:10) As business has grown and globalized, in harmony with technological change, so too has its influence on the community and its members. Today it is considered as a power in the social composition and hence its practices significantly impact on the social sector and its constituents. Legally the company is treated as an artificial person and as such is generally bound by the same rules and regulations governing those of the individual. It has a responsibility to conduct itself in an exemplary manner, and in so doing, it should protect the public’s interests and social wellbeing. The ethical consideration in the business framework is but one avenue, albeit quite a significant one, wherein business can achieve such conduct. The main aim of the thesis is to explicate the concept of ethics in terms of its twenty first century relevance and to situate it in business policy. Secondly, once the ethical position has been established the thesis will employ its framework in the development of a functional code of ethics that can be used as the base for establishing corporate codes of conduct and practice.
1.1 THE EPISTEMOLOGICAL FRAMEWORK
Ethics, as we know it today, traverses most disciplinary fields and as such is bounded by numerous theoretical frameworks. The knowledge base upon which the thesis has been written draws from a number of these theories including the teleological, deontological and virtue theories that explicate its hermeneutical origins, through to the modern day social theories such as social constructivism, linguistic theory and, more specifically, post-structuralist discourse theory. These help to situate and contextualise its current position. Using a Western perspective, the paradigmatic development of ethics can be traced from the days of Socrates through to the pluralistic interpretations posited in today’s global community.
2 Philosophically, ethics in Western society has traditionally been explained using the teleological arguments of the utility or consequences of actions or, alternatively, the deontological concepts of duty or obligations and as such both have been incorporated in the first segment of the thesis to help establish the historical reference to the development of the basic tenets of ethics. The opportunity to acknowledge and incorporate the discursive events that shaped the Western view of such moral principles provides the foundation stone from which to build the current ethical position.
However, as the central premise of the study is concerned more with the identification of the meaning of ethics and its application to practice, the primary epistemic framework that is used throughout it is that of the post-structuralist discourse theory.
‘Post-structuralist discourse theory is a tool for analysing the more or less sedimented rules and meanings that condition the political construction of social, political and cultural meanings and identities.’ (Torfing, 2003:3,) [Accessed 26 July 2005]
The use of this theory provides the opportunity to actually create the episteme for the area under discussion within its historic boundaries. In the case of ethics, the ontological position is centred on the business sector and its ability to apply ethical principles within the context of current business practices. Currently the interpretation and application of ethics is premised on a broadly based, presumed uniform, meaning of the term. This presumption however raises a concern as to why the adopted meaning appears to be baseless and ineffectual when used. The current format applied to ethics appears to lack any substantive analysis or discursive contextualization of the language employed. When the term is posited no parameters are provided to denote its referential position. Post-structuralist discourse theory thus allows me to discuss and deconstruct the current status of ethics in the business context. It provides the means to identify any
3 intertextual relationships between the language of ethics and that of business, as well as providing the opportunity to situate its relevance to the cultural environments within which it is to function.
A basic tenet of post-structuralist discourse theory is that the process of meaning making in relation to people and objects is caught up in an infinite play of horizontal difference/equivalence. Meaning is never finally fixed; it is always in an unstable flux… [However] the stress on openness is balanced by the assumption that objects and social subjects and the relations between them may emerge in partially stable configurations known as nodal points. (Slembrouch, 2004)
This theoretical framework thus provides me with the political, social and linguistic instruments needed to ascertain whether there are any nodal points that could be utilized in the identification and adoption of the historically grounded, ethical precepts that currently exist. The employment of discourse also helps to underscore the aporias and insecurities that arise in the evaluation and interpretation of the language and the derivatives that flow from it. It exposes the misconception that words and language construction can be framed in a fixed indisputable format without taking into account the intertextuality of the words not to mention the social and political influence.
The thesis adopts a reflexive methodology in that it uses discourse analysis and deconstruction to reflect on and distinguish the pluralistic nature of ethics and the multiplicity of meanings that can result if no boundary or constraints are given. The use of discourse analysis, as supported by Foucault and Derrida, enables the ethical language used to be correlated with the institutional frameworks within which it functions. It focuses on how ethical language impacts on the multiple configurations within society and how, due to its dynamic nature, it is vital to constantly assert meaning to situate and contextualize relevance and capability of compliance. In this
4 sense, discourse analysis establishes ‘language use as a social action, as situated performance, as tied to social relations and identities and as essentially a matter of practices rather than structures.’ (Slembrouch, 2004)
The whole concept of ethics and its application to business is subjected to continuous discourse within different socio-business contexts in order to draw conclusions and correlations between the two. Discourse analysis activates discussion on the topic, providing the essence of the research area and establishing the directions for deliberation, and consequentially, possible solutions to the problem. It situates the text, in this instance ethics, within its historical and social context providing the background material for deconstruction and reassessment in current surroundings.
A corresponding technique also adopted is that of deconstruction. ‘At its simplest, deconstruction may be seen as a mode of discourse or textual analysis that uses reversals, inversions and paradoxes to call into question the orthodox interpretations derived from conventional forms of analysis.’ (Legge, 1996, p 1002) This form of analysis provides a useful tool for examining underlying meanings and allows for identification and construction of a general theme as opposed to a definition. It aims to liberate the text structure of a sentence or paragraph, giving it no clear boundary of interpretation but allowing for discourse and consensual agreement on perceived meaning in a particular context. By using deconstructive analysis it is possible to highlight the ambiguities of meaning, ‘the blind spots’ of understanding and ensure that the intended meaning of the statement has the greatest exposure. In regard to ethics, the purpose of deconstructive analysis is not to destroy the need for and usefulness of ethics codes but to highlight the necessity for, first, being careful in choosing the words and,
5 secondly, in acknowledging and reducing the multiplicity of interpretation to ensure a greater success of understanding the intended meaning. Since textual autonomy is unlikely to be within the control of the authors, a degree of reference and direction needs to be supplied to allow for application. According to Norris (1993),
Deconstruction is avowedly ‘post-structuralist’ in its refusal to accept the idea of structure as in any sense given or objectively ‘there’ in a text. Above all, it questions the assumption that structures of meaning correspond to some deep- laid mental ‘set’ or pattern of mind which determines the limits of intelligibility… Deconstruction starts out by rigorously suspending this assumed correspondence between mind, meaning and the concept of method which claims to unite them. (Norris, 1993:3)
Whilst in its purest sense deconstruction could be perceived as counterproductive, it nevertheless can provide the reference point from which, with the aid of signification, a particular interpretation can be determined. Meaning derives from the associations and referrals that appear in the process of coupling words or expressions and in this sense will change depending on the textual interchanges in any one instance or situation. The adoption of this praxis appears appropriate for evaluating ethics given the extent to which such a philosophy is debated in current society. If ethics are to be truly considered as a valuable commodity for modern day living, and in particular, as an asset to business then its primacy needs to be clearly explicated and appropriately situated to justify its privileged status. More often than not the term is exploited in the social and business sectors in a very superficial manner hence negating any potential value it may bring to human wellbeing.
6 1.2 CHAPTER STRUCTURE
This thesis is divided into three sections. The first section comprises three chapters which cover the historical positioning of ethics in terms of the Western perspective.
Chapter two begins with a discussion on current day perceptions of ethics and the confusion that seems to prevail in terms of the copious interpretations of its meaning. It identifies the multiple layers of influence on interpretation and application of ethics from the personal, social and work environments and the need to step back and recreate its roots. The thesis particularly concentrates on the Western development as this is the most appropriate given that the thesis concentrates on the ethics of business in the
Western cultures.
As the evolution of Western ethics has occurred over a number of centuries its starting point begins with the father of moral philosophy, Socrates and progresses through a number of influential philosophers and theologians including, Plato, Aristotle, Saints
Ambrose, Anselm, Augustine of Hippo and Aquinas. It is through the period of religious denomination that Saint Ambrose, in his Expositio in Lucam, gives title to the four cardinal virtues of ethics, namely temperance, courage, prudence and justice to which Saint Thomas Aquinas later adds the theological virtues of faith, hope and charity or love. By the end of the Middle Ages the basic tenets of ethics had been established providing the background to the development of modern day views. The social revolt against religious domination and feudal control of this era not only saw the dawning of a period of social development it also saw a change in direction of ethical thinking.
7 Chapter three introduces some of the more influential philosophers, from the period of enlightenment, who evaluated and redefined ethics in terms of an interactive perspective rather than as a compliance with religious dogma. This era brought with it time for reflection and personal development. It was a time when politics collaborated with society to provide social values that embraced human rights within a secular view of social order. Ethically speaking it was a period of intellectual freedom, interpretation and application of the ethical precepts from numerous paradigmatic positions. The theories of teleology and deontology were expanded by theorists such as Hobbes,
Locke, Hume, Bentham, Mill and Kant, to provide a plethora of ways to account for ethical behaviour. Concepts such as utility, duty, rights, and consequences were introduced to explicate particular rationales for ethical behaviour. In this period ethics became a choice rather than a dictate. Values were centred on personal belief and community standards as opposed to being controlled by the church. By the dawn of the twentieth century the secular movement had all but replaced religion as the dominant force and the ethical focus was now on providing a framework that addressed meaning and application of the ethical tenets within its social context.
Chapter four concludes the historical development of Western ethics by drawing on the views of some twentieth century ethicists including, Moore, Ross, Kohlberg, Gilligan,
Rawls, Habermas and Rorty. Central to discussion in this chapter is the importance of setting boundaries within which meaning and application can be effected. Definition is acknowledged as being contextual and temporal and hence dependent upon a plethora of factors including multiple cultures, language and the psychology of the individual.
Whilst Moore argues for the intrinsic meaning of some ethical terms such as ‘good’ and
Ross expands on Moore’s ideas to incorporate ‘right’, others, such as Kohlberg and
8 Gilligan, interpret ethics from a behavioural perspective, one addressing the cognitive development of the individual and the other acknowledging the gender differentials that impact on interpretation and enactment of ethical principles. In the latter part of the twentieth century the discussion moved beyond the modernist view of objectifying ethics to imbedding it within the environment in which it is to operate. Writers such as
Rorty and Habermas introduced two new paradigms for ethics, pragmatics and discourse, which help to situate ethics through the use of language, culture and communicative action. Both these issues are considered as significant drivers behind ethical practice and hence the remaining two sections are devoted to discussion of topics that emanate from these two areas.
Chapter five introduces the influence of language to the interpretation and application of ethics. If ethics are to be adopted and enacted, whether from a social or business perspective, the basic intent must be clearly expressed. Communication is a fundamental link between construction, integration and adoption of any policy or guideline and thus language, as its tool, becomes a pivotal component to its success.
The chapter elaborates on the signification of meaning through the employment of appropriate text, acknowledging the intertextual relationships that defer to one interpretation over another in any one instance. It highlights the transience of language and the need to ensure that, after deconstruction, the intended conclusions are capable of being reached. It also acknowledges the use of informal cues and the impact of multiple cultures such as ethnicity, education and gender on the interpretive process. The main theme throughout the chapter is the idea of identifying and embracing the communicative process of relaying meaning through a holistic perspective. An evaluation of the issue of language helps to emphasise the limitations and aporias within
9 this process and the need to be selective yet informative if the desired result is to be achieved. In view of its abstract nature, this point is even more important when determining the meaning of ethics.
As the thesis is primarily devoted to the ethics of business the remaining chapters centre on the business culture and their use of codes of conduct to espouse an ethical position.
Chapter six is devoted to evaluating the concept of a business culture. It offers a broad discussion on the business sector and its ideology with specific emphasis placed on the powers of the business sector in today’s society. The business culture can be viewed from two positions, the one being its external relationships and the other its internal interactions. Externally, business operations pervade every corner of the globe and thus encroach on all levels of the global community, albeit in different capacities. As such their behaviour has become a form of exemplar to community living. A new morality has arisen governed in some instances by power, greed and exploitation. The business sector has entered the twenty first century as a controlling force in the global community but with some dissent. Continuous corporate collapses and questionable behaviour have led to a demand for reform by the broader social sector with an express request that businesses adopt a more transparent ethical position.
Internally, the business sector has become the focal point of most individuals’ lives, whether it is directly associated with the worker, who spends the greater part of their waking hours at work or, indirectly, those connected to the worker who receive the benefits or drawbacks as a consequence of the work relationship. The flexibility of working conditions has also meant less socialization with family, religious worship and community, leaving work as the controlling influence on individual lifestyles and
10 values. This is an even greater reason for reflection and establishment of appropriate ethical principles in business practice.
Chapter seven introduces discussion on the development of a corporate ethos. It evaluates the rise of corporate codes in the late nineteen nineties and the adoption of a corporate persona as a responsible citizen of the community. The main focus of the chapter is the development of a model code of ethics for use when establishing corporate codes of conduct or practice. It identifies the basic requirements of such a code, reintroducing the basic tenets of ethics in a business context. The intention is not to provide a universal code of ethics but to provide a framework from which the business sector could customise their own code of ethics. One of the main concerns with the current codes that pepper the business sector is the lack of explanation or association of the code with the intent of ethics, along with an obvious slant towards self protection.
The chapter offers some suggestions as to the core qualities of an ethics code for business by recomposing the ethical precepts in the language of business, being mindful that such language can have different connotations and that is it imperative to clearly explicate its intended direction. The exemplar is also proffered knowing that any coded that is derived from it must be capable of changing to accommodate changes in the corporate and social precincts.
Whilst most companies today provide some form of code of conduct or compliance to corporate governance requirements they tend to lack the ethical foundations from which their codes are supposedly based. Chapter eight of the thesis debates the current misconception of codes of ethics and draws upon a sample of current codes to
11 demonstrate the flaws in their structure and content. Most companies consider their codes of conduct as synonymous with their codes of ethics yet a deconstruction of the language and content of these codes reveals that they are strongly correlated with the concept of morality (an applied version of ethics) with little to no discussion on ethics.
The codes in place today are highly superficial, lacking in definition and depth in regard to ethical content and heavily focused on conformity with regulatory requirements and preservation of corporate interests. Had companies taken the time to clearly articulate their ethical stance the desired ethical image they wish to portray may be more achievable. Instead the structure of the current codes tends to support self preservation above altruism or benevolence. Current codes would have far more support if they were prefaced with an explanation of ethics and the basic virtues it espouses.
Chapter nine extends the discussion of corporate ethics to address the ethics of the professional groups. Initially the discussion centres on what exactly constitutes a professional today as there are a number of occupational groups that claim to be professional. Whilst most occupations today contain an educational element the additional duties of serving the public and self governance provide some clarity as to which occupational groups are being evaluated. Given the service-oriented focus of this group, coupled with their autonomous state, there is a perception that ethical values are intrinsic to this employment group. Again the core principles are redefined in terms of the professional viewpoint and a professional group, the Accounting profession in
Australia is used as an exemplar to evaluate the benefit of codes to professional members. The last twenty years has seen an inordinate amount of corporate collapses and corrupt behaviour in the business sector supposedly founded on inappropriate use or reporting of accounting information which is a direct assault on accountants and their
12 practices. Hence it was felt that an evaluation of this profession’s code of conduct should provide some insight into a profession’s ethical position. The profession has had an active code of conduct for some time in this country yet public perception of the profession is less than favourable. The natural question is to ask why there is not apparent correlation between professional practice and their code of conduct. A deconstruction of the accounting code of professional conduct provides some understanding as to why it is not succeeding in its objectives. As with the business sector, what is again missing is some acknowledgment of the meaning of ethics and its relevance to professional practices.
The last chapter draws together the development of the concept of ethics and its relevance to business today and offers some alternative strategies to help infuse all business sectors with an ethical mindset.
The term ethics is a common term used in today’s society but few stop to think just exactly what the term actually means to them, to their community and to their job. If all words had an absolute meaning there would be no problem in getting the message across. However the reality is that there are a plethora of meanings for every word, including ethics, and that it all depends on the linkages and interrelationships of the words that privileges one meaning above another. If we truly believe in being ethical we need to first place the boundaries around what we mean by ethics. Chapter two will elaborate on this issue.
13 CHAPTER 2
ETHICS -MORAL PHILOSOPHY
In moral philosophy, we seek a theory of practice. Ethical knowledge, as
developed in moral philosophy, is not immediately in the process of being
enacted. There is therefore a gap between a right theory of practice and right
practice itself. (Christopher Kaczor, 2003)
The word ethics has existed since the beginning of time but its meaning and significance have roller coasted throughout history. This chapter introduces the concept of ethics and traces one particular perspective, the Western viewpoint, from its acknowledged beginnings in Ancient Greece through to the Middle Ages and the introduction of the Judea-Christian influences. This discussion is vital to the thesis in that it establishes a specific hermeneutical influence on the current interpretation of the term from the Western perspective and it is this position that has been adopted throughout this thesis. Naturally there are many cultural viewpoints that are equally valid but as the ultimate intention is to address the language of ethics in business, and more specifically from an Australian viewpoint, it was felt that the Western culture was the most influential in this area. The difficulties of definition are also raised and briefly discussed and will be elaborated on in subsequent chapters.
2.1 SOCIAL ETHICS
Society has seen the rebirth of an age-old philosophy in recent times. The philosophy of morals, commonly known as ethics, has re-surfaced in a number of sectors of the
14 community. Carr (2000) proposes three reasons why ethics has become the current topic of interest.
The first reflects a filtering-down of concerns about how a degree of common social cooperation and purpose might be sustained in that problematic fusion of cultural pluralism and liberal individualism. A second reason mirrors a degree of public panic at what is widely regarded as the breakdown of traditional mores under the influence of liberal individualism and economic consumerism. The third seems more related to a professional concern that recent politically driven educational reforms have focused more on the economic than the moral beliefs of education. (Carr, 2000:50)
The now privileged position of the business sector and its obsession with profits and power, as opposed to any support for moral hygiene, has dominated social thinking for the last fifty years and has exacerbated the problem of an amoral society. Until the corporate collapses of the 1980s the central attributes of society appeared to be focused on hedonism, materialism and egotism. The growing disenchantment and lack of respect for this lifestyle has moved individuals and society in general to reflect on ways to achieve a more harmonious and socially conscious society.
Ethics is again being considered as a key factor to developing a well-balanced existence. It pervades every part of an individual’s life from the legacies of their past to their current personal, social and work environments. Each level or culture provides a set of values or mores suited to its domain and assumes that the standards they develop are synchronized with the values of the other sectors influencing one’s existence.
However there appears to be no dialogue or corroboration between the sectors when it comes to assigning some common meaning or uniformity of understanding with respect to the definition and or interpretation of ethics. Catch phrases such as 'right and wrong'; good and evil' and words such as 'truth'; 'justice' 'honesty' and many more are commonly used by each sector as key words or phrases to describe the ethics of their
15 group but no attempt is made to assess the possibility of establishing a common interpretation across all groups. Is this possible? What exactly are ethics and is it possible to have one monistic definition accepted by all the stakeholders involved in the development of human wellbeing or must each sector publish their own interpretation and thus, whilst providing an eclectic viewpoint, they are establishing a constraint on its value?
2.2 THE DEFINITION
Ethics, both historically and currently one can assume, has arisen from a human desire to provide an idealistic and harmonious way of life that helps counterbalance the more complex and challenging aspects of one’s existence. The use of laws and customs throughout history bear testimony to the establishment of the more basic moral standards of society. However the concepts of reason, reflection and self-awareness and the notion of a will, being unique human qualities, can be utilised to develop a higher order of standards that not only acknowledges the basic rights of human beings but can also be used to conscientiously improve the status of humanity. Ethical principles are viewed as an attempt to provide the theoretical foundations that govern honourable actions and or practices. ‘The purpose of ethical theory is to introduce clarity, substance and precision of argument into the domain of morality.’ (Beauchamp, 1991:5) However the correlation between theory and practice still remains situation-specific. The establishment of meaning is often contingent on the timeframe and context within which it is used and hence often provides multiple responses.
16 The debate over the meaning, and perhaps meaningfulness, of ethics has continued throughout history with viewpoints changing depending upon which philosopher one followed. Whilst most would agree that the central theme of ethics has been the achievement of `good acts' the question remains as to what these good acts are and, if a definition can be agreed upon, how can they be achieved given the diversity of groups wishing to adopt them. ‘The major problem in ethical theory has been how to formulate the conditions in which it operates. Being unable to define the conditions has led to the situation in which ethical theory has become a cocoon of controversy.’(Beauchamp,
1991:129)
Whilst the background of ethics is entrenched in philosophy, today it forms part of a number of different disciplines including anthropology, biology, economics, history, politics, sociology and theology. It is the very essence of its presence within these fields of study that has led to the need for further clarification of its meaning, given their often divergent viewpoints on life qualities. Questions arise as to how influential each perspective is in identifying the meaning of right and wrong, good and bad and how strong is their influence on one’s individual and societal values. As Hinman (1998:4) states, in any given discipline ‘the discussion becomes more finely tuned. Distinctions are drawn, concepts refined, arguments criticized and reconstructed.’ How then is an individual expected to adopt an ethical position given the plethora of interpretations with which they are confronted? The time and context in which a situation arises also add to the complexity of meaning.
17 Today’s moral philosophy is a descendent of many and varied sources and to fully appreciate its current status it is necessary to take a step back and review the debate on ethics from its origins.
2.2 ETHICAL ORIGINS
The hermeneutical origins of ethics can be shown to have arisen from any one of the ancient civilizations. The Arab culture introduced a list of precepts to aid in the education of the males of the ruling classes, which can be considered as a form of ethical guidelines. The Jews also cultivated a humane form of behaviour as is witnessed in the Proverbs of the Bible and the Books of the prophets such as Isaiah. The Greek
Sophists, or teachers of the 5th century BC, introduced a relativist viewpoint of right or wrong. Their use of rhetoric and argument favoured a philosophy of power and self interest, with the interests of the dominant group establishing social norms or values.
Philosophers such as Socrates, Plato and Aristotle extended these teachings and developed a more instructive, altruistic version of ethics. Other writers of the period such as Thales, Heracleitus and Pythagoras and Zeno also wrote on the concept of truth and natural order. In China writers such as Lao-tzu (and his discussion on Tao or a simplistic way of life) and Confucius (with his teachings on the ‘superior man’, one who was humane, honest and thoughtful) represented the ethical foundations of the
Chinese culture. Unlike the other cultures, in India the introduction of a moral philosophy began almost immediately with the Indian writings, such as the Vedas that appear around 1500 BC. These writings represented a form of higher order of righteousness and good and a way of life that allowed one to align reality with living the, supposed, right way. Whilst all of these societies brought with them an
18 interpretation of ethical theory and all certainly provided the catalyst for ethical discourse the search for ethical meaning still remains. Given the resurgence of interest in the theory of morals today, an appropriate starting point for current discourse is to retrace our teachings on the topic by elucidating the thoughts of some of the key orators throughout history. Because my interests are founded on the values developed through the Western culture I will concentrate my discussion on the philosophers linked to this society.
2.3 ETHICAL THEORY FROM A WESTERN PERSPECTIVE
The origins of the Western viewpoint on ethics can be found in the early teachings of the ancient Greek philosophers. The ancient Greeks spent a great deal of time pondering the problem of values and right actions. Through the teachings of Thales and Zeno the concepts of natural law and human order arose. The Stoics explained human nature in terms of a natural order or logos whereby order is determined through reasoning. There is a causal relationship between the laws of nature and human action. ‘For the Stoics
God was fire (active energy) and logos (reason) diffused throughout the Cosmos. They believed, too, that the law of nature was God’s material presence in the Universe…
They declared that the Cosmos must be viewed as a single whole [and] the actual nature of a human person is the universe on a small scale.’ (Murrell,
(http://novaroma.org/via_romana/stoicism.html)[28 January 2004] Whilst the Stoics believed in working for the betterment of the community from a practical, naturalistic approach other philosophers (Pythagoras, Socrates, Plato, Aristotle) looked beyond nature and began studying the concepts of ethics from a self-valuation or introspective stance taking reason one step higher than its mere physical position.
19 The word `ethic’ is said to have come from the Ancient Greek word `ethos' meaning character, whereby the character of an individual identified their moral fibre or moral qualities. The three most noted ethicists of ancient times were Socrates, Plato and
Aristotle. All three philosophers were rational thinkers advocating that moral order was to be found in understanding the human mind and rational activity.
2.3.1 SOCRATES
Socrates (recognized as the father of moral philosophy) is considered as one of the best- known thinkers of the 5th century BC and although he put nothing in writing, his teachings are portrayed in the writings of his students, particularly Plato and Xenophon.
He sought to clarify some of the complexities of the human mind by providing a framework centred on reflection and self-evaluation to help express one’s thoughts and the implications of one’s actions. Socrates based his understanding of ethics upon the
Delphic oracle `Know Thyself’ His first principle on the philosophy of life was that the unexamined life was not worth human living, that whilst we all inherit certain beliefs and doctrines it is the responsibility of the individual to question and criticise such beliefs in order to establish his or her own understanding and interpretation. He considered the need to understand oneself as paramount to achieving the highest good.
Socrates' primary aim was to teach individuals to think out their own views. He espoused that ‘the truths of ethics cannot be drummed into ones' head; rather they must be discovered and respected by oneself.’ (Donaldson, 1984, p.8) Enquiry brought knowledge, which in turn gave insight into, and acceptance of what was considered as right and good.
20 To Socrates the excellent life was the intelligent life where a person had discerned what was right and good for him or herself, using both critical inquiry and experience.
Criticism and evaluation led to the achievement of right judgment and choice, which was interpreted as the ethical way of life. Until this time philosophers had looked for understanding and acceptance of right actions based on a naturalistic approach that required a materialistic and physical means of evaluation. Socrates however moved away from this way of thinking preferring to direct his attention to discovering a meaning of human values. By developing an understanding of why it was good to foster certain qualities and discard others, Socrates preached that individuals would then attain their own level of self-fulfilment whilst contributing to a greater insight into the meaning of 'a good life' for all. Achievement of the most idealistic principles of morality could only occur through critical inquiry.
Socrates was probably one of the first ethicists to question the meaning of words and actions. It was his practice through the use of a dialogue, to question his followers’ beliefs and ultimately draw from them an interpretation based on their inner senses rather than from superficial, ill thought through, generalisations. His intention was always to make his listeners personalise their responses so that they conceptualised their understanding from their own experiences and knowledge base and not be dependent on surface experiences. By identifying and verbalising one’s thoughts one was then capable of translating meaning through the words adopted and expressed. ‘The dialogue was a work of self-criticism, done with the help of students, for the purpose of arriving at a concept – a true understanding of the question proposed.’ (The Philosophy of Socrates, http://radicalacademy.com/philsocrates.htm#concepts) [28 January 2004]
21 2.3.2 PLATO
Plato, a student of Socrates, defined the highest principle of human nature as that which could be founded in reason rather than mere physical observation. Plato's views on ethics were based on his fundamental view of reality, which was defined in terms of a higher level of awareness drawn from one’s reasoning of a situation or event. ‘Reason properly used, resulted in intellectual insights that are certain, and the objects of these rational insights are the abiding universals, the eternal forms or substances that constituted the real world. Ultimately the Theory of Forms is intended to explain how one comes to know and also how things have come to be as they are. In philosophical language Plato’s Theory of Forms is both an epistemological and an ontological thesis.’
(Plato, circa 428-c. 347 BC, http://www.encarta.msn.com) [28 January 2004]. Unlike
Socrates, Plato was not content to merely deal with self-reflection and self-evaluation but rather advocated the Theory of Forms, a universal state of ideals that could be translated into physical examples to approximate the ideal. This explained why there could be multiple avenues of interpretation. To Plato, knowledge represented the ideal, a fully informed and well-reasoned articulation of the universe as opposed to physical observations, suppositions or opinions.
From an ethical stance his principle aim was to encourage individuals to evaluate and understand the characteristics that represented the good life, the how and why one way of existence was the best when compared with others. He emphasised the distinction between defining actions and activities based on sense perception and defining them from a more universal, idealistic perspective founded on the principles of reason and rationalism. The development of ethical ideals based upon this method identified the reasoning behind the occurrence of an activity or event as of primary importance rather
22 than the actual occurrence itself. Without reason, misinterpretation and or misconception might occur resulting in possible inappropriate actions.
The art of rationalism, according to Plato, enabled the individual to pursue that course of action that was most natural to them, which in turn led to a perfect and harmonious existence. Plato identified, through his various dialogues (Gorgias, Meno, Republic) a number of virtues attached to his principles of ethics, all leading towards the ultimate ideal, the achievement of a perfect existence through the performance of good acts. The chief virtues he described were those of temperance, courage and wisdom which, when combined with reason, provided an insight into human nature and the definition of a good life. Wisdom provided intelligence and knowledge when deciphering which action was best. Courage showed the right way of achieving such a result, whilst temperance provided the degree of balance needed to accomplish the desired result.
Choosing the right action was then based on sound reasoning. Plato also acknowledged that man did not live in a vacuum but rather influenced and was influenced by the society in which he lived. He identified three classes of social order, the merchant class, the military class and the philosopher kings, each with its own level of reasoning. He did not expect each level to have the same degree of intelligence or balance but rather that each would reason out or rationalise his or her own interpretation of what was right, just and good. Like Socrates, Plato considered that each order from the craftsman to the councillor, had a responsibility to work towards a perfect existence, based on good acts.
Vicious and ignoble acts he considered were involuntary and based on ignorance but could be corrected through reasoned thought.
23 Plato's moral philosophy was thus based upon an idealistic, universal interpretation of the reality of human nature, established from a rationalisation of human actions in terms of achieving the ultimate ideal of 'good'. The core of reality was identified when an act could be defined in terms of its fundamental worth or benefit and this would differ depending upon one’s class or social level. The universal ideals would exist for all but the level of understanding and interpretation would be internalised and enacted in accordance with the individual’s personal qualities.
2.3.3 ARISTOTLE
Aristotle supported Plato's view that the concept of ethics was inherently linked to human nature and the faculty of reasoning but he concentrated more on the individual and their contribution to society rather than a universal form. He examined the issue of what was considered as the good life for man. But in order to achieve this position man needed to interact with the society in which he lived. ‘Aristotle saw individuals as essentially members of a social unit, believing that moral actions were only promoted by the support of the social groups. The first principles of ethics were deeply embedded in the non abstract world of conduct in society.’ (Beauchamp, 1991:215-216)
The concept of good was founded upon an understanding of human nature, its distinctive qualities and functions as opposed to a universal principle. He argued that knowledge of good was a distinct advantage to the way in which the individual conducted his life, stating that ‘we must do our best to get at least a rough idea of what the good really is and which of the sciences, pure or applied is concerned with the business of achieving it.’ (Aristotle, Nicomachean Ethics, Thomson, 1953:14) All individuals were expected to structure their development in a manner that maximised
24 their potential, which then led to the achievements of good results. Aristotle considered good to be that to which all humans aspired. It represented eudaimonia, in translation, happiness or flourishing. He was a follower of the concept of Nicomachean Ethics, which aimed at giving one a reflective understanding of how one could achieve eudaimonia by living an ethical life within society. ‘The point of Nicomachean Ethics was not to persuade us to be good or show us how to behave well in the various circumstances in life, it was to give people, who were already leading a happy, virtuous life, insight into the nature of their souls.’ (Lear, 1988:157) In this regard Aristotle's ethical beliefs were similar to those of the teleologists in that he concentrated on ways that led to ends or consequences that were considered highly desirable and beneficial.
He stated ‘most people would regard good as the end pursued by that study which has the most authority and control over the rest.’ (Aristotle, Nicomachean Ethics, Thomson,
1953:23) He did not attempt to narrow the meaning of good by definition but rather described it in terms of means to an idealistic end ‘It is our actions that determine our dispositions ... goodness is but the inspiration to noble actions.’ (Aristotle,
Nicomachean Ethics, Thomson, 1953:37) Happiness was seen as the pinnacle of human good, an acknowledgment of self–fulfilment and or satisfaction with one’s existence.
‘Aristotle argues that content of eudaimonia is substantially the same for everyone.
Eudaimonia is primarily a life of virtue. But what counts as virtue and what actions virtue call for, is different for different people. He argued that virtuous actions are relative to us.’ (Benitez, (1997) ww.usyd.edu.au/philosophy/benetiz/eudaimonia.html)
[Accessed September 2001]
To Aristotle, man's ability to achieve his highest good was through his ability to think and act rationally. He established two distinct kinds of virtue, the moral (or reasoned)
25 virtue such as liberality and temperance and the intellectual virtues such as those achieved by knowledge and wisdom. Moral virtues were considered as activities of the soul that were developed throughout one's life. Whilst it was acknowledged that all individuals were born with certain characteristics or virtuous qualities, these were not automatically enacted. The achievement of good acts could only be accomplished from the development of good moral habits. A good disposition could only be cultivated from the right background. It was therefore a matter of real importance how an individual was raised and educated. ‘Neither by nature then, nor contrary to nature do the virtuous arise in us, rather we are adapted by nature to receive them and are made perfect by habit.’ (Aristotle, Nicomachean Ethics, Abernethy &Langford, 1969:165)
Reason was used to distinguish between two extremes, excess and deficiency, arriving at the middle position or ‘golden mean’, taken to be the virtuous stance. ‘Moral virtues perfect that part of the soul which is rational in the sense that it can be controlled or influenced by reason.’ (Kilcullen, 1996:2) The ultimate good is taken to be that which provides the greatest command over an individual's activities and actions, that which acknowledges self worth and the fulfilment of one's ambitions. ‘Intellectual virtue in the main owes both its birth and its growth to teaching while moral virtue comes about as a result of habit. None of the moral virtues arises in us by nature.’ (Aristotle,
Nicomachean Ethics, Abernethy &Langford, 1969:165)
Moral virtues develop through habituation throughout ones life whilst the intellectual virtues control and legitimise the development of moral virtues. ‘The intellectual virtues perfect the part of the soul which itself reasons and thinks.’ (Kilcullen, 1996:2) It is in this regard that the choice of language used to annunciate meaning becomes significant, as interpretation will be governed by a number of factors such as education, age, social
26 position etc. If a code of ethics is to succeed it must acknowledge and incorporate all factors that influence the intellectual virtues.
Aristotle's principles of ethics were thus strongly associated with human nature and its impact on society. The ability of the individual to achieve a `good life' was governed by their ability to reason out their actions and the impact of such actions on the community.
Individuals were considered to possess innate qualities or virtues that were cultivated and perfected over time to generally provide a greater balance of good to evil, right to wrong.
The difficulty of accepting the Ancient Greeks' philosophy of ethics is that there is no substantiated proof that all humans possess such innate virtuous qualities and that even if these qualities did exist, would they necessarily be distributed in the same proportion or necessarily be developed to their fullest potential. The question still to be answered then is when does one consider an act to be good and right, given that we all have differing views of the meaning of good and right? Is it possible then, to establish a pattern of ethical beliefs that provides a restricted, but positive, meaning of interpretation of a good or righteous life?
Whilst all individuals are born with an intellect it must be argued that it is the cultivation of that intellect which will dictate the ethical beliefs of the individual and these will also be influenced by the opportunities offered to the individual throughout their lives. Thus, whilst the Ancient Greeks have identified what they considered as an ethical way of life, it is perhaps not as easy to see how such an idealistic situation could realistically eventuate particularly in today's world. Their ethical theory was based on
27 the harmonious existence of the individual in society, the `living of the good life'. The virtues are defined based on their dedication to the community, a form of patriotism and self-sufficiency, with the more subtle and finer virtues yet to be defined. Even given such a style of ethics, history has not demonstrated a means of enacting such a philosophy.
What then is the `good life' today? Do we still have honourable men/women who aspire to self-fulfilment and social harmony? The development of religious practices, in particular the Jewish doctrines and the rise of Christianity introduced a new slant to the interpretation of ethics.
2.4 THE RELIGIOUS INFLUENCE
Much of what is considered as today's ethical philosophy in the Western culture can be attributed to the influences of the development of Judea-Christianity. Jewish philosophy sought to distinguish and promote an ethical way of life. Judaism promoted an ethical stance that encompassed a common language and moral stance that went beyond the legal requirements. One of the most important tenants of the religion was wisdom, and within that, of knowing how to live properly. A number of treatises
(Improvement of the Moral Qualities by Solomon ibn Gabirol; The Duties of the Heart by Bahya ibn Pahuda; The Lamp Light by Isaac Aboab) discuss the ethical conduct of man commenting on such aspects as humility, kindness, repentance, love of God, self- examination and restraint and even ethical practices in Business. Initially their philosophy aligned with that of Aristotle but over time it has moved away from the
28 rationalistic approach and more towards the religious dogmas based on belief in God and the teaching of moral and religious self-discipline.
Early Christian developments appear to have embraced, in part, the Jewish philosophy of natural law in the establishment of Christian ethics and, given the gradual conversion of the greater part of the Western world to Christianity, this had a dramatic impact on the development of ethical theory as is viewed today. ‘Christianity brought with it what may be called a revealed ethics… an essentially religious ethics given to man with the absolute, unquestionable, infallible authority which belongs to the word of God.’
(Maritain, 1960:5) [Accessed 28 January, 2004]. The Christian doctrine aligned the ideals of ethics with an inner loving devotion to God and viewed people as basically sinful, corrupt individuals in need of Gods' saving Grace. God was the epitome of good, the Supreme Being. Evil came from undue pride and self-exaltation. As
Augustine said ‘by craving more man becomes less and by aspiring to be self sufficing he fell away from Him who truly suffices him. Pious humility enables us to submit to what is above us; and nothing is more exalted above us than God.’ (Augustine, City of
God, XIV: 13) [Accessed 29 January, 2004]. This evaluation of man's worth was in sharp contrast to that of the classical philosophers.
The Ancient view of `innate good' was supplanted by a vision of supreme perfection upon which all should model their lives. ‘These men (the men of Ancient Greece) represent what was best in Pagan morality. We of today, in light of Christian truth and in the presence of the Sermon on the Mount, feel the shortcomings of their greatest and best codes…The Pagan ideal was that of harmonious development of soul and body.
The Christian ideal looks farther. It goes beyond the natural order. It tells us to be
29 perfect as our Father in heaven is perfect.’ (Azarias, 1888:12.4, 7) [Accessed 29
January, 2004]. The Decalogue (Sermon on the Mount) provided a new interpretation to the cardinal virtues (temperance, prudence, justice and courage as named by Ambrose in
Expositio in Lucam). A new scale of theological virtues was introduced dealing with the qualities of humility, forgiveness, charity, hope and love of God. Religious philosophers such as Ambrose (e.333-397); Augustine (354-430) and Anselm (1033-1109) wrote about Temperance as being that of Christian love, pure and undefiled. Courage was exemplified by the strength of character and endurance of the martyrs in their service to
God, whilst justice was seen as ruling in God's name and by his example.
The City of God was said to comprise a society of godly men guided and fashioned by love of God. The three theological virtues, named by Paul in I Corinthians, XIII, 13, as faith, hope and love of God, were deemed as more important in an individual's life than knowledge of oneself. ‘The object of the theological virtues is the transcendent God, the divine good with which they unite the human soul…For Christian ethics the theological virtues are superior to the moral virtues. (Maritain, 1960:5) [Accessed 29 January,
2004]. As Aquinas states, ‘Never can we love God as much as He ought to be loved, nor believe and hope in Him as much as we should. Much less therefore can there be excess in such things.’ (Thomas Aquinas, (circ 1268) I-II, 64, 4) [Accessed 29 January,
2004].The outward demonstration of good actions was modelled on God's example.
The good life would come by living a life devoted to God. The ethics of this period were enunciated through the rigour of the Christian doctrines. The language used presented humans as sinful and unworthy with the need to fashion a way of life that sought redemption and eternal salvation. Identification of what constituted good or bad; right or wrong was defined by the Church and was not perhaps as convoluted as it is
30 today. The good life was a life dedicated to serving God. Augustine declared, ‘Life eternal is the supreme good, death eternal the supreme evil and that to obtain the one and escape the other we must live rightly.’(Augustine, XIX, 4) [Accessed 29 January,
2004]. This was achieved by following the teachings of the church.
2.4.1 THOMAS AQUINAS
The most noted development of Christian Ethics since Augustine came around the 13th century from the writings of Aquinas (1225-1274), sometimes known as the Doctor
Angelic. Aquinas extended the work of the ancient Greeks and his Christian forbearers by establishing a more refined, holistic view of ethics. ‘In his mind he conceived the totality of things as proceeding from one source and returning through the cycle of time and space to one sovereign end, the source and the end being God… In his mind, as expressed in his writings, we behold the most perfect blending of natural and supernatural truth.’ (Pace, 1896:193) [Accessed 29 January 2003] Aquinas' philosophy was a combination of Christian Theology and Aristotelian ethics. He conceded that the individual needed 'reason' to guide his or her actions and choices. However the ultimate goal of blessedness, he argued, was beyond the capability of human reason, being founded on the spiritualistic ideal of faith.
If then the final happiness of man does not consist in those exterior advantages which are called goods of fortune, nor in goods of the body, nor in goods of the soul in its sentient part, nor in the intellectual part in respect of the moral virtues, nor in the virtues of the practical intellect, called art and prudence, it remains that the final happiness of man consists in the contemplation of truth. This act alone in man is proper to him, and is in no way shared by any other being in this world. (Aquinas, (1261-1263)3.37) [Accessed 9 February, 2004]
31 Knowledge and reason therefore were subordinate to faith and, similarly, power and authority were secondary to the powers of the Church, it being God's earthly commander. Christian ethics advocated salvation from a life of sinfulness. Anything less than a Godlike existence was base and corrupt. Man's whole existence was devoted to achieving the penultimate ideal of a blessed life after death. It was the responsibility of the individual, guided by faith and some degree of reason, to control and direct their baser instincts in order to achieve the ultimate ideal of good. Each individual is considered to have innate powers that can be built upon to attain a higher and more satisfying order of life ‘Aquinas succeeded in constructing a philosophical and theological wisdom elevated in immateriality that it is truly delivered from every particularization of race or place.’ (Maritain, 1958, II-II, 5) [Accessed 30 January, 2004]
The introduction of Christianity brought with it a new dimension to ethical theory. ‘The
Divine mission of the Church becomes apparent. She brings home to man his origin and his destiny… That end she does not hold with Aristotle to be self-development or self- sufficiency, or the good of the State. That end is none other than God. His will defines the rectitude of action in which the soul should dwell.’ (Azarias, 1888:12.5) [Accessed
30 January 2004] The Christian ideal looked beyond the natural virtues and the social and political influences of that time. It introduced a higher, supernatural order of ethics, the theological ethics. Now ethics encompassed at least seven core virtues.
Besides the natural virtues, it recognizes others, which are of the supernatural order. There are the theological virtues of Faith in God and the truths of His Revealed Religion; of Hope for union with Him in eternity; of Charity, wherewith we love Him with all our heart and all our soul, and in Him and for Him, our neighbour as ourselves. It made predominant a criterion of excellence other than the approval of men. (Azarias, 1888:12.6) [Accessed 30 January, 2004]
32
The end of the middle ages had established the core of ethical ideals with the task being to interpret and apply these principles to human actions. This period but completed the set of principles by which we evaluate our actions today. However, in terms of definition, interpretations of meaning and capacity for enforcement of these values or principles, there is still need for further discussion. Whilst the religious hierarchy provided the definition and directions for this period their power and control of the community diminished as the period of modernity arose. The middle ages were a time when intellectual exchanges and development of thoughts arose mainly from the educated religious or high-ranking members of the community rather than a general consensus from broader society. The rules were set, delivered and monitored by the
Church with no opportunity for debate or even dialogue amongst its congregation. Thus a minority group predominantly controlled instruction, and hence ethical development.
The ministers of the church were well tutored in setting and applying the Church’s dogma, leaving very little scope for misinterpretation or misunderstanding of meaning.
Whilst a great deal of socially accepted practices have, over time, been considerably influenced by religious doctrines today this influence is no longer as prevalent. The growths in education, technology and changing lifestyles have also impacted on the development and adoption of ethical principles.
This chapter has but introduced the concept of ethical theory. It has revealed resurgence in the adoption of ethical ideals but has also draw attention to the fact that there are a number of issues that impact on its meaning and relevance in today’s society, particularly those associated with definition and acceptance. By way of clarification and as a means of establishing its current parameters, one particular perspective, the
33 Western culture, was chosen to trace it’s develop. It began in ancient times with
Socrates and progressed through to the Middle Ages and the religious influence. At this stage the basic tenets of ethics had been established. The next chapter will extend this discussion and introduce the changes that occurred during the period of enlightenment, the period of modernity and the establishment of the teleological and deontological theories.
34 CHAPTER 3
THE MODERN VIEWPOINT
Ancient Greek philosophy was divided into three sciences: physics, ethics, and
logic. This division is perfectly suitable to the nature of the thing; and the only
improvement that can be made in it is to add the principle on which it is based,
so that we may both satisfy ourselves of its completeness, and also be able to
determine correctly the necessary subdivisions. (Immanuel Kant, 1785)
3.1 MODERNITY
The previous chapter initiated discussion on the concept of ethics and introduced the early phases of its development to the point where its precepts were identified. At this point the ideals of ethics were legitimised and controlled by a powerful minority. As the language adopted was in the vernacular of the period and interpreted by a minority, there was little need for translation, adjustment or open dialogue. However this controlled environment began to change around the beginning of the seventeenth century when social and political values were being reformed to align with a changing social image one of enlightenment, objectivity and socially directed order. This was the beginning of the period of enlightenment, the dawn of the modern world. This chapter identifies some of the influential ethicists of this period and how they perceived the moral debate. It highlights how ethical principles moved beyond the control of the
Church and into the day-to-day lives of the community members.
35 In this chapter there is a shift in emphasis of ethical purpose, from that of subservience and blind faith to the introduction of reason and communal order, to an age of supposed objectivity and neutrality.
The legislators and thinkers of this era felt that morality, rather than being a ‘natural trait’ of human life, is something that needs to be designed and injected into human conduct…They believed that the void left by the now extinct and ineffective moral supervision of the church can and ought to be filled with a carefully and artfully harmonized set of rational rules; that reason can do what belief was doing no more; that with their eyes wide open and passions put to rest, men can regulate their mutual relationships no less, and perhaps more and better than at a time when they were blinded by faith. (Bauman, 1995:6)
During this period a number of philosophers (Hobbes, Locke, Bentham, Mill, Hume and
Kant to name but a few) were involved in developing ways of presenting ethical principles that embraced the political and economic sentiments of the time. These principles centred on protecting the natural human rights and the implied, if not actual, contractual relationships between the people and the government. The concern of this period was how to uphold and enforce the basic tenets of ethics, which had been preordained, whilst acknowledging the rights of the individual, political and social groups that would apply them.
In an age where rational thought became privileged above faith and free will, governments and communities alike had to devise ways in which they could jointly promote and enforce socially acceptable behaviour. There developed a need to justify ethical ideals in more distinct, translatable and objective terms that rationalised and conformed to personal ideals. Nowadays we ‘must articulate how particular moral beliefs fit in with who we are as persons, with our individual moral identity.’ (Hinman,
1998:308) This chapter also classifies some of the ethical theories developed over the
36 past three centuries with an emphasis on the well-known teleological and deontological perspectives. The purpose of discussing these particular viewpoints is to develop a pattern of ethical thought that brings it to its current place in the twenty first century.
3.2 ETHICS v MORALITY
Before further discussion on advancements that have occurred since the middle ages can proceed, one clarification needs to be addressed and that is the distinction between ethics and morality. Often the terms are used synonymously which tends to exacerbate the problem of interpretation, and acceptance of meaning. Philosophers often discuss the concept of ethics in terms of moral issues or practices. Morality in itself deals with an individual’s conduct within society in terms of what is considered right and wrong, good or bad. Ethics, however, evaluates the nature and justification behind human conduct, the reasoning, as such, behind the established moral rules and values. ‘Ethics supplies us with a matter (an object of the free elective will), an end of pure reason which is at the same time conceived as an objectively necessary end, i.e., as duty for all men… Ethics may be defined as the system of the ends of the pure practical reason.’
(Kant, 1780: 1) [Accessed 22 February, 2003]
It is quite possible to have ethical principles that are enacted differently by individuals and or communities and hence why some cultures appear to have different ethical beliefs. Ethical principles are normative by nature and for this reason cannot be clearly defined in terms of some natural phenomena or physical state whereas morality can be demonstrated by some concrete activity or action. Morality is the consequence or enactment of an interpretation of the ethical precepts.
37 3.3 ETHICS THE TOOL OF RATIONAL THOUGHT
As can be seen from its historical development ethics does not profess to give us answers. What it does aim to do is provide the dialogue that can be used to interpret human behaviour within any given situation. It has as one of its functions the means available to sharpen our knowledge and understanding of human practices and to help establish standards or moral codes that will benefit the majority within the community.
In order to achieve this it must be capable of examining the relevant issues of any given situation.
G E Moore (1903) argued that the point of ethics was to establish what was intrinsically good for the majority as opposed to being good as a means to a desired end. He states,
‘It is necessary we should know what good means, before we can go on to consider what is good – what things or qualities are good’, (Moore, 1903:142) although he does not provide a particular definition of the word. He argues that it is an imperative of ethics that meaning is firstly determined before any particular actions or associations can be taken.
How ‘good’ is to be defined, is the most fundamental question in all ethics. That which is meant by ‘good’ is, in fact, the only simple object of thought, which is peculiar to ethics. Its definition is, therefore, the most essential point in the definition of ethics… Unless this first question be fully understood, and its true answer clearly recognised, the rest of ethics is as good as useless from the point of view of systemic knowledge. (Moore, 1903:5)
In his opinion there can be no certainty attached to moral rules, as these are basically determined within particular parameters and may not be universally appropriate. What determines an ethical moral stance, according to Moore, is the use of reason to define
38 ‘good’ in itself rather than as a means to an end. Whilst Aristotle defined ethics in terms of happiness or communal wellbeing and Aquinas in terms of Godlike qualities, modern day philosophers such as Moore appear less inclined to associate or restrict its meaning.
To look for a definition, in the strict sense of the word, is perhaps a mistake, as it would restrict the application of ethics to one point of view or perspective. Linguistically then, ethical theory can provide a plethora of meanings depending upon the context and associated links being addressed at that point in time. The language of the modern theorists centres more on privileging one or other theoretical frameworks than clearly giving one monistic definition to the term. ‘The more finely textured our moral perceptions are, the more well grounded our moral judgments can be. It is here that literature plays a crucial role because literature maps out the moral landscape in a detail beyond the reach of moral theory.’ (Hinman, 1998:312) Moral theory coupled with discourse and literary statements provide the resources necessary to establish an ethical posture.
3.4 THE MODERN ETHICAL THEORIES
The major ethical theories of modern time concentrate on two broad groups, each highlighting a specific moral stance using essentially the same concepts. The teleological perspective addresses the moral worth of actions or practices based on the consequences or utility of the actions or practices whilst the deontological perspective maintains that actions are not justified merely by their consequences but rather the sense of duty or obligation attached to them, duty being independent of the concept of good or bad.
39 3.5 THE TELEOLOGICAL THEORIES
Teleological ethics is based upon the teleological philosophy that studies ends, purposes and or goals of active causes. ‘Every active cause acts for an end; otherwise from its activity one effect would not result rather than another, except by chance.’ (Aquinas,
(1265-1273, I: 44:4) [Accessed 9 February, 2004] The consequences or end results are seen as the explanation for all that occurs or happens. Teleological ethics concerns itself with the measurement of the maximum value obtained from performing an act.
‘Teleological theories determine what is right or obligatory exclusively by reference to those consequences of actions desired for their own sake.’ (Fish, 1980:80) They may proceed in several directions, depending upon which consequences are desired. For example, the desired consequences may be pleasure and happiness (The Hedonistic
Theory) or they may be survival (The Evolutionary Theory) or they may simply desire some usefulness or utility from the action (The Utilitarianistic Theory) or purely to retain a particular virtuous stance (Virtue ethics). All these theories retain the basic thesis of the Teleological argument ‘that the rightness or wrongness of actions and practices is determined solely by their consequences.’ (Beauchamp, 1991:130)
Collectively they are also referred to as consequentialist theories.
3.5.1 THOMAS HOBBES
Thomas Hobbes was one of the first philosophers to detract from the religious influence on ethics and he is often linked to the concept of ethical egoism. Hobbes held firm beliefs about the ‘laws of nature’ wherein each person had the right to pursue those interests that best serve them.
The right of nature, which writers commonly call jus naturale, is the liberty each
40 man hath to use his own power as he will himself for the preservation of his own nature; that is to say, of his own life; and consequently, of doing anything which, in his own judgement and reason, he shall conceive to be the aptest means thereunto (Hobbes, 1660:14.1) [Accessed 9 March, 2004]
Hobbes argued that, given the human disposition to preserving and protecting their personal rights and interests, it was necessary for individuals to adopt some form of social contract with government as part of a self-protective strategy otherwise war or anarchy would prevail. This way, so long as the interests of the individual were being served, the community and government benefited as well. He proposed that as long as an authority could defend the individual’s rights then they would have their loyalty and support. ‘If everyone were to act on more or less fixed rules such as those found in common moral and legal systems, this arrangement would produce the most desirable state of affairs from an egoistic point of view. The reason is that these rules arbitrate conflicts and make social life more agreeable.’ (Beauchamp, 1991:77)
The language Hobbes used in The Leviathan chapter 5 explicitly defined the concept of reason and its significance in constructing and transferring meaning.
Out of all which we may define (that is to say determine) what that is which is meant by this word reason when we reckon it amongst the faculties of the mind. For reason, in this sense, is nothing but reckoning (that is, adding and subtracting) of the consequences of general names agreed upon for the marking and signifying of our thoughts; I say marking them, when we reckon by ourselves; and signifying, when we demonstrate or approve our reckonings to other men… The use and end of reason is not the finding of the sum and truth of one, or a few consequences, remote from the first definitions and settled significations of names; but to begin at these, and proceed from one consequence to another. (Hobbes, 1660, 5.2) [Accessed 9 March, 2004]
41 According to Hobbes, if words are used appropriately, giving them sound definition and direction then the right actions will follow. He concludes by stating ‘reason is the pace; increase of science, the way; and the benefit of mankind, the end’. (Hobbes, 1660, 5.12)
[Accessed 9 March, 2004] This process of rational debate marked the introduction of the teleological arguments.
3.5.2 JOHN LOCKE
Locke, like Hobbes, supported the natural rights of the individual to be free and possess property earned from their labour. However he did not support sovereign power, advocating that the contractual relationship between the individual and the government was negotiable, that rulers only held power so long as they used it wisely and justly. All individuals were entitled to life, liberty and equality and as such had the right to bargain for the protection of these natural rights. Locke used his writings on nature, knowledge and language to enunciate his stance on morality.
Whilst Locke does not specify a particular ethical position, in numerous places in his writings (Reasonableness of Christianity; An essay concerning Human Understanding;
Letter concerning Toleration) he champions religious freedom and the capacity of the individual to make their own rational moral choices without the interference of the theologians and religious orders. He saw the religious as having used and abused their powers and that it was the duty of individuals to use their own god-given talents to develop their own rationalised position, translating their own ideals into actions. He states ‘ Men have reason to be well satisfied with what God hath thought fit for them, since he hath given them whatsoever is necessary for the conveniences of life and information of virtue; and has put within the reach of their discovery, the comfortable
42 provision for this life and the way that leads to a better.’ (Locke, 1690:5) [Accessed 15
March, 2004]
Locke, as a strong supporter of the sciences, held that it was possible for ethics to be empirically determined in the same manner as the sciences were verified and that if this were not possible then it had to be a revelation from God, ‘the Supreme Author’.
‘Whatsoever should thus be universally useful, as a standard to which men should conform their manners, must have its authority either from reason or revelation.’
(Locke, 1695:251) [Accessed 15 March, 2004] Locke’s ethics were based on the idea of a natural goodness of the individual with a hedonistic slant on achieving pleasure and reducing pain. Whether an act was good or bad was judged by the degree of pain or pleasure it elicited.
He proposed that meaning and development of knowledge and moral acts came from the careful choice of words that articulated the individual’s ideas. He argued that the terminology used and the courses of action adopted could be positivistically determined if an exacting analysis was performed, that is if the specific boundaries and essence of the issue were known and agreed upon. If this were the case then meaning and appropriate actions could be ascertained with a degree of certainty. Locke’s teleological argument was very much from the consequentialist viewpoint and demonstrated a rationalization of ethical theory.
3.5.3 DAVID HUME
Hume, another empiricist and secular philosopher of this era, however differed from
Locke’s viewpoint in that he centred his moral thesis on natural laws and sentiments as opposed to tenets based on God’s will or Devine plan. According to Hume it was not
43 rationalist debates that determined ethical values but rather natural sentiments. He argued that the senses would instinctively direct one’s behaviour.
Where the truths are indifferent, and beget no desire or aversion, they can have no influence on conduct and behaviour. What is honourable, what is fair, what is becoming, what is noble, what is generous, takes possession of the heart, and animates us to embrace and maintain it… The final sentence, it is probable, which pronounces characters and actions amiable or odious, praise-worthy or blameable; that which stamps on them the mark of honour or infamy, approbation or censure; that which renders morality an active principle and constitutes virtue our happiness, and vice our misery; it is probable, I say, that this final sentence depends on some internal sense or feeling, which nature has made universal in the whole species. (Hume, 1751:10) [Accessed 24 March, 2004]
According to Hume, rational debate was necessary only as a mechanism to clarify one’s sentiments or desires. It was a means to an end but not the prime feature or cause of the action. He sees reasoning as a way of categorising the common qualities of one’s character that distinguish between good or bad, as perceived by the individual, and from which the foundations of ethical beliefs are derived. Reason, he asserts, is valid when determining matters of fact or logic but it cannot motivate the individual to act.
The only object of reasoning is to discover the circumstances on both sides, which are common to these qualities; to observe that particular in which the estimable qualities agree on the one hand, and the blameable on the other; and thence to reach the foundation of ethics, and find those universal principles, from which all censure or approbation is ultimately derived.’ (Hume, 751:10) [Accessed 24 March, 2004]
Some of the qualities, he asserts, form part of the natural virtues such as benevolence, or charity whilst others such as justice and loyalty are artificially constructed. He disagrees with Hobbes’ egoistic self-interest outlook being the driving force behind our actions arguing that benevolent acts are not always driven by personal reward and often align
44 with social wellbeing and general community happiness. Justice, he agrees, is a means of providing order and regularity and protecting property but it derives from social needs and hence is artificially constructed to serve a particular purpose. His argument is that the system itself is what is approved and accepted and not because it is a consequence of individual self interest.
Hume’s viewpoint could be considered as the turning point in ethical perceptions as his writings drew away from the religious emphasis on ethics and placed it in the social domain. He introduced the concept of utility to the moral debate and certainly had an influence on subsequent moral philosophers such as Bentham, Mills and Kant.
3.5.4 JEREMY BENTHAM
The most generally known and widely discussed teleological theory is the utilitarian theory, which argues, ‘that there is only one fundamental principle determining right actions. That is an action is morally right if and only if it produces at least as great a balance of value over disvalue as any available alternative action.’ (Beauchamp &
Bowie, 1993:7) Thus all decisions are based upon their utility to both individual and the community at large.
‘Jeremy Bentham, considered as the founder of traditional Utilitarianism, sought an objective base for making value judgements that would provide a common and publicly acceptable norm for determining social policy and social legislation.’(Velasquez,
1992:60) Bentham, a lawyer, considered utilitarianism not merely as an idealistic ethical theory but one of practical use whereby it could support and justify the level and severity of the punishments metered out to individuals for the crimes they committed.
45 He sought to distinguish between ethics and legislation and emphasised the need for clarity of meaning when establishing the common utility of an action.
Of an action that is comfortable to the principle of utility one may always say either that it is one that ought to be done, or at least that it is not one that ought not to be done. One may say also, that it is right it should be done; at least that it is not wrong it should be done: that it is a right action; at least it is not a wrong action. When thus interpreted, the words ought, right and wrong, and others of that stamp have a meaning: when otherwise, they have none. (Bentham, 1789:1 X) [Accessed 22 January, 2003]
According to Bentham, the acceptance of an ethical opinion should not rely solely on one’s personal feelings nor should it be so easily discarded but rather they should rationalise the benefits or deficiencies of its acceptance or rejection. In paragraph fourteen he provides a set of steps that should be followed before an opinion should be considered as useful. For example in step four he says:
If he [being any human being] is inclined to think that his own approbation or disapprobation, annexed to the idea of an act, without any regard to its consequences, is a sufficient foundation for him to judge and act upon, let him ask himself whether his sentiment is to be a standard of right and wrong, with respect to every other man, or whether every man’s sentiment has the same privilege of being a standard to itself. (Bentham, 1789:1, XIV.4) [Accessed 22 January, 2003]
He emphasised the need for the utility of any action proposed otherwise the action might hold as being uncontroversial but not beneficial or helpful. From a legal sense he suggested, ‘that crimes be classified according to the offence’s level of seriousness, and that the levels of seriousness be determined by the unhappiness or misery a crime visits on its victims and society.’ (Beauchamp, 1991:130) Crimes should only be considered as punishable if their consequences were harmful to others and that the punishment should only be severe enough to deter the offenders. Bentham’s utility theory enabled
46 serious discussion to progress in the development of an ethical framework that allowed for reasonable cooperation among individuals with differing lifestyles. He defined ethics as ‘the art of directing men’s actions to the production of the greatest possible quantity of happiness, on the part of those whose interest is in view.’ (Bentham,
1789:17, II) [Accessed 22 January, 2003]
3.5.5 JOHN STUART MILL
John Stuart Mill supported Bentham’s belief in the importance of the utilitarian theory of ethics stating that ‘the principle of utility had had a large share in forming the moral doctrines… that the influences of actions on happiness is a most material and even prominent consideration in many of the details of morals.’ (Mill, 1863:7) He centres his argument on the concept of happiness, which he defines as ‘a good’ comprising of all those desires, including the virtues, which lead to pleasure and exclude pain. The aggregate is a representation of the general happiness of all persons. He thus extended
Bentham's philosophy of ethics in that he felt that desirability was also an important factor. Mill advocated the establishment of an ethical standard that objectively promoted a method of choosing the right course of action based on a combination of practical utility and intellectual reasoning. ‘Our moral faculty, according to all those of its interpreters who are entitled to the name of thinkers, supplies us only with the general principles of moral judgments; it is a branch of our reason, not of our sensitive faculty; and must be looked to for the abstract doctrines of morality not for perception of it in the concrete.’ (Mill, 1863:6) Reason and intellectual interpretation, according to Mill, played a significant part in development of an ethical theory. Mill's moral philosophy was not unlike that of Aristotle in that he too advocated happiness as the principle ideal.
Unlike Aristotle and Bentham, however, he argued that there were different types of
47 happiness some more worthy than others. Happiness derived from the physical sensations, whilst pleasurable, was not what one should accept as the ultimate example of happiness. Pleasures of the intellect, feelings, and imagination allowed the individual a level of inner happiness far superior to those of the lower life (such as the animal world) that relied on mere sensation for their happiness. Mill argued that pleasure could be categorised based on one's level of desirability. He stated, ‘It is quite compatible with the principle of utility to recognise the fact that some kinds of pleasure are more desirable and more valuable than others. It would be absurd that, while in estimating all other things, quality is considered as well as quantity, the estimation of pleasure should be supposed to depend on quantity alone.’ (Mill, 1863:11) The use of superior knowledge was capable of distinguishing and categorising differing levels of desirability that produced happiness. The Theory of Utilitarianism for Mill thus comprised two components, one dealing with the normative theory of utility and the other dealing with human nature and the more abstract elements of intellect and imagination. The combination of the two provided the basis of choice.
The Utilitarianistic perspective thus interpreted the ethical ideals of good and right in terms of the achievement of those desired ends that produced the greatest amount of happiness for the majority. Generally speaking this theory is based on a maximisation principle where the maximisation of happiness becomes the principle concern. As Mill stated
The happiness which forms the Utilitarian standard of what is right in conduct is not the agents' own happiness but the greatest amount of happiness altogether... Utility would enjoin first that laws and social arrangements should place the happiness or the interest of every individual as nearly as possible in harmony with the interests of the whole, and, secondly that education and opinion should so use their power as to establish in the mind of every individual an indissoluble association between his own happiness and the good of the whole. (Mill, 1863:19)
48 Happiness here is not the penultimate achievement of perfection but more an acceptance of a positive life as opposed to a negative one. For Bentham, Locke, Mill and other hedonistic utilitarians ethical conduct was judged by the degree of happiness it produced. No rules or doctrines could be enforced because of the complex nature of human beings and the temporal and cultural influences of the situation. Mill acknowledged that codes of conduct and standards of ethical practices needed to be flexible to adapt to the time and place. As Mill commented ‘there is no ethical creed which does not temper the rigidity of its laws by giving a certain latitude, under the moral responsibility of the agent, for accommodation to peculiarities of circumstances’
(Mill, 1863:27) In many instances conflict of interest and obligations will arise and it is the intellectual and moral background of the individual which will ultimately decide the right course of action to take. Again training and education will hopefully pave the way to happiness and harmony.
Utilitarian theory itself can be dissected into a number of perspectives, the hedonistic views of Bentham and Mill being just one example. An act utilitarian, for example views a situation from the point of view of the actions involved and the utility achieved whilst a rule utilitarian looks firstly at rules of conduct that might influence the utility of a course of action. Utility theory can also be addressed from an absolutist point of view or a relativist point of view. The absolutist theorises that all actions must be validated according to their utility and that this will provide the guidelines for future. The relativist, on the other hand, is more flexible and looks at the utility of each situation individually.
49 Whilst Utilitarianism provides some measure of understanding of ethical behaviour and theory it also raises a number of questions regarding the adequacy of the explanation and definition of the theory. One of the main problems with the Utility theory is that it is assumed that value judgments can be measured. How does one weigh up the qualitative considerations? How is it possible to rank individual or even communal preferences and who decides which preferences or courses of action have the greater utility? Not all individuals will judge the consequences of certain actions as 'good' or
'right'. Nor is there uniform desirability among individuals. Those with the stronger desires, whether these are consensually good or not, will influence the actions chosen.
In other words the desires of the powerful or strong will suppress those of the weak and oppressed but this does not mean that they are necessarily the right or best actions to choose. ‘Utilitarianism treats society as a single person... the policy that ought to be adopted is considered as the one that maximises net happiness.’ (Bowie & Simon,
1977:50) This balancing technique raises the question of the possibility of inequitable and even unjust distribution.
Given this interpretation, it appears that justice cannot necessarily be included in the determination of 'good' and 'right'. At what point and by what method is one group’s viewpoint considered the more relevant? It is expected that good actions will override the more adverse ones assuming the distinction between them is discernible. However, there does not appear to be any guarantee that this will occur. The theory also fails to clarify the degree and level of utility involved. The role of the individual and their level of involvement are not stipulated. If they were merely the agent or neutral observers then the courses of action they would choose would differ dramatically to the situation in which they were personally and deeply involved. If, for example, the individual was
50 given the choice between saving the life of their child or that of a world leader who, it is felt, is needed to lead a country out of trouble, how do they choose? Their personal need is obviously great but ethically speaking should they not forgo their child for the good of a country? Personal feelings, family ties and the role played in a situation appear to be overlooked. Identification and transmission of meaning requires more than merely identifying the utility of an action, before it can be considered the appropriate course to take.
3.6 THE DEONTOLOGICAL THEORIES
In the deontological theories it is argued that the proper focus for ethical judgments should not be on the consequences at all but rather the moral precepts such as rules, norms and principles. ‘The Central Thesis is that, in considering what one ought or ought not to do, the issue is not decided simply by determining what action has the most desirable consequences. Among the appropriate considerations are such things as the promises, the contacts, and the agreements that one makes and the reactions one has to those affected by one's actions.’ (Bowie, 1982:6) The character of the individual and the motive behind the actions has relevance to the course of action taken. As can be seen thus far, the teleological theories have centred on the purposes and consequences of performing an act and the degree of goodness which results from the actions. Duty and obligation have not been considered.
An alternative to the teleological perspective is that of the deontological theory which has had a far stronger influence on the development of ethics in modern times. These theories appeal to a sense of duty rather than the desirability of consequences of actions.
51 ‘The general idea behind deontology is that there is a structure which places bounds on the ends that can be regarded as goods. Duties can be described in terms of them being perfect or imperfect; direct or indirect; absolute or conditional or they may be categorised under main headings such as those duties one has to God, to oneself and to others. Kant introduced a categorical imperative, which attempts to universalise these duties under one overarching principle. But behind duties, human nature, a social system, or the tendencies of an emerging group might be the fundamental structure upon which goodness depends.’ (Fisk, 1980:80) From this perspective rules and principles guide actions. The promises and contracts arranged between the parties and the impact such actions will have on others will determine which action is seen as the most appropriate course to take.
‘Deontologists put an emphasis on the sense of duty as a unique motive. Rightness and obligation are the central concepts of ethics.’ (Nowell-Smith, 1961:133) They see the sense of duty, as distinct from inclination or self interest, as being the pivot of the goodness of an act. The character of the individual and the motives behind the action has bearing on the results. ‘Deontologists may envisage only one supreme principle, a monistic theory, which maintains that one fundamental principle supports all other moral rules and judgments or they may accept many fundamental principles, a pluralistic theory, which identifies two or more irreducible moral principles.’
(Beauchamp, 1991:177-78) The most notable figures in support of the Deontology theories have been Immanuel Kant, Sir David Ross and John Rawls.
52 3.6.1 EMMANUAL KANT
According to Kant, correct moral principles are determined using the human art of reason with a sense of duty being the virtuous motivator. Individuals are considered to possess an innate sense of duty which intends to provide or produce good actions but which does not necessarily promote good feelings in the individual performing the act.
Moral worth comes from the performance of a duty regardless of whether it brings good results to the instigator or not. Kant states,
The moral worth of actions [should be] done from duty not from inclination… To secure one’s own happiness, to maintain one’s life and to be beneficent when we can is a duty [when promoted from duty and not from inclination]. The second proposition is an action done from duty derives its moral worth, not from the purpose, which is to be attained by it, but from the maximum by which it is determined, and therefore does not depend on the realization of the object of the action, but merely on the principle of violation by which the action has taken place without regard to any object of desire The third proposition, which is a consequence of the two preceding, [that] duty is the necessity of acting from respect for the law. (Kant, 1785, 16:3) [Accessed 22 February, 2003]
Moral worth is established from the principle of the will (the mental faculty used to choose between alternative courses of action) and not the ends or consequences of the action. ‘The will stands between its a priori principle, which is formal, and its a posteriori spring, which is material, as between two roads.’ (Kant, 1785, 16:3)
[Accessed 13 April, 2004] Duty surpasses all inclination and provides the ultimate reason for performing good acts. Reason provides that facility necessary to produce a good will (practical reason) unaffected by consequences or purpose, which stands alone without external influences. Kant's moral theory has been called the ethics of the categorical imperative. ‘Unlike the laws of the nature or rules of expediency, moral law has the distinctive note of unconditional obligation.’ (Beauchamp et al, 1983:32) A
53 categorical imperative looks at an action in terms of it being objectively necessary in and of itself regardless of the purpose or consequences. Kant argues that the will, through rationalisation, objectively determines a categorical good that is not reliant on hypothetical imperatives but rather stands independent of subjective influences and is valid for all beings.
Everything in nature works according to laws. Rational beings alone have the faculty of acting according to the conceptions of laws, that is according to principles...the will is a faculty to choose that only which reason independent of inclination recognises as practically necessary, i.e., as good. Practically good, determines the will by means of the conceptions of reason, and consequently not from subjective causes, but objectively, that is on principles which are valid for every rational being as such. It is distinguished from the pleasant, as that which influences the will only by means of sensation. (Kant, 1785, 16:3) [Accessed 22 February, 2003]
According to Kant good actions are only those that can be carried out for the benefit of everyone. They are not influenced by personal gain or desire but rather provide a universal good. If an act cannot be shown to have universal good then it cannot be accepted as ethical. Kant's emphasis was on that of the dutiful spirit of an action rather that the actual performance. Absolute good could only exist when the action was free from all other influences such as inclination and consequences. The moral worth of an action was derived from the dutiful intention rather that the performance of the action.
He also believed that true morality manifested itself in the interrelationship of the agent and his act. The intrinsic worth of an act was embodied in dignity, a fundamental element of social order. Kant thus professed duty to be the main catalyst of moral worth rather than purpose or consequence. The ability of an act to be consistently applied to everyone, i.e. its universality, established the goodness of the action. Linguistically speaking, a monistic viewpoint would allow for one universal framework upon which to
54 build an ethical position but it does not eliminate the opportunity for multiple adaptations and or interpretations.
Whilst the deontological perspective has become increasingly popular in modern times many have challenged Kant's monistic ethical theory, accusing it of being too rigorous and formal. Kant argued that one could not override or vary a moral obligation in any situation but he failed to explain how one decides between two conflicting obligations.
‘The theory that a single characteristic makes an act right or wrong seems to oversimplify morality in cases of converging obligations and in cases of conflicting obligations.’ (Wellman, 1988:34) This lack of flexibility and failure to provide for exceptions makes one question the possibility of universal ethical ideals.
3.7 VARIATIONS TO KANT’S THEORY
The theory of the Categorical Imperative is but one version (albeit a very distinguished one) of the deontological philosophy. Other deontologists have provided a number of varied explanations of ethical ideals based on duties, rights and obligations. Some, like
Harold A Pritchard (1871-1947), have developed ethical concepts based on the individual's intuitive understanding of an event or situation. Pritchard extended Kant's dutiful spirit theory by arguing that a sense of duty was in itself one of the most fundamental qualities of human nature and that an individual's actions were governed by their perception of a situation and the obligations attached and not necessarily the achievement of good results. Others (William James, 1842-1910; John Dewey, 1859-
1952) adopted a more pragmatic philosophy identifying truth and goodness in accordance with what had been tried and proven and or in line with the social
55 experiences of the day. All these theories have so far viewed ethics from the individual’s position and their interaction with society. A more recent deontological theory that has attempted to interpret the concept of duty and obligation from a communal view is that of the Contractarian Theory. The Contractarian theory attempts to interpret ethics from the point of view of an abstract hypothetical, social contract, drawn up in ideal circumstances by unbiased rational individuals, which aims at providing the most equitable existence for the majority. Basically, this theory aims at establishing an ethical viewpoint that entails universal equity and justice.
The ethical theories developed during the period of Enlightenment established a pattern of ethical thinking that was to last till the latter half of the twentieth century. This chapter has shown the movement from a religious domination of the ethical tenets to the introduction of a secular control of moral acts. The government, the community and ultimately the individual took charge of the debate and presented multiple viewpoints on how to classify and interpret ethics. Of course none presented a definitive and universally accepted viewpoint but all contributed to its clarification and relevance in terms of its importance in society. However in moving away from the unquestionable dogma and control of the church this period swung the pendulum almost to the opposite side, seeking solace in objective reason and physical evidence to support beliefs and practices.
The next chapter will bring this historical discussion on the development of Western ethics to its current stance in the twenty first century. The twentieth century saw the beginning of a new development of ethics; a period that all but severed the ties with religion and one that began the debate on the interpretation and use of specific
56 terminology to describe ethical principles. The chapter will identify some of the more prominent theorists of this era (Moore, Ross, Rawls, Kohlberg, Rorty, Habermas, and
Gilligan) and how they have influenced ethical thought. It will conclude with a discussion on the relevance to ethics today in all aspects of one’s life.
57 CHAPTER 4
TWENTIETH CENTURY ETHICAL VIEWPOINTS
Moral theories can be likened to spotlights. They throw light, from a
particular angle, onto the moral life and illuminate it. They elucidate aspects
of our moral life that might otherwise be left in shadow. (Hinman, 1998:65)
The period of Enlightenment, as was discussed in the previous chapter, was considered as a liberating and reflective period wherein the new political and economical climate encouraged social change built upon free will and rationalised choice, resulting in more open-minded and rewarding lifestyles. The traditional religious control was supplanted by the elevation of the individual to the role of controller of their own actions and a new way of life arose wherein morality became a choice and not a command. Ethical control was taken away from the church and placed in the hands of the state to be moulded in accordance with the changing economy.
The modern legislators and thinkers believed that reason could do what belief was doing no more; that with their eyes wide open and passion put to rest, men could regulate their mutual relationships no less, and perhaps more and better (in a more ‘civilized’, peaceful, rational manner) than at a time when they were ‘blinded’ by faith… In line with this conviction, attempts were continuously made to construct a moral code which - not hiding any more behind God’s commandments – would loudly and unashamedly proclaim its ‘man-made’ provenance and would be embraced and obeyed by ‘all rational human beings’. (Bauman, 1995:6)
New philosophical perspectives were introduced which identified a more community driven viewpoint of ethics that could be adapted to suit individual convictions as well as social mores. By the beginning of the twentieth century the secular movement had all
58 but supplanted the religious influence on ethics replacing it with a more objectified and naturally driven creed. The ethical debate now centred on meaning and application.
This chapter will extend the deontological argument presented by Kant by introducing a pluralistic viewpoint of ethical choice, which also leads to the acknowledgement and introduction of other factors that influence ethical beliefs and behaviour. The viewpoints of some of the leading twentieth century ethicists, Ross, Moore, Kohlberg, Rawls,
Habermas, Rorty, Gilligan, will be discussed, which demonstrates the plethora of positions that can be taken when evaluating ethics. This capacity for multiple choices highlights the importance of using appropriate language when expressing an ethical stance.
4.1 GEORGE EDWARD MOORE
One of the most notable influences on twentieth century ethics was in the writings of
George Moore who argued against the alignment of ethics with idealism and naturalism turning it instead towards intuitivism and realism, although not professing himself to be a true intuitionist. ‘Moore’s criticisms of ethical naturalism and metaphysical ethics were taken to show the flaws in the old philosophies and his alternative, purified, conception of an ethics based on personal appreciation of a plurality of intrinsic values appealed to an audience that wanted to go beyond the old alternatives of hedonistic utilitarianism and metaphysical theories of duties.’ (Baldwin, 2003:4) Moore’s examination of ethics attempted to ‘discover the fundamental principles of ethical reasoning; and the establishment of these principles, rather than of any conclusions which may be obtained by their use.’ (Moore, 1903: ix) He concentrated on the why
59 and how of ethical theory as opposed to the way in which it was enacted. Moore argued that within ethics certain terms existed that have intrinsic meaning and thus require no analysis or evidence to support their interpretation. The greater part of his writings centred on meta-ethical issues addressing such matters as meaning and the concept of intrinsic good as opposed to a consequential good. He also introduced the term
‘naturalistic fallacy’ in an attempt to refute the claims made in the naturalistic and metaphysical philosophies that the word good could be uniquely defined by associating it with specific natural or supernatural properties. According to Moore
How good is to be defined, is the most fundamental question in all ethics. That which is meant by ‘good’ is, in fact, except its converse ‘bad’, the only simple object of thought, which is peculiar to ethics. Its definition is, therefore, the most essential point in the definition of ethics… Unless this first question is fully understood, and its true answer clearly recognised the rest of ethics is as good as useless from the point of view of systematic knowledge. The main object of ethics, as a systematic science, is to give correct reasons for thinking that this or that is good. (Moore, 1903:5)
At this point Moore is not referring to the word ‘definition’ in terms of it’s meaning when used in a particular context but rather his intention aligns more with the peculiarities or unique qualities of a word that cannot be deconstructed any further. In this sense he argues that the term ‘good’ is indefinable stating that ‘it is simple and has no parts’. (Moore, 1903:9) If a word cannot be deconstructed any further than its etymological roots then it stands, according to Moore, as unique and indefinable offering, an intrinsic value as opposed to a conclusive or consequential value. Moore considered that the word ‘good’ had intrinsic properties that did not require definition and as such it formed part of the basic tenets of ethics. Moore asserted that it was not appropriate to merely discuss ethics in terms of ‘conduct’ but rather that it required a deeper analysis into its intrinsic properties to determine appropriate actions. He states,
60 The peculiarity of ethics is not that it investigates assertions about human conduct, but that it investigates assertions about that property of things which is denoted by the term ‘good’ and the converse property denoted by the term ‘bad’… This property, by reference to which the subject matter of ethics must be defined, is itself simple and indefinable. All assertions about its relations to other things are of two, and only two, kinds: they either assert in what degree things themselves possess this property, or else they assert causal relations between other things and those which possess it. In considering the different degrees in which things themselves possess this property, we have to take account of the fact that a whole may possess it in a degree different from that, which is obtained by summing the degrees in which its parts possess it. (Moore, 1903:26)
Moore also argued against Mill’s idea of pleasure and its association with desire stating that pleasure was not necessarily the sole ‘object of desire’ and hence could not always lead to good acts as Mill implied. He also discounted the metaphysical notion that through truth and knowledge ‘good’ derived as a real property. Moore’s thesis on ethics and the concept of intrinsic good provided the catalyst needed to re-evaluate the concept of ethics and introduce a new area of analysis, the influences of language and meaning on ethical interpretation. Moore is also known for his commonsense analysis of language distinctions. Whilst till now the moral debate centred on the agent and their perceptions of how to behave Moore and those that followed him changed this focus.
Twentieth century ethicists concerned themselves with interpretation and definition of ideas as opposed to behaviour or conduct. They began the debate on how to ‘judge what things were good or bad, right or wrong. The central question became, what is a moral judgment?’ (Warnock, 1978:134)
4.2 SIR WILLIAM DAVID ROSS
David Ross continued the debate on the intrinsic nature of the term ‘good’, adding as well the word ‘right’. According to Ross both words formed the moral basis of ethics
61 and neither could be absolutely defined. His concentration centred on the characteristics attached to the words that identified their intrinsic value. Ross also disagreed with
Kant’s monistic view of ethics advocating an alternative known as the pluralistic axionomy.
Ross dismissed the idea of only one supreme monistic philosophy advocating that there were “several basic and irreducible moral principles that express `prima facie obligations” (Beauchamp, 1991:189). He identified a prima facie duty as one that could be directly aligned with any number of relationships (eg husband to wife, creditor to debtor, parent to child) but which, independently, may require a specific action or solution without reference to any of the other acts or duties associated with the relationship. It is considered as a conditional duty (as opposed to a proper duty) in the sense that it depends on the circumstances of the situation. ‘Whether an act is a duty proper or an actual duty depends on all the morally significant kinds it is an instance of.’
(Ross, 1930:20) He argued that one performs an act not because it produces the greatest amount of good but rather because it carried with it the greatest sense of duty. Thus, where two conflicting obligations arise it is the responsibility of the individual to establish which duty carries the greatest moral obligation. In the business environment this situation is readily observable, particularly where there are conflicting loyalties and or conflicts of interest. Ross also stated that there may be a number of reasons why we choose one act in preference to another and that the duties performed can be subdivided into a number of prima facie duties.
Of prima facie duties Ross suggested the following division:
62 1) Duties that rest on previous acts of my own. These duties seem to include two kinds, (a) those resting on a promise or what may fairly be called an implicit promise (fidelity duties) or (b) Those resting on a previous wrongful act (reparation duties). 2) Duties that rest on previous acts of other men i.e. services done by them to me (gratitude duties).
3) Duties that rest on the fact or possibility of a distribution of pleasure or happiness, which is not in accordance with the merit of the persons concerned (the justice duties).
4) Duties that rest on the mere fact that there are other beings in the world whose condition we can make better in respect of virtue, or of intelligence, or of pleasure (beneficence duties).
5) Duties that rest on the fact that we can improve our own condition in respect of virtue or of intelligence (self-improvement duties).
6) The duties of not injuring or harming others (non-maleficence) (Ross, 1930:21)
One or more of these characteristics or claims of duty determine what makes actions right or wrong, good or bad. The duties associated with Justice Beneficence and self improvement is broad, general principles that lead to the production of good acts. The obligations or senses of responsibility attached to each of these duties support the intention to perform good acts irrespective of whether 'good' results. ‘What really matters is not that you should act on the right principle but that you should act on the principle that you believe to be right’ (Nowell-Smith, 1961:254).
Those duties associated with promise keeping, reparation or gratitude have additional qualities that are more specifically related. One's prima facie duty is thus conditional, depending upon the circumstances of the time or situation in which it arises. In ethics, unlike the sciences, we have no logical progression to decide which acts are good and right, we must instead rely on the wisdom of the well educated, coupled with social consensus and acceptance, to lay the foundations of moral theory. Moral standards are
63 derived from analysis of the situation. Those that have been adopted over time have stood the test of reflection and experience.
As Ross states,
In ethics we have no more direct way of access to the facts about rightness and goodness and about what things are right and good than by thinking about them; the moral convictions of thoughtful and well-educated people are the data of ethics just as sense-perceptions are the data of a natural science…The existing body of moral convictions of the best people is the cumulative product of the moral reflection of many generations... the verdicts of the moral consciousness of the best people are the foundations on which we must build." (Ross, 1930:40- 41)
Moral choice is never easy. There may be occasions where the individual is faced with two conflicting moral obligations, both of which will provide some measure of good.
The choice is arbitrary, although Ross argues that one should weigh up the degree of rightness or goodness that results and, that obligation with the more beneficial result should be chosen. He states ‘while we know certain types of actions to be prima facie obligatory we have only opinion about the degree of obligatoriness... It becomes a matter of individual and fallible judgment to say which claim is, in the circumstances the overriding one.' (Ross, 1930:189) The moral philosophy espoused by Ross supports the need to deconstruct and reflect on the multiple choices open to anyone attempting to act ethically. Obligations, duties or desired results are all factors to be considered when establishing an ethical position.
4.3 LAWRENCE KOHLBERG
Ethical beliefs and practices of the twentieth century have also been explained from a psychological perspective. Moral psychology, addresses the concept of moral
64 development from a cognitive viewpoint with right and wrong, good or bad being determined depending on the educational and psychological maturity of the individual.
Piaget (1930), in his developmental studies of children, identified a moral progression in children from heteronomy (wherein a young child reacts more to the rules and dictates of an authority figure than their own evaluation of the situation) to autonomy and equity (a point at which the child is capable of providing a balanced evaluation of a situation and or issue, ensuring all factors are taken into account). Kohlberg expanded on Piaget’s work using the developmental approach to establish a three-phase, six-stage moral taxonomy for adults wherein he claimed that moral reasoning was an important factor in explaining moral choice. He demonstrated that an individual’s ethical stance could be explained using a model that combined their cognitive and chronological development. He proposed that the individual systematically progressed through a series of phases in moral development, remaining at that point that best aligned with their state of psychological and physical maturity. ‘He sees these stages as universal, sequential and irreversible.’ (Hinman, 1998:370)
Each stage identified a new level of mental reasoning to explain moral behaviour and choice. He explained each phase as follows:
65
(Source: The Six stages of Moral Judgment, Kohlberg, L., Essays on Moral Development, Vol 1, The Philosophy of Moral development, 1981, http://teachweb.cis.uoguelph.ca/cs2050/Kohlberg'sixStagesofMoralJudgment.htm)
‘What Kohlberg found was that people pass through stages of moral development, some progressing further than others, most never getting beyond the fourth of six stages.’
(Hinman, 1998:370) He asserted that, depending upon the individual’s stage of development, they would adopt a particular ethical stance. ‘In general, humans proceed from egocentric orientations in which simple pleasure and pain are the main considerations, to contractual, altruistic, and principled orientations.’ (Flanagan,
66 1991:150) Kohlberg was more concerned with how individuals interpreted an ethical situation rather than the action. The same situation could be interpreted differently depending on the cognitive skills of the people involved, with each stage of his model appearing to be an advancement on the previous. ‘With progression through the stages the scope of an individual’s moral world widens although the motor of development remains private reflection.’ (Leman, 2001:205) Kohlberg’s work again highlighted the importance of considering all factors that influence the understanding and interpretation of a particular situation or position. In an organisational environment it is quite feasible to have members residing at all stages of Kohlberg’s model and as such developing an ethical code of conduct should be capable of catering to all levels.
Whilst Kohlberg’s model of moral development appears comprehensive and logical and offers an alternative explanation for the reasons why individuals take different ethical positions for the same situation, there are some areas of concern. Firstly his model takes an individualistic approach that does not acknowledge the cultural and social influences on the development process, appearing to standardise moral development without acknowledging the uniqueness of human nature. Secondly the model does not allow for regressive activities assuming people always move forward. It assumes that at a given age an individual can be clearly categorised. In fact it may be difficult to clearly situate an individual as some may find themselves aligned with a number of stages. Kohlberg himself has, over time, added additional interim stages to accommodate just such a metamorphic stage. Finally one of the main criticisms of Kohlberg’s model is that it presented a male-focused viewpoint. It is argued (Gilligan particularly) that women assess ethical situations from a totally different perspective to men and as such will present differently in Kohlberg’s model. The model does not allow for distinctive,
67 cultural and historical differences that impact on one’s ethical position. As Leman
(2001) states,
For cognitive-developmental theorists (such as Kohlberg) moral thought is not wholly the product of our social environment. Rather, moral reasoning is a matter of how we, as individuals, make sense of that environment. In this sense cognitive theories allow us to conceptualise moral reasoning as a truly autonomous process… However, a potential problem for cognitive- developmental approaches is that they underplay (or perhaps ignore) the importance of the social crucible in which moral thinking and action happens. And whilst autonomy is clearly an important aspect of morality, studies from a variety of cultures ad even within cultures point to significant and consistent social variations in moral reasoning. (Leman, 2001:211)
To counteract this problem Carol Gilligan has posited another psychological perspective of ethics centring on ‘care’ as opposed to rights and justice and she introduces the views of women and minority groups.
4.4 CAROL GILLIGAN
Gilligan’s theory highlights another cultural aspect of ethics that has become a significant issue in the twentieth century, that of the distinction between the male and female viewpoint. The voice of women had, until the turn of the twentieth century, been subsumed in a male centred world, with ethical attributes concentrating on fairness and justice and ignoring relationship and care issues. Gilligan found that the developmental model put forward by Kohlberg was not representative of all human development as it presented women as somewhat inferior to their male counterparts because they did not clearly align with the attributes of the model. She argued that ‘the failure of women to fit existing models of human growth may point to a problem in the representation, a limitation in the conception of human condition.’ (Gilligan, 1982:2) Her thesis thus
68 attempted to introduce a feminine perspective ‘to highlight a distinction between two modes of thought and to focus on a problem of interpretation rather than to represent a generalization about either sex.’ (Gilligan, 1982:2) Gilligan’s writings, whilst centring on the views of women, introduced the concepts of care and connectedness to the ethical debate on moral reasoning. Her discussion served to once again highlight the point that ethical beliefs could not be easily compartmentalised as many cultural aspects influence choice and behaviour.
‘Gilligan ‘s study showed that women tended to see the moral life more in terms of care rather than justice, in terms of responsibility rather than rights… Men typically make moral decisions by applying rules fairly and impartially, whereas women are more likely to seek resolutions that preserve emotional connectedness for everyone.’
(Hinman, 1998:375) Male qualities reflect a more autonomous and rules based image whereas the feminine image fosters a caring, relationship-centred focus and, whilst not all men or women fit completely within these moulds, they do provide another dimension to the ethical position. Gilligan provides an alternative explanation for the moral growth of women to that presented by Kohlberg’s. She states,
When one begins with the study of women and derives developmental constructs from their lives, the outline of a moral conception different from that described by Freud, Piaget or Kohlberg, begins to emerge and informs a different description of development. In this conception, the moral problem arises from conflicting responsibilities rather than from competing rights and requires for its resolution a mode of thinking that is contextual and narrative rather than formal and abstract. (Gilligan, 1982:19)
Gilligan also adopts the stage process model to explain the moral development of women. In her model she identifies ‘a psychological logic of relationships, which contrasts with the formal logic of fairness that informs the justice approach.’ (Gilligan,
69 1982:73) She posits three different stages of care with transitional phases between them.
The first stage focuses on self and survival followed by a transitional phase moving from ‘selfishness’ to relationships and caring for others. The second stage ‘signals a new understanding of the connection between self and others which is articulated by the concept of responsibility.’(Gilligan, 1982:74) The identification of self and others and the idea of self-sacrifice trigger another sense of concern or transition period wherein it becomes difficult to acknowledge and include self as part of the caring ethic without feeling selfish. The final phase allows for the combination of caring for self and others to be acceptable. ‘It focuses on the dynamics of relationships and dissipates the tension between selfishness and responsibility through a new understanding of the interconnection between other and self.’ (Gilligan, 1982:74) Gilligan’s introduction of an ethics of care revealed a new dimension to the interpretation of ethics. It served to reinforce the point that both the sociological and psychological aspects of an individual significantly influence and often direct the way in which ethical issues are dealt with.
Whilst the principles and words used in ethics may be the same for both sexes it is in the translation and enactment that differences in understanding arise. Men and women place a different emphasis on interpretation and meaning and it is relevant to duly note and accommodate both viewpoints when developing an ethical position in the workplace.
In addition to the individual having to make personal choices and establish their own practices the environment in which the issue(s) arise also must be considered before any action is taken. As no situation occurs in isolation it is appropriate to address the interrelationships that influence preferences. John Rawls, in his evaluation of ethical
70 theory, moves the discussion to yet another level, wherein he identifies a collective contractual structure, which acts as the foundation for social ethics and moral practice.
4.5 JOHN RAWLS
Rather than looking at ethical theory from the individuals' perspective Rawls talks of a theory based on the interaction of consenting parties (within a social structure) that provides a coherent compromise to a primary set of rules that capture the first principles of ethical living. He states, ‘We are to imagine that those who engage in social co- operation [a social contract] choose together, in one joint act, the principles which are to assign basic rights and duties and which determine the division of social benefit… A group of persons must decide once and for all what is to count among them as just and unjust.’ (Rawls, 1999:10-11) The theory itself is based on the understanding that all parties involved are of equal status, each having no power over the other members.
Natural talents or social positions have no influence in determining the terms of the contract.
Rawls’ theory interprets the meaning of justice as 'fairness'. In this way he tries to provide a more equitable distribution of rights and obligations that will be acknowledged by everyone. He emphasises that ethics are social constructs, established communally, to entice individuals to behave in a way that gives benefits to others as well as themselves. The talents and achievements of individuals, in a similar fashion to
Kant’s goodwill, must contribute to the wellbeing of the majority for them to be considered as ethical and not merely self-serving. He states that a more general conception of justice could be expressed as ‘all social values - liberty and opportunity,
71 income and wealth, and the basis of self respect - are to be distributed equally unless an unequal distribution of any, or all, of these values is to everyone's advantage.’ (Rawls,
1999:54)
Any perceived inequalities between individuals are acceptable so long as those less fortunate derive some benefits as well. The theory of justice as fairness aims at establishing a set of universal first principles in which everyone would be happy to adhere, given that the contract has been drawn up by consensus and without prejudice from a position or station in life. ‘These principles primarily apply to the basic structure of society and govern the assignment of rights and duties and to regulate the distribution of social and economic advantages.’(Rawls, 1999:53) The equilibrium of the two principles can be seen, if viewed as a fair balance, to provide equal opportunity. Rawls identifies them in terms of a ‘difference principle' - the principle of mutual benefit. He best describes the meaning of ethics when he refers to wellbeing being dependent on a scheme of social co-operation. It is perhaps from this viewpoint that most business organizations and professional people should adopt their ethical philosophy.
As the twentieth century progressed and secularisation took over from enlightenment the ethical debate has become more contextual and temporal. As a consequence language and its associated communication cues became the focal point of ethical discussion in order to appropriately situate the basic principles. The second half of the twentieth century has seen the adoption of two more theories of ethics, discourse ethics and pragmatic ethics, both of which pivoted around language and the way it is used to evoke action.
72 4.6 RICHARD RORTY
In the second half of the twentieth century Richard Rorty advocated a pragmatic viewpoint of ethics based on observable practice and human experience as opposed to metaethical ideals or the human condition. Rorty’s views differ from the more traditional naturalistic and metaphysical paradigms previously discussed, in that he rejects the concept of a ‘universal truth’ and the reliance on reasoning as an essential basis for moral order. Whilst Rorty acknowledges the relevance of knowledge and reasoning to moral theory he does not agree with their supremacy. Rather he asserts that truth, and its bedfellow, reality, are not absolutes but rather contextual and intersubjective in nature and hence will derive meaning from practice. He argues that moral development comes from acknowledging the social order of one’s culture and that our moral stance comes from the particular cultural view practiced within that community. Thus, cultural values are defined and redefined through our interrelationships within our culture and our associations and interactions with other cultures. ‘Our moral progress should not be conceived of as the convergence of human opinion to Moral Truth or as the onset of greater rationality, but rather as an increase in our ability to see more and more differences among people as morally irrelevant’
(Rorty, 1998:11) This way leads to a more holistic, all-inclusive society with differences being acknowledged and accepted as opposed to being distinguished and, in some instances, judged.
A universal moral code therefore exists only as a collective of viewpoints developed through the harmonious practices of the multiple cultures and these are constantly open to debate and modification. Rorty favours a human rights culture based on a ‘summary
73 of our culturally influenced tuitions about the right thing to do in various situations. The summary is effected by formulating a generalization from which these tuitions can be deduced… and that the point of formulating such summary generalizations is to increase predictability, and thus the power and efficiency of our institutions, thereby heightening the sense of a shared moral identity that brings us together in a moral community.’ (Rorty, 1998:171)
Rorty considers the vocabulary of ethics to be embedded in the practice and or history associated with a culture at any one time and that language is but a tool used by individuals and societies to construct their social mores. Used in the pragmatic way
‘language is seen, not as a tertium quid between subject and object, nor as a medium in which we try to form pictures of reality, but as part of the behaviour of human beings.’
(Rorty 1982:8) According to Rorty the ethical question is not about universal truth or what kind of rational beings we are but more to do with how we can best use our distinctive qualities to provide an ethically sound structure for today’s needs. The language and vocabulary adopted by a culture reflect their current attitude and any changes to these beliefs will come from the process of interacting with other cultures.
Rorty does not believe that there is an externally superior text upon which a metaethical vocabulary can be derived but rather that, from a pragmatic viewpoint, it comes from
‘the process of playing vocabularies and cultures off that we produce new and better ways of talking and acting.’ (Rorty, 1982:32) Rorty does not proffer an alternate definition to concepts such as truth or reality; good or right but merely reaffirms the arguments put forward by Moore and Ross as to the difficulty of providing one absolute interpretation. He does however disagree with the intrinsic elements of these terms but rather considers them as more contextual and temporal. The pragmatic opinion
74 presented by Rorty emphasises community and egalitarianism, a sense of solidarity and the use of sentiment to govern moral practice. Another philosopher who also espouses an interactive, communicative ethic is Jurgen Habermas.
4.7 JÜRGEN HABERMAS
As with Rorty, Habermas supports the inclusion of pragmatic influences on ethics however he is not as dismissive of the potential to universalise the ideals established through consensus. Habermas addresses an alternative ethical position based on the theory of communicative action and titles it as discourse ethics. This style of ethics appears compatible with a number of the traditional ethical theories but concentrates on community interaction and debate to determine a practical ethical position. In part
Habermas models his theory on Kant’s categorical imperative but distinguishes it from this and the other theories as follows:
‘Discourse ethics takes its orientation from an intersubjective interpretation of the categorical imperative… It insists, in a Kantian spirit, on the internal relation between justice and solidarity. It attempts to show that the meaning of the basic principle of morality can be explicated in terms of the content of unavoidable presuppositions of an argumentative practice that can be pursued only in common with others. The moral point of view from which we can judge practical questions impartially is indeed open to different interpretations. But because it is grounded in the communicative structure of rational discourse as such we cannot dispose of it at will. It forces itself intuitively on anyone who is at all open to this reflective form of communicative action.’ (Habermas, 1993:1)
In this instance a process of debate, wherein dialogue and consensual agreement among communities validate the adopted norms, replaces the traditional development of universal principles, which historically were validated by ‘assertoric statements’ that provided the objective metaphysical maxims. Practical reasoning supplants theoretical
75 reasoning and argumentation replaces idealisation. The principle of universalisation that Habermas attaches to his ethics centres on a principle of argumentation in which all members of the community are free to put forward their viewpoints and access other viewpoints in order to establish general moral norms. The rule of argumentation implies that for every valid norm there is general consensus that all affected would freely accept the consequences, both personally and socially. ‘The universal principle thus posits a kind of ideal end-point of moral inquiry, in which agreement would settle on only those norms that were equally in the interests of all.’ (Finlayson, 1999:34) In this sense the best arguments put forward will prevail. This interactive process supports the argument that a moral viewpoint cannot occur unless it embraces the environment in which it is to function. According to Habermas the objective-neutral position posited by the metaphysicians and empiricists is inappropriate for an ethical perspective. He sees them as ‘unsuitable for judging the question of whether actions or norms are in the common interest or contribute to the common good.’ (Habermas, 1993:48)
The development of ethical ideals should thus be inclusive. Individual beliefs and practices must cohabitate with those of the social world. ‘One who wishes to examine something from the moral point of view must not allow himself to be excluded from the intersubjective context of participants in communication… We cannot attain an impartial standpoint by turning our back on the context of linguistically mediated interaction.’ (Habermas, 1993:49) The discourse ethics espoused by Habermas aims to establish a universally accepted ethics based on the interaction between the intersubjective relationships of individuals and their communities. His use of argumentation also ensures continuous discussion, which allows for adaptability to changes in conditions. Discourse ethics incorporates a number of the elements found in
76 Kant’s deontological theory, Rawls’ contractual theory and Kohlberg’s cognitive theory and hence presents a more eclectic modern view of ethical theory.
Ethics is then a moral philosophy that aims at evaluating and prescribing the most positive means of achieving an all-inclusive moral life. “Ethics involves techniques of judging and decision making as well as the tools of social control and personal development.” (Garrett et al, 1986:2) It embraces a number of viewpoints, which help to highlight the relationships both within and between individuals, their social environment and the context in which events occur. The distinction between any of the ethical theories is really arbitrary, as it is arguable that there is a significant amount of overlap between them. Their distinctions come more from their interpretation than a debate as to the basic tenets. ‘While each of the major ethical philosophies has its own unique conceptual core, there exists a certain conceptual overlap among them.’
(Reidenback & Robin, 1990:640) The question is not which philosophy one follows but rather which philosophy best suits the needs of the individual or the community in that specific situation and how readily it can be translated and applied. The main point at issue is thus how to adopt the ideals of ethics to our way of life both individually and collectively to ensure a more equitable and fulfilling existence for all.
One way that can assist with the translation is to ensure that the ethical stance that is adopted is clearly articulated. The following chapters will focus on the development of an ethical position for the business sector with particular emphasis on the usage of language as the tool of communication, whilst also acknowledging the political, social and cultural influences that impact on its successful integration.
77 As can be seen thus far ethics, from a philosophical viewpoint, represent an abstract set of first principles or ideals, established with the intention of providing positive and beneficial guidance to individuals, businesses and the community in general. ‘Both the study and practice of ethics contribute to our growth of society as a fit place.’ (Garrett et al, 1986:4) Whether one follows a teleological or deontological approach the central thesis remains still the same. The benefits of ethical practices are governed by the ability of the individual or group to evaluate their actions in such a manner as to achieve a measure of benefit for everyone. Ethics is not merely a study of ideals or moral maxims but rather the development of an exemplar for moral behaviour of individuals and society in general. Three fundamental principles can be derived from the above discussion, these being the principles of beneficence, justice and benevolence. None of the principles specifically relate to one school of thought but rather the combination of the three summarise the overall dimensions of ethics. These principles are not definitive and, like the words ‘good’ and ‘right’, their adherence is solely based on interpretation. Enforcement of one particular viewpoint is not suggested, merely that they be addressed in the development of an ethical position. It is hoped that with the aid of reasoning, dialogue and appropriate language it is possible to translate, with linguistic proficiency a functional interpretation of ethics that enjoins the human dynamic with these three principles and to provide what Aristotle described as the ‘good life’.
This chapter concludes the historical development of Western ethics and, whilst time has only permitted the discussion of some of the eminent writers that have influenced the growth of this field, the ideas presented provide a backdrop to help identify and articulate the current ethical perspective. Today’s ethics embrace a plethora of
78 influences that govern and direct moral actions but, as the previous discussion has shown, one factor has emerged as fundamental to and underpins all current day decisions and that is the ability to clearly enunciate meaning. Appropriate language is the key to interpretation and application of ethical principles in this age and, as has also been shown above, there are many ways of communicating a moral position. The following chapter will identify and discuss the ways in which language plays a controlling part in communicating and directing ethical behaviour.
79 CHAPTER 5
THE USE OF THE WRITTEN WORD AS A COMMUNICATION TOOL OF BUSINESS ETHICS
‘There is a presupposition that meaning can be literally determined thus
appearing as a true interpretation with tropes being extensions or figurative
representations. Postmodern philosophers (Derrida, 1978; Eagleton 1983;
Harland, 1987) would argue that there is no one absolute core meaning.’
(Walters-York, 1996:49)
The previous three chapters identified the basic tenets of ethical theory but they also showed that interpretation and application could vary depending on the way such principles were introduced and implemented. Historically, definition or interpretation of meaning was not such an issue as it was established and debated by the educated and often wealthy few. Later that role fell to the Church who dictated appropriate behaviour without opportunity for discourse or inquiry. It was not until the age of enlightenment and the subsequent social secularisation of ethics that language and meaning became central to its understanding.
Today ethics has a much wider constituency to satisfy and this can only be achieved if the fundamental tenets are communicated in a manner that is understandable and applicable to all relevant users Communication is a key element to the success of modern day ethics and an important way in which this is achieved is through the use of suitable language. This chapter will link the use of the written word as a formal means of communicating meaning and show how, with the aid of some informal cues and its relationship to multi cultures, it can achieve a sustainable moral outlook.
80 The business sector of the twenty-first century, in the main, trades in a global environment and as such must be capable of balancing a plethora of pressures that place an inordinate strain on the success of operations. Organizations must not only contend with the shifting boundaries of trade and competition but they must also address the influences of multi cultures, multi governments, technological changes and the development of corporate power. In order for organizations to maintain their competitive edge and social position they must operate at multiple levels of communication. Communicating effectively requires particular knowledge and skills in the development of a language that is fluent and adaptable to all situations and levels of operation.
There are many ways in which to communicate but basically they are recognised in two main forms, the formal (explicit) and openly visible mode of communication and the informal (implicit) method of communication. Explicit communication is the most direct and formal method of imparting meaning and requires structure and planning. It can be performed either orally or in a written format. Oral communication, through the use of verbal dialogue and supported by informal aids (gestures, speech tone, etc), is considered the most important and effective means of communication as it has the advantage of providing an immediate indication as to whether meaning has been successfully conveyed. The ongoing exchange between the parties allows for immediate correction and reinforcement of intended meaning ensuring a guarantee of the desired interpretation. It is thus the preferred method of communication where possible. However, in the business environment, given the more involved and ongoing dialogue that occurs, the most efficient form of communication is via its written format, as this is the most express method of interacting with large numbers at multiple
81 locations and at any one time. It also has the advantage of being verifiable long after its deliverance. The use of internet chat lines, emails, and other more traditional techniques, such as written memoranda, policy statements and procedural manuals, tend to be the norm in terms of maintaining a dialogue between management and staff. As most correspondence often nowadays takes place on a global level the emphasis is on expediency and conciseness of content. Non-verbal forms of communication are frequently used as ancillary or support mechanisms that reinforce a specific meaning.
They may include such activities as gestures, stance, dress and tone or even a particular colloquial vernacular, when conversing orally or the use of graphics, visuals, and particular styles of prose, the use of simile or metaphor, or even specific types of writing paper when corresponding in writing. Regardless of which form of communication is adopted the common element linked to both modes is language, and it is through this mechanism that it becomes possible to transfer information from one party to another. ‘We encounter language as the enormously complex, rich and ordinarily invisible medium, that we have available for communication. (Diamondstone,
2002:318)
As the development of a business code of ethics is the particular issue in question in this thesis it is important to explicate the use of language as an ethics implement, with its multiple methods of constitution and lack of absolute meaning, before addressing the corporate position on ethics and deconstructing any particular codes currently in practice. In addition, aspects such as education, culture (including the organizational, social, political and economic positions of both the author and the intended recipients) and experience all have particular linguistic inferences, which need to be recognized and dealt with before a code can be promulgated. If the business sector is serious about
82 developing a sound moral position then it must first interrogate the use language, particularly in its written form, as the most appropriate means of positing a particular ethical stance.
5.1 LANGUAGE
‘Language is a structure; a system of oppositions of places and values… No language has an absolute situation, only a differential one.’ (Derrida, 1984:217) It is often seen as the reservoir for meaning, definition being determined through the conjunction of words with cultural/social experiences. ‘Language is the way of accessing and understanding experience. By naming and renaming experience, we bring it to awareness, (re) interpret it and come to particular understandings or misunderstandings.’
(Max Van Manen, 2000:315) The key elements to language structure are the syntax
(sentence structure), the semantics (system of meanings) and the semiotics (signs) which, when combined, codify the intended meaning. Interpretation and acceptance come from the intentional combinations or couplings of the words.
Whilst language, particularly the English language, is derived from a number of theoretical bases including grammatology, morphology and the theory of linguistics in general, the point of reference for this thesis is in the use of language as a means of emoting a specific sentiment or belief, highlighting the power of language, particularly written language, as a communication tool within its cultural context. ‘Linguist Michael
Halliday in his early work theorized language as a meaning-making system – a social semiotic. Halliday argued that language evolved in response to social and cultural needs, and that a description of language should reflect its functionality in actual
83 use.’(Diamondstone, 2002:321-322) The function of language from this perspective reaffirms the close alliance between theory and practice. For example the ethical ideals underpinning a stated corporate code of practice are put forward through the use of an applied language derived from the social and cultural ethics of businesses in that period.
As the written word is often the most dominant means of communicating information to all levels of the organization, management issue manuals and specific written directives, which aim to ensure that staff are notified (but not necessarily informed) of the policies and operational procedures in place to ensure a smooth flow of operations in the organization. Apart from ensuring that these missives/documents are easily attainable in the physical sense, it is equally important to ensure that the language used is appropriate. The language employed, coupled with the cultural and social influences surrounding the organization and its employees, can act as a benefit or deterrent to imparting the intended meaning. If the multi influences, as stated earlier, have not been acknowledged and incorporated within the text then the likelihood of ensuring compliance, or at minimum understanding, is severely impaired. The recipients of written communications will be swayed by the context and hermeneutical developments that have prompted their inception. The main responsibility of the author(s) is to ensure they clearly articulate meaning. As most communication is subject specific the prose used should incorporate language that is common to that subject and, at least, summarily understandable by all recipients. For example when discussing ethics, words
(e.g. ‘good’; ‘right’; ‘honesty’) and phrases (e.g. ‘do the right thing’; ‘act honourably’) which are familiar to the subject matter, are often used in the compilation of a corporate code of ethics, yet rarely is a specific interpretation attached leaving recipients to translate within their own biased boundaries and failing to expose a commonly accepted
84 meaning. Through the careful choice of words there is an opportunity to develop a level of commonality of understanding, which can enhance intended meaning, ensuring a suitable level of interpretation and adoption. This concept will be elaborated in later chapters.
Depending on which linguistic school followed, language can be seen to be founded on an innate abstract structure or it can be seen as temporal and contextual, constantly adapting to change. Chomsky argues that language is constituted by abstract (deep, innate) structures that provide the rules etc that are then employed in the communication process in a superficial (surface) manner. ‘Chomskyan linguists assume that humans possess an innate set of pre-existing mental structures that enable them to possess and use language. These deep structures are a class of abstract underlying linguistic principles or structures that are called linguistic knowledge or linguistic competence.
Surface structures are deduced on the basis of a hypothetically derived set of rules arising from the underlying innate principles of linguistic knowledge. This view is mentalistic and holds that language consists of a set of abstractions studied as principles, rules and a generative grammar.’ (Truex & Baskerville, 1998:107)
Other, post modern theorists (Derrida, Eagleton and Harland) would reject Chomsky’s idea of language being an innate mental structure and see it more as an evolving process. In this instance the thematic representation is replaced by a deeper analysis of the structures and multiple plays on the meaning of the words used. ‘Languages and structures, rather than authorial self or consciousness, become the major source of explanation.’ (Culler, 1994:21) Meaning and understanding thus become inevitably embedded in the structure of the language adopted.
85
Textual meaning is also governed, as was stated earlier, by the hermeneutical backgrounds of both the author(s) and the reader(s) and the currently accepted grammatical structures in place. ‘Natural language is made up of words, the meanings of which are governed by community practice and defy strict definition. The discourse of natural language flows at variable human scale speeds appropriate to social context.’
(Ruthrof, 2000:189)
When speaking, meaning can be determined through the tone in which the statement is made or the manner in which a word is used. In writing, the associations or linkages with other words or the sentence structures themselves become the manner in which meaning is assigned. For example the word ‘read’ can either be associated with the past or the present depending upon which supporting word(s) are used. Another example is the word ‘good’ which has multiple meanings. It can be a state of well-being, something pleasant or nice, or a summary term used in business to describe a product or collective of products used to sustain human existence. ‘One might think of language as a play of differences, a proliferation of traces and repetitions which, under conditions that can be described but never exhaustively specified, give rise to effects of meaning.’ (Culler,
1979:90) Hence to achieve maximum benefit from the use of a linguistic expression it is crucial that the pitfalls and or limitations of such expressions are addressed before the final product is distributed.
‘In written communication we trust our entire presentation to the words we select.’
(Fabian, 2001:74) The choice of vocabulary and the literacy levels of any intended audience need to be considered before any linguistic interpretation can be ascribed.
86 Within the business community literacy skills can vary significantly, ranging from lower high school to university trained and although society has become more educated in recent years the literacy level of the majority of employees may still lag behind the instructional material offered. The ability of an employee to read and derive a basic meaning is to some extent based on the premise that they are assumed to be literate.
However no definition of what is considered as literate is forthcoming. Literacy skills among staff members can vary significantly. A study by Nale et al (1998) found that the majority of employees operate with a minimum reading and comprehension literacy level, recently considered to be at a functional level (year eight high school), which is often below the level at which reports and policies are written.
It is hence important that the authors of policy statements and procedures manuals, including codes of practice, be acutely aware of presenting material at a level of understanding that accommodates all of the targeted audiences. Interpretation and enactment of a written missive can be severely impeded if it is couched in language unfamiliar to the educational and demographic background of an intended audience.
‘The meaning of a given sign may change with the speaker/writer, the circumstances of its making (the history, the context, the speaking community from which it derives), and the reader’s unique contribution on the text.’ (Walters-York, 1996:49)
Moreover, whilst we live in a more educated world the pressures imposed by time constraints and a globalized market place force readers to ignore or quickly dismiss any correspondence that does not identify and explain its content promptly and explicitly.
Authors should consciously avoid any superfluous words and concentrate more on the
87 use of an analogy or metaphor that clearly imparts a more realistic and identifiable interpretation of the situation.
Finding a language suitable for the development of a moral stance for an industry is more difficult than expected as most of the terminology used in developing the code contains language that is not clearly definable. However with careful selection, it is possible to establish a business ethics code that becomes an intrinsic part of the daily operations of the organization. In order to achieve this aim it is essential to distinguish the form of the written discourse, whether this is descriptive, narrative or persuasive, as each style of writing requires different characteristics to be used.
A business report is usually concise and factual and therefore highly descriptive whereas narrative or persuasive styles are used more often to provide anecdotal material for a particular case or scenario and are less formally structured. This particular technique appears to be the more appropriate style of writing when developing codes of ethics as the persuasive style allows for the use of more emotive language to encourage reader involvement as well as placing the ethics of the period within the context of the situation at hand.
5.2 THE WRITTEN WORD
As stated earlier, the written word is often considered as a less effective means of communication to that of the spoken word as it lacks the physical interaction between the author and their audience.
88 Speech is seen as in direct contact with meaning: words issue from the speaker as the spontaneous and nearly transparent signs of his present thought, which the attendant listener hopes to grasp. Writing, on the other hand, consists of physical marks that are divorced from the thought that may have produced them. It characteristically functions in the absence of a speaker; gives uncertain access to a thought, and can even appear as wholly anonymous, cut off from any speaker or author. (Culler, 1994:100)
Plato, Saussure, Rousseau, Husserl and Lévi-Strauss, to name but a few, portrayed writing as a derivation of or, at best, an extension or supplement to speech, legitimising it only as a means of reinforcing the meaning already projected in the spoken word.
However if this perspective were to be accepted today it would then be exceedingly difficult to develop a code of ethics that embraced and gave credence to a commonly acceptable belief within the organization.
Today’s corporation covers a large distance, with face-to-face communication at a premium, and hence addressing all staff members would probably be a logistic impossibility. Coupled with this a delivery of policy and instructions quite likely would fail to acknowledge or include the diversified cultural influences of its members. Any oratory discourse or its content, particularly that advocated by management that is only delivered orally, would be biased in favour of management and would not incorporate the views of the bulk of staff. In terms of the development of a workable ethical code this method would not be readily accepted as it would be perceived as merely an extension of a code determined by a hegemonic group rather than a functional, socially acceptable guideline for practice. It could be subjected to constant debate or even ignored depending on the position of its orator and whether all parties who were privy to its enactment were capable of translating its intent accurately to absent members. An automatic restriction is placed on the translation and transference of meaning of the codes to that, which is purported to be an accurate record of what was heard if received
89 second hand. This method of instruction can only be instructional to the point where all who read the code were in fact present at the deliverance of the original speech and can concur on the intended meaning. The minute this correlation disappears then reader biases will enter the scene and transference of meaning will be distorted. The more removed the reader becomes from the author the greater the possibility becomes of misinterpretation of intended meaning. It is better to consider the written word as an alternative source of communication that can independently and or collectively give meaning as opposed to being an extension of speech.
‘In the project of writing one never blankly represents one’s experience. This is because words do not function to capture reality and because the reader necessarily brings his or her experience to that which he or she reads. Thus, the writer’s experience as written is interpreted through the lens of the reader’s experience.’ (Simone De Beauvoir within
Sally J Scholz, 2000:219) To function effectively the written word must be capable of being translated by its recipients in a manner similar to that intended by its author. It has the burden of overcoming the lack of presence of the author, whose gestures, tone etc would normally assist in illuminating meaning. The written word acts as the medium between the author and their audience with the sentences being structured in a way that posture a visual interpretation of the author’s intentions. Its reproduction, although not necessarily exact in all ways, must be able to impart the same intent as if its author was physically present providing its points of reference. It is therefore important for the author to choose their language carefully in order to give clear direction to the purpose of the text. Language choice thus becomes a key factor in the validation and adoption of a corporate code.
The written word must thus work harder and be more precisely structured than the spoken word to compensate for the lack of clarity and directness of meaning that comes 90 with the spoken word. This is a doubly difficult task when dealing with codes of practice, as was discussed earlier, there are a multiple variables that influence meaning.
A chronicle needs to be established that defines the what, who and how of the written discourse before any specific codes can be recorded. As no two words have an identical meaning the use of semantics, metaphors and visual graphics may be used to influence the direction of the discourse.
5.3 SIGNIFICATION OF MEANING
As all communication is pivoted around some form of sign (normally written or spoken) it becomes critical that the direction and or interpretation of meaning of such signs are clearly delineated. It is argued (Derrida, Saussure and Husserl) that no word can stand alone in terms of its meaning, that every word is dependent, in some way, on its surroundings for its definition. ‘Saussure argues that signs are arbitrary and conventional and that each sign is defined not by some essential property but by the differences which distinguished it from other signs.’ (Culler, 1994:98) There has to be some distinguishing feature or tone that signifies the intended meaning. This can be found with, as Derrida says, the use of ‘differance’. ‘To Derrida this term designates both a passive difference already in existence as the condition of signification and an act of deferring which produces differences… Differance is the systematic play of differences, of the spacing by which elements refer to one another. This spacing is the production of both active and passive, of intervals without which the ‘full’ terms could not signify, could not function’ (Culler, 1994:97) That is the signification of meaning comes from both the distinguishing features and the referential alignments of the words within the written prose. The words combine to construct a particular meaning in any
91 one instance. ‘There is no end to semiosis but there is directionality.’ (Ruthrof,
2000:191)
Derrida, in his book on Positions, notes ‘If on the linguistic system there are only differences then the play of differences involves syntheses and referrals that prevent there from being at any moment or in any way a simple element that is present in and of itself and refers only to itself. Whether in written or in spoken discourse, no element can function as a sign without relating to another element which itself is not simply present.’
(Derrida translated by Alan Bass, 1981: 37-38/26) Meaning is ascribed based on a constant deference to other words or images. ‘Reality is thus made up of a series of present states. These states are what is basic, the elementary constituents which are given and on which our account of the universe depends.’ (Culler, 1979:85) A sentence or statement should then be structured in a manner that aims to reduce the aporias in the text achieving a higher degree of clarity of meaning.
Given the abstract nature of ethics, the implementation and acceptance of a code of ethics becomes directly proportional to the signification process. The true meaning of a word, phrase or sentence is thus intertextually dependent and can only be elucidated when placed in perspective by the reader. Any reduction of ambivalence or uncertainty in the transference of meaning can enhance the desired result. ‘To write is to function as the node of a range of discourses that one does not control or unify; the ‘author’ is not the cause, but an effect of the text – or rather, of a particular way of reading, of structuring the text; he does not determine or limit its significance.’ (Tredell, 1987:91)
92 To assign a specific meaning or interpretation to a word or phrase one needs to have predetermined, through some means (either through the act of performing the event or some other gesture), what this event or act signifies to them. ‘Words must not merely reflect what is being written or spoken of but they must construct and even constitute what is being written or spoken.’ (Legge, 1996:1003) Interpretation and enactment are governed by past activities and future expectations whilst present analysis becomes temporal and contextual. Identification and interpretation of any activity or event will be dependent on relational events or activities. The present draws its definition from its past and future outlook.
To effect a change in belief or practice requires a re-formation of the current status quo, identifying areas of change and their affiliations with the past and stated expectations for the future. ‘An account of what is happening at a given instant requires reference to other instants which are not present. There is thus a crucial sense in which the non- present inhabits and is part of the present.’ (Culler, 1979:86) Companies in the past have failed to adopt such an all-inclusive approach when establishing their values. A corporate code of ethics requires not only an acknowledgment but also an active inclusion of the environment in which it is to function.
Meaning thus becomes a derivation of the conjunction of a number of factors. It is bounded by the biases of both the author(s) and the reader(s) and the process, which is used to transfer information from one party to the other.
93 In summary the translation process may be depicted as follows:
Input (Author) Processing (Words/statements) Output (Recipient)
Subjective, pre-conceived Deconstruction of individual Restricted understanding interpretation of meaning words and linkages used to and interpretation bounded based on factors pertaining identify multiple meanings by the textual limitations to and influencing the style through associations and imposed by the author, the adopted by the author differences process of translation and
demographics of the
recipient
A deconstructive praxis can be used as the processing tool to translate meaning from author to reader. Successful transference can possibly be determined through the observance of the actions of the recipients. Any deviations from the authorial expectations may flag possible misconceptions or misdirections in the translation process.
5.4 COMMUNICATION OF MEANING
‘Derrida’s concept of ‘differance’ gives further insight into the idea of a text’s undecidability… Derrida proposes that the meaning of any word or phrase is derived from a process of deferral to other words that differ from itself.’ (Legge, 1996:1003)
Derrida brings forth, with the use of a deconstructive praxis, the idea that there cannot be a ‘conceptual closure’ to any word or phrase and as such meaning becomes a derivative of the associations of words with other words and symbols. The use of a
94 deconstructive praxis assists in identifying the differences and deferrances which, when interrelated, assign meaning at that point in time to either the author or their recipients.
It helps highlight the ‘blind spots’ in the text, distinguishing the limitations of rational thought and acknowledging the alternate links and symbols that influence interpretation.
Recognition of the restriction of the language used should then provide opportunity for clarification and reaffirmation of the proposed intent of meaning in this instance. ‘At its simplest, deconstruction may be seen as a mode of discourse or textual analysis that uses reversals, inversions and paradoxes to call into question the orthodox interpretations derived from conventional forms of analysis.’ (Legge, 1996:102)
The task of any author, be they a writer, a philosopher or a business person, is thus ‘to examine how language works both by the differences within it and by the chain of expectations which the writer or speaker sets up and which require the listener to defer to the moment when he or she decides what a particular sentence [or statement] may or may not mean.’ (Wood, 1979:21) The choice of language used can either restrict or expand the respondent meaning, and consequently, in all instances there has to be some distinguishing feature or quality that implies the intended meaning of a word or phrase, which is a form of signification. ‘Acts of signification depend on differences such as the contrast between ‘food’ and ‘non food’ that allow food to be signified, or the contrast between signifying elements that allows a sequence to function as a signifier. (Culler,
1994:96) Similarly in business the establishment of a code of practice should signify the ethical position of the company, for example how the company deals with bribery or gifts or employment policies.
95 Whilst one cannot eliminate all possibilities of misinterpretation or confusion it should be possible to identify a common level of understanding to ensure the appropriate message is received. The signification of meaning is deduced based on the associations and structuring of the words and phrases used along with the recognition of the demographic qualities that the members bring with them.
5.5 THE CULTURAL INFLUENCE ON LANGUAGE
The demographic qualities of the parties involved in the communication process can also significantly influence the successful transference of meaning. Factors such as occupation and ranking within the organization, ethnicity, gender, age, religion and educational level will all impact, to some degree, on the choice of language adopted.
Historically the corporate culture has been reasonably localised and hence the level of adjustment required to achieve a common level of understanding has been minimal, given the similarity of backgrounds. Today this is far from the case, with the corporate structures having to be redefined to cover the multiple social and political boundaries that comprise today’s corporate environment.
The first cultural factor that will influence the successful transference of meaning of an ethical code is the choice of vernacular used to compose the code. If the language used originates from one society and is then translated into many other cultures to accommodate the multi lingual zones of its operations then problems may occur in the translation merely from lack of equivalent meanings. Alternatively if the language used remains in one format, which may be considered reasonably universal, yet not necessarily be the first language of many staff, then differing levels of comprehension
96 will arise. A corporate code of ethics needs to be aware of the discrepancies in fluency and perhaps counterbalance this with the use of simplistic language strongly supported by graphical representations.
Given the philosophical outlook of ethics, meaning is best determined by addressing the spiritual intent of the language used. There is no absolute definition but rather an amalgamation of words to describe the relationship between the moral attitude of practice and the principal tenets of ethics. As stated by Garcia-Zamor (2003) the ethics of the workplace is viewed as a way of behaving that can be prescribed, and imposed by the work environment through the code of practice. ‘It is understood in the workplace that each individual has a basic understanding of what kind of behaviour is morally acceptable (and sometimes obligatory) and what is considered morally inadmissible.
But within this broad framework are a multitude of variables that often are rooted in the individual’s own spirituality.’ (Garcia-Zamor, 2003:359) This leads to the next demographical influence on the communication of meaning, the religious convictions of its members.
Within the community, religious doctrines and beliefs represent the formal principles and rules that outwardly identify a particular belief system that some individuals choose to follow. Often these religious convictions align with some of the precepts of moral philosophy however given the multitude and diversity of religious groups within the community it is impossible to accommodate the dogma of all religious persuasions within a corporate ethos. The following of a particular religion is also perceived as a personal choice and thus not necessarily applicable or welcomed in the workplace.
However individual religious teachings can act as a support mechanism for the
97 development of an ethical code as they may reinforce the basic ideals proposed for the development of the corporate philosophy. Whilst doctrinal language is considered as highly structured and often prejudicial towards a specific creed, and or moral stance, corporations can use the religious influence to encourage employee support and compliance when establishing an ethical attitude in the organization, particularly if there is an obvious alignment between the two. They need to ensure compatibility between religious convictions and the corporate ethos and that there is no opportunity for one specific religious practice to dominate or control the process as this may lead to factional disputes amongst the staff, particularly where members hold no religious preferences. Developing principles that can accommodate personal beliefs and project a corporate value system is the challenge of any code of ethics.
Another cultural influence that impacts on the language adopted in the workplace is the gender viewpoint. Management need to be aware that organisational behaviour involves the inclusion of both the biological makeup and the socially defined role of its members as part of the corporate image and that gender bias (both positive and negative) can provide a different emphasis and interpretation of meaning to any policy or direction given.
Gender diversity arises from the generally accepted cultural differentiation of males to females, which has a tendency to associate particular qualities to each gender. The perception is that ‘women and men have been socialized differently, with different communication and language styles.’ (Smith, 1997:101) Feminine qualities are often portrayed as including a caring, nurturing disposition, a more compliable, amenable outlook, and one more concerned with acceptance and approval than success or power,
98 although this is not to say that they are incapable of providing a distinct viewpoint…
The feminine viewpoint appears to be more pensive and all-inclusive in its deliberations, centring on person-oriented values and skills, which is more readily aligned with ethical principles. Masculine traits, on the other hand, present an image that is more assertive and aggressive, often singularly focused or task-oriented and concentrating more on achievement and success and less inclined to be concerned with social or ethical issues. The gender impact distinguishes multiple interpretations and weightings for the role of ethics in the organization and hence makes available a plethora of perceptions and behaviours.
It is therefore important to acknowledge and incorporate gender diversity in the advancement of corporate codes to ensure a more holistic approach to ethical practice in the workplace. The language adopted has to address both points of view and establish common ground with terminology and interpretation otherwise if one gender is privileged above another it would be impossible to develop an acceptable corporate ethos.
In addition to gender differences other cultural factors such as age, race and educational backgrounds will also sway corporate behaviour and practices. Singularly or jointly these qualities can affect an individual’s ranking and power in the organization as well as their ability to comprehend, assimilate and operationalize instructions. The educational levels of staff will place boundaries on comprehension and restrict the linguistic expression adopted whilst age and ethnicity may favour one particular perspective over another.
99 The generation gap highlights differing age viewpoints, particularly on issues such as technology, work strategies and ethics, More mature members of the organization customarily bring experience and maturity to the organization nevertheless they are frequently restricted in their knowledge of current technological advancements and the latest corporate language of the global marketplace. Hence the language used to direct these members needs to be clearly and simplistically articulated. On the other hand the younger, more globally oriented generation, whilst technologically more adroit, are restricted in experience and knowledge of corporate practices. What need to be developed are trans-generational principles that accommodate the knowledge and skills of the idiosyncratic needs of each member category. The generational distinctions, coupled with ethnicity, are again notions that need to be deliberated on to ensure a corporate language that links personal values and traits to those of the business. The final and perhaps most significant, cultural influence that impacts on corporate language is corporate positioning and the situational context within which the issues or codes may be enacted.
The profile of most corporations today is that of a multi-faceted, multi-layered structure, which operates within a highly competitive and ever-changing marketplace. The dynamics of the organization comprise a multi-skilled labour force assigned to various specialised positions or areas that are designed to deliver optimal results from limited resources. The multitude of positions required, the diversity of job specifications and the level of specialised knowledge involved to carry out tasks, all combine to categorise the level of understanding and explication required to educate staff on corporate policies and procedures Employee roles and responsibilities are governed by their skills, which in turn define their ranking within the organization. As such the corporate environment
100 must demonstrate that cooperation and compliance are natural consequences of the directives it issues to its multi-skilled personnel. The language adopted needs to clarify and illuminate the desired consequences and or contributions employees make to the organization.
The development of an ethical policy must embrace and cover such factors as position and status, level of control and flexibility of interpretation if it is to provide a coherent and suitable guideline to moral practice. The language used ought to express the sentiments and proficiencies affiliated with all its members and couched in terminology familiar to all. It should be structured to ensure it is both culturally and occupationally meaningful. Where there is potential for misunderstanding or multiple interpretations based on cultural issues organizations will need to provide support mechanisms (such as graphics, use of metaphor, pictures etc) to help explain and reinforce meaning.
One final influencing factor that can impact on the success of transference of meaning of any guideline, policy or procedure is the particular context within which the issue is being addressed. Organizational specific issues, the political and economic climate of the day and even environmental factors will each place constraints on interpretation and enactment of a policy or guideline. The aim should always be to provide information that best fits the climate of the day but with sufficient foundation to develop a pattern of performance that always displays an altruistic outlook as well as enhancing performance. The organisational dynamic should reflect the sub cultural influences that help define its viewpoint.
101 Today’s business environment is only now acknowledging the relevance of a corporate culture, and in particular an ethical image, in improving performance and profits. The combination of corporate objectives and individual needs can lead to higher productivity and internal harmony, which becomes a win-win result for all. The aim should be to develop a more humanized organisational culture as opposed to the hedonistic amoral one experienced in the second half of the twentieth century. ‘In a highly technological, turbulent marketplace, a postmodern approach to accountability is necessary to deconstruct and interpret corporate messages.’ (Schultz, 1996:167) The next chapter will elaborate more on the corporate culture and its impact on ethical practice.
102 CHAPTER 6
THE BUSINESS ENVIRONMENT
In Modernity there is no humanly significant world order... [T his world
devoid of values, to which values are superadded by human choice, is a
subhuman world, a world of objects, of things... It is a world without man, a
world from which man has deliberately removed himself and on which he is
thus able to impose his will. (Louis Dumont, 1986)
6.1 INTRODUCING BUSINESS ETHICS
The previous chapter identified the significance of language, its formal structure and the multiple layers and techniques available that impact on interpretation of meaning and its specific relevance to ethics. It concluded with discussing a number of cultural influences that also impact on definition and the formulation of an ethical code. As an extension of that discussion this chapter will concentrate on one particular culture, the business culture. It will show how, along with its various subcultures, this particular culture plays a dominant role in forming a corporate ethos. It will demonstrate that, along with changes in business practices, ethical beliefs have also been modified from the strictly defined protestant ethic practised at the turn of the twentieth century to a more liberal self indulgent ethic that privileges success and wealth as the benchmarks of happiness. For the greater part of the twentieth century the amalgamation of ethics with business has been seen as an oxymoron rather than a prosperous union and hence it has been difficult to interpolate the historically determined tenets of ethics with current business practice. The post war boom and the decentralisation of business, which have
103 worked to cultivate a shallow self-absorbed focus in the business sector, have exacerbated this condition.
6.2 THE BUSINESS SECTOR
The principal function of business has always been to provide goods and services to the community, which, consequently contributes to its wellbeing. As De George (1999) comments,
Business is a means by which people endeavour to attain a good life for themselves. It is a central activity of society and a type of human association. Too often it is seen in terms of dollars and cents rather than people. Although the firm may be established for profit the profit earned is simply a means to an end and not an end in itself. When this fact is obscured and profit becomes an end, then people are poorly served because they are forgotten and ignored in the business process. (De George, 1999:614)
The role of business in society did not become a central issue to the social condition until the industrial age. Previously economic wellbeing was the responsibility of the gentry, the state and religious. ‘Every individual human had a specific place or station in the community, a rank set by birth and therefore by God.’ (French, 1995:5) Minimal regard was given to wealth, as this was usually aligned with breeding and social position whilst any attention to profits, and commerce in general, was frowned upon by the religious teachings of the period. `Business activity was regarded as beyond the moral pale. A moral businessman was thus a contradiction in terms. In a way, it was no more possible to have been an ethical money-lender six centuries ago than it is now possible to be a socially responsible drug dealer.’ (Vogel, 1991:103) In contrast, the rise of industry, coupled with the revolt against religious control, led to a new regard for the role of business and the subsequent rewards it offered. Profits and improved social
104 position were accepted as just rewards for one’s labours. The modern era saw the introduction of, what Weber (1904) termed, the ‘Protestant’ ethic, which supported a position where work could be dedicated to both God and family and wealth and profits were seen as the fruits of one’s hard labour and commitment to the good life. In fact the
Puritan ethic directly linked the two.
For if that God, whose hand the Puritan sees in all the occurrences of life, shows one of His elect a chance of profit, he must do it with a purpose. Hence the faithful Christian must follow the call by taking advantage of the opportunity. "If God show you a way in which you may lawfully get more than in another way (without wrong to your soul or to any other), if you refuse this, and choose the less gainful way, you cross one of the ends of your calling, and you refuse to be God's steward, and to accept His gifts and use them for Him, when He requireth it: you may labour to be rich for God, though not for the flesh and sin. (Weber, 1904, translated by Parsons, T, 1930:5.5) [Accessed 12 September 2004]
Whilst this ethic was introduced with the intention of promoting honourable, hard- working, community-oriented lifestyle it had, for the most part, the opposite effect.
Income (through work) became the means to prosperity and happiness with material possessions defining the level of wealth and happiness one had. The translated ethic was one that fostered an interest in the material and superficial, one that inadvertently led to the creation of a consumer society. As Jackall (1988) states, ‘this ethic of ceaseless work provided…the moral foundations for modern capitalism… it became for the upward-moving middle class the social myth, the ideology that justified their attention to this world, their accumulation of wealth, and indeed the social inequities that inevitably followed such accumulation.’ (Jackall, 1988:8) To accommodate the changing social image wealth creation, profits, dividends and continuity became the key aims of business operations with little demonstrated emphasis being placed on social responsibilities. ‘The corporation’s essence is profitability, and whatever benefit its operation brings to society is coincidental.’ (Adams and Maine, 1998:3)
105 The profit-centred focus of business revolved around the promotion of economic value, sometimes at the expense of human and social value. ‘The classical business ideology highlights the sole responsibility of the corporation as being to maximise profits for shareholders within competitive constraints.’ (Danley, 1991:915) Milton Friedman
(1970) is often quoted as saying that ‘the responsibility of corporate executives [and the corporation] is to conduct the business in accordance with the owners’ desires, which generally will be to make as much money as possible.’ However the often forgotten part of the quote says that this is to be achieved ‘whilst conforming to the basic rules of the society, both those embodied in law and those embodied in ethical customs.' (Friedman,
1970, reprinted in Donaldson & Werhane, 1996:222) Thus, the most relevant point to
Friedman’s comment is not the appropriate use of resources to ensure increased profits and owner satisfaction but that such a practice, to be effective, needs to be based on an ethical premise for its success. Unfortunately for the greater part of the twentieth century attention seems to have been centred more on the earlier part of Friedman’s statement rather than an all-inclusive approach.
The results of a survey performed by Kaye (1988, 1990) appear to reinforce this sentiment. Kaye found that the role of ethics in business was very minimal. In a survey of 50 of Australia's largest business corporations Kaye reported that very few had established ethical codes and, of those that did, these tended to be legalistic and strongly inclined towards self preservation. He concluded, ‘the tool of codes of ethics was not a widely used method in the cultivation and enforcement of ethical standards of behaviour... Codes did not have a high profile nor were they extensively or rigorously used.’ (Kaye, 1992:860)
106 More often than not codes are confused with the minimal legal requirements of acceptable business practice. ‘In business we tend to get behaviour that is guided by the lowest common denominator, the legal obligation rather than any ethical or moral stance.’ (English, 1990:21) Those codes that have been established appear to lack the commitment and sincerity aligned with ethical beliefs. There is little emphasis placed on the importance of the human involvement and or the human qualities that distinguish the ethical stance from its legal counterpart. ‘The legalistic character makes ethics a set of rules designed to protect the organization rather than a set of values to guide behaviour.’ (Robin et al, 1989:70) Whilst it is commendable that a minimal ethical stance exists it in no way should be used as a surrogate for ethical practices. It should serve to supplement not substitute for ethical ideals.
Thus by the end of the twentieth century the essence of ethics in the business sector had diminished almost to the point of non-existence. What had arisen was a blinkered view of corporate success, one where tangible/materialistic outcomes were privileged over the more qualitative, less definable characteristics such as ethics and morality. The past forty years, it seems, have fashioned a business ethic concerned with wealth and success measured by profits and size whilst subverting the intangible, non-quantifiable elements such as social wellbeing.
6.3 THE BUSINESS IDEOLOGY
The bifurcation of business and community that existed for the greater part of the twentieth century has meant a lack of collaboration between the two in areas of social concern. This has led to a reduced, if not non-existent, inclusion of a humanist and,
107 hence more ethical, approach to day-to-day operations. Most business operations, particularly in the latter half of the twentieth century, portrayed a myopic vision of success, which was not necessarily in harmony with or consideration of the broader social issues of human wellbeing and social order. A number of hermeneutical reasons emerge as references for the adoption of this viewpoint. Such factors as the depression years (1929-1935), the Second World War, a post war boom period and strong technological advancements all intertwined to produce a business environment that became self absorbed and self-centred, promoting business interests and corporate power and success as the indicators of social wellbeing.
Aristotle talked of ethics in terms of `the good life' for individuals, achieved through their involvement with the community in which they lived. The Aristotelian way of life
‘is a strong emphasis on individual character and the virtues embedded in and in service to the larger community.’ (Solomon, 1992:103) However, this interactive perspective appears incongruent with some of the precepts presented in current business practices.
What is considered to be a `good business life' does not automatically imply a way of life that incorporates the ethical ideals espoused by Aristotle or the other philosophers discussed in the previous chapters. ‘Business leaders today tend to take a narrow view of the corporation, narrow in the sense that they largely exclude the human, moral and ethical aspects of the enterprise.’ (Viola, 1976, reprinted in van Dam and Stallaert,
1978:96) If one were to ask business people what they considered to be the elements of good business they would more than likely respond in terms of profitable operations, a strong client base and ongoing future opportunities before they would touch on any of the ethical qualities such as honesty and trustworthiness.
108 The development of global operations has also led to a new approach to business dealings, which, for the most part, has not included ethics. The post world war II era saw businesses beginning to disassociate from localised practices (predominantly influenced by domestic politics and derived from social customs and cultural beliefs) and adopt a more international, less restrictive, approach to their operations. The post war boom saw the development of hedonism and materialism as the principal drivers of individual pursuits with businesses widening their activities to accommodate the changing lifestyle of the expanding community. ‘The traditional emphasis on a religious ethos was replaced by an ethical pluralism with a strong pragmatic inclination.’
(Hasseling, 1976, reprinted in van Dam and Stallaert, 1978:35)
The art of business today extends beyond the visual interaction of parties engaged in the trading of goods and services to include a plethora of perceptions and viewpoints derived from social, political and economic fields. Business practice can be seen as either a collective of independent members united in the pursuit of profits or it can be considered as a single unit in it own right with all the social roles and responsibilities associated with a person. It is here the dilemma begins. Which definition best describes today’s business structure and hence which ethical viewpoint does one adopt?
6.4 BUSINESS PRACTICES TODAY
Since the late eighteen hundreds the business sector has been changing its persona, from that of being a resource provider and peripheral influence on community living, to that of a powerful and forceful authority dominating community life. ‘Advances in communication, technology and transportation have shrunk the world, resulting in a new global economy.’ (Ferrell and Fraedrich, 1997:193) Business practices have grown
109 and diversified with their structures changing from being regional operations (generally owned and run by the family) to national and more recently, international conglomerates (run by boards of directors representing investing shareholders) whose activities serve the interests of multiple stakeholders. ‘The intense competition on national and international levels has inspired traditionally bureaucratic, highly hierarchical corporations to decentralize and to specialize, focusing on niche marketing in an effort to streamline operations.’ (Schultz, 1996:181) Hence, with the aid of technology, business operations have become streamlined, highly competitive and globally focused. Corporate objectives have expanded to include a focus on the international market with success being measured by market size and level of global involvement as well as profits. ‘The modern corporation may be regarded not simply as one form of social organization but potentially (if not actually) as the dominant institution of the modern world... The modern corporation has brought a concentration of economic power, which can compete on equal terms with the modern state.’ (Berle et al, within Sutton, 1993:114)
Corporations are no longer governed by merely one economy or one political power.
They must function within a much broader domain and hence have become the drivers of our new globalized economy. ‘Multinational corporations operate on a global scale without significant ties to any one nation or region…their size and financial clout enable them to control money supplies, employment and even the economic existence of less- developed countries.’(Ferrell and Fraedrich, 1997:193) Businesses have been empowered, through their domination of the economic world, to ensure the safety and perpetuation of today’s scarcely available resources. Corporations should continue to seize the opportunity to grow and prosper but in doing so they must acknowledge and
110 address the needs of a significant and widely diverse group of participants. ‘Business must now consider the worker, consumer, and the general public as well as the shareholder –and the views and demands of all four – in making decisions. The key to responding positively to this moral requirement is to develop a mechanism for assuming moral responsibility.’ (De George, 1999:608)
Individuals today find their loyalties divided between two leaders, their employer and their country. One classic example is that of the people of the United States. ‘Whereas
Americans once identified themselves on the basis of family or community ties, today increasing numbers of people enter the workforce and pledge their loyalty to business or industry.’ (Schultz, 1996:165) This phenomenon is not unique to America; it can also be seen in most industrialized countries, for example the number of employees working away from their homeland at their company’s request and in some cases in quite dangerous conditions. On the one hand individuals still remain loyal to their country and all it has to offer them but on the other hand they have developed an unquestionable loyalty to their workplace, as it is in this area that they experience opportunity and self- fulfilment. Today national powers and boundaries are not as pronounced as they were in the past. Nowadays control and power are defined more in terms of economic and financial control than political rule. Employees also find their communal boundaries extended beyond their birthplace or local community. More often than not they identify themselves in terms of their position in the workplace rather than their country of origin.
In the modern world the power of conglomerates is discussed more so than the power of countries (Burnham, J; Sutton, B; Schultz, P; Weiss, L.). It can be said that ‘the instruments of production are the seat of social domination; who controls them, in fact not in name, controls society, for they are the means whereby society lives.’(Burnham,
111 J, within Sutton, 1993:131) International trade, coupled with ongoing technological advancement, has introduced the new global economy where interests centre on economic rather than political issues. In so doing it has drawn attention to the multiple cultures that affect the human condition and, in the case of ethical practices, the need to introduce an eclectic view of ethics, one that embodies the sentiments of all cultures and one that can function in the organizational environment.
Whilst the new globalized economy is seen as beneficial and progressive in reality this progress, in addition to forging new economic frontiers, has managed to leave in its wake a field of moral confusion, and often, moral abandonment. ‘In the universe of technology, the moral self with its negligence of rational calculation, [its] disdain of practical uses and indifference to pleasure [ethics] becomes an unwelcome alien.’
(Bauman, 1995:198) Whilst economic success is imperative for global continuity and betterment so too is the need to acknowledge the moral ideals that empowers human action and develops international harmony in the international sector.
6.5 THE NEW MORALITY
As stated above, the rise of the multinational corporation has seen a shift in the level and control of world economic resources. The concern here is not the expansion of industry into a world market but that it has expanded the moral debate to include the international exploitation of labour, markets and resources ‘Critics believe that the size and power of multinational corporations create ethical issues related to the exploitation of both natural and human resources. Because of their size and power they must take extra care to make ethical decisions that not only achieve their own objectives but also
112 benefit the countries in which they manufacture or market their products.’ (Ferrell and
Fraedrich, 1997:200) Currently there is no mentoring system set in place that fully caters for this level of operation. Whereas government and resident social systems (such as the Australian Environmental Protection Authority, The Australian Competition and
Consumer Commission or the Australian Securities and Investment Commission) had long been established to monitor local and national operations, international operations, until recent years, were left to predominantly self-govern.
The lack of legal constraints combined with a profit-centred focus provides the multinational corporation with the opportunity to concentrate on their own objectives without considering the political and social consequences of their actions. To some degree this form of regulation has been ameliorated with the rise of international lobbying groups (Greenpeace, http://www.greenpeace.org/international/) and the introduction of charters from the United Nation Organization (the UN Declaration on
Human Rights (http://www.unhchr.ch/udhr/); the UN Code of Conduct on Transnational
Corporations, http://www.un.org/documents/ga/res/45/a45r186.htm) and even industry specific agreements (such as those found in the pharmaceutical and health industries e.g. the European Pharmaceutical Regulator, the therapeutic Goods Administrator of
Australia or the US Drug regulator). But still the need for an integrated ethical policy is of paramount importance as international operations cross cultures in so many ways.
What is needed is an organizational culture that fosters a positive moral outlook that supports and even enhances good business practices in every business sector. The inclusion of ethical codes can do this by providing an acknowledgement of individual and community rights and articulating the social responsibility of business. The
113 corporate goal should no longer be purely economically orchestrated but rather address, as well, the broader demands of society.
Society, like business, has grown and become culturally diversified. ‘The practices and attitudes of the virtuous business person need to be re-described, re-conceived and re- evaluated in the setting of the twenty first century technological society in a way that helps us to grasp the bearing of the many social transformations that have altered our understanding of what is to be a good business person.’ (John Langan, reprinted in
Coady et al, 1993:61-62) What needs to be re-emphasised is that ‘the business world is not a separate universe of economic values and goals distinct from society but an aspect of the behaviour of society as a whole.’ (Evans, 1991:871) As social customs have graduated and progressed to accommodate a more eclectic view of the world so too must business practice. ‘Ever-increasing world trade in goods and services is leading to greater and greater interdependence both materially and spiritually which is creating a need for a more ethical approach in business matters.’ (Tijmstra, 1976, reprinted in van
Dam and Stallaert, 1978:172)
Corporations need to be acknowledged as moral entities with more emphasis placed on the relevance of the cultural aspects of business operations. ‘We need to consider the organization as a moral person and that the organization does have responsibilities towards individuals who work within it and the social environment within which it works’ (Quigley, 1992:19)
114 6.6 INTERNAL ASPECTS OF THE BUSINESS CULTURE
The workplace today has, for most people, become the focal point of their lives.
‘Corporations today enjoy the prestige associated with creating and maintaining the scale of worth against which the majority of adults in Western societies judge their own accomplishments and personal value.’(French, 1984, ix) No longer is the family unit or the local community the main influence over our actions. Today it is common for both partners of a family unit to work, for the working week to encompass all seven days of the week and to include most hours of the day. In other words, the work environment consistently impacts on our daily lives and as such the concepts of family and community have been modified to include the work environment, making it the most dominant influence on individual living. ‘We identify ourselves with the positions we occupy at work and with the companies for whom we work. Our self-estimations rise or fall with the fortunes of those corporations.’ (French, 1995:16) This dependence on the organization for approval draws attention to the importance of organizations embracing their social responsibilities as well as their fiduciary obligations. It also introduces the issue of the relationship between the corporation as a unit and the individuals that work within and interact with it.
The corporate image today is often considered as that of an independent unit with its own corporate voice. Whereas historically the organization was judged based on the behaviour of its members, today, with the rapid advancements in technology and changing corporate structure, corporate behaviour has tended to become depersonalised and objectified, with the humanistic element being masked by the impersonal approaches used to communicate and operate in the workplace. ‘One of the most adverse effects of technology in the business corporation has been on work…the
115 automated assembly line took its toll on the worker. He became bored doing this repetitive work. As a result he became alienated from his work [and] as the business corporation became larger and more complex, he also felt a loss of individuality.’
(Viola, 1976, reprinted in van Dam and Stallaert, 1978:1116-117)
The last one hundred years, particularly the post world war II era, can be considered as a period of prosperity and progression yet it can also be considered as a period of nihilism and frustration. Technology has brought with it such innovative techniques as mass production, automation, standardisation and specialisation, all of which have improved production and provided the community with greater choice and satisfaction in servicing their needs but at what cost? The business sector itself is considered as strong and prosperous with unlimited opportunity for further development, however some negative factors have arisen which, whilst not as overtly obvious as the visible signs of progress and perceived prosperity, have impacted on the qualitative aspects of our daily lives (such as recreational time, face-to-face time with the family unit, socializing with friends etc). The organization should now be held responsible and be required to address these qualitative issues and develop an ethical profile that encompasses the beliefs of its individual constituents. ‘The postmodern corporation mediates and controls the reality of individuals; therefore it and not its members should be viewed as morally accountable.’ (Schultz, 1996:182)
6.7 THE INTERRELATIONSHIP BETWEEN THE BUSINESS AND CLIENTS
Another aspect of business that has gradually been declining is in their dealings with their clientele. In their attempt to improve and expand operations businesses have lost
116 the rapport, the personal involvement, with their clients. Organizations no longer have time to get to know their clients on a personal level, generally being too large and preoccupied with trade and profits to consider the effect their operations have on individual and community group members. Customers have become objectified as means to an end rather than as valued people serviced by the organization. This viewpoint is supported by the way business deals with client concerns such as product safety and or support, and generally in the way in which products are marketed. It is often the case that ‘consumers bear the costs of product injuries, the costs of deceptive selling practices, shoddy product construction, products that immediately break down and warranties that are not honoured.’ (Velasquez, 2002:333)
Whilst the corporate world has strived for and become recognised and acknowledged for its economic achievements it has, in part, done this at the expense of excellence and service to clients, for which it was better known at the turn of the twentieth century.
Many businesses (eg the car industry; the retail sector; health care and even some professions), in their concern for corporate positioning, have changed their focus from that of service provider to one which is highly self-serving and self-motivating, one that attempts to restrict their responsibility to the client or community. ‘The general public has labelled business self-seeking, narrowly self-interested, and socially blind.’ (De
George, 1999:607) It is in this regard that there is an urgent need to reform the corporate ethos to include a code of ethics. One area in which this sentiment stands out is in the area of advertising. Advertisements often use puffery and half-truths to present a specific image of the product or service with little or no comment on the after sale effects. Products are marketed and services provided based upon a specifically targeted group within the community, some of whom are ill equipped to challenge their claims.
117 Often the sales pitch veils the imperfections or potential dangers of the product or service. ‘Consumers are bombarded daily by an endless series of advertisements urging them to buy certain products [but] rarely do they do more than give the barest indications of the basic function of a product and sometimes [they] misrepresent and exaggerate its virtues.’ (Velasquez, 2002:335) A most notable example is that of the invention and sale of cars. No one could deny the benefits that have been derived from the invention of the automobile yet the negative effects (air pollution, poor construction in some cases etc) are little publicised or investigated.
Whilst one would hesitate to discourage technological advancement it is important to ensure that all effects are acknowledged and addressed in terms of their impact on individuals and communities. The current damage to our environment and our quality of life, caused by hastiness to embrace technology and change, has alerted today’s society to the importance of more cautious optimism in the future. Businesses need to change their systemic profile to accommodate a changing social structure. Another area wherein change has influenced operations is in the role of employees.
6.8 THE INTERELATIONSHIP BETWEEN THE BUSINESS AND THE
EMPLOYEE
The era of industrialization and the subsequent advance of an objectively structured and ordered world began the redefinition of the modern worker. ‘The hallmarks of the emerging modern production and distribution system were administrative hierarchies, standardised work procedures, uniform policies, specialised expertise and above all, centralized control.’ (Jackall, 1988:9) The staff profile has, over time, shifted from that
118 of an all-purpose, broad-based collective of unskilled to moderately skilled employees to that of a specialized skills-based resource. In the last century many jobs (particularly in the industrial sector) became routine and, in the main, repetitive lacking in any intellectual stimulation and sensitivity. Individuals became almost robotic in the performance of their duties developing a work ethic that was soulless and superficial.
Employees appear to have lost their sense of pride and purpose in their work with the concept of craftsmanship, of individual talent and skill being supplanted by the urgent need to succeed quickly to cater for their material desires. Individuality has been replaced by mass production mentality whereby staff are trained to complete only one part of the finished product. ‘Like anything else, modern humans are technological objects. Like anything else they have been analysed (split into fragments) and then synthesised in novel ways (as arrangements or just collections of fragments... Efficiency standards have become the substitute for ethical norms.’ (Bauman, 1995:195) Skilled craftsmen such as the carpenter, are often subsumed within a bureaucratic system where brand names and or company logos are the only acknowledgment they get for their work. Few managers today find the time to get to know their staff and understand their needs (both social and work). They no longer encourage a sense of pride and achievement neither for work well done nor in the organisation in general.
Whilst, as stated earlier, employees have developed a fierce loyalty for their organisation, this has not necessarily come from pride in their work. Often employee loyalty is derived from fear and insecurity rather than confidence and support.
Employees have become mere tools, cogs in the wheel of progress and success. Justice and equity have become veiled by greed and power and the broader, community engendered issues are ignored unless they become a matter of law. ‘The philosophers
119 argue that business organisations are like machines whose members must blindly conform to formal rules that have nothing to do with morality.’ (Velasquez, 2002:17)
Whilst no one denies the benefits associated with improved technology it is important to remember the contributions made by those who work with it. It is the humans that comprise the core of an organisation no matter how technologically advanced the organisation is. It is they who are ultimately the instigators of its success or failure.
‘Corporations are defined first of all by their communal and cultural status... [They] are social groups with shared purposes. A person's position is not just a function defined by duties but a role in the community.’ (Solomon, 1992:127,130) Corporate goals can only be achieved through the joint efforts of its members. ‘The goal of business should be to
(produce) exchange goods and services humanly... business is a function, a means for the realisation of human life.’ (Stallaert, 1976, reprinted in van Dam and Stallaert,
1978:139) Today’s employees work for self-gratification and that includes recognition and job satisfaction and the inclusion of a work ethic that is compatible with a morally based environment.
6.9 ETHICS IN BUSINESS
Thus far it has been demonstrated that ethics has had a close affiliation with social practices, particularly religious beliefs, whilst business has concerned itself more with fiscal and economic wellbeing. The advance of technology and the expansion of industry have tended to polarise the two even more. Until the beginning of the twentieth century businesses at least acknowledged the social conventions in their operations.
‘Irving Kristol has described the nineteenth century as a `society in which it was agreed that there was a strong correlation between certain personal virtues - frugality, industry,
120 sobriety, reliability, piety - and the way in which power, privilege and property were distributed. It was a society in which success was associated with duty performed.’
(Irving Kristol, within Vogel, 1991:103) The work ethic nowadays requires more from the current business climate than it did then as it has a more complex social structure to accommodate. The values of the family unit, the local community, the work community and the global community must now be fused together to present a set of ideals that embrace and accommodate all viewpoints. A new work ethic needs to be put in place that ‘includes an atmosphere of trust, a vision of the future, a co operative endeavour that transcends traditional notions of work and provides for responsibility, flexibility and full participation.’ (Green et al, 1991:12)
Business today must accept the influence they have over individuals and communities alike and that they have a moral duty to predict and evaluate the ramifications of their actions both in the short and long term. To do this they need an ethical code of practice.
The legal status quo is insufficient in this regard as it merely provides a minimum standard of socially acceptable behaviour without being designed to identify the covert qualitative aspects that influence organizational behaviour. ‘Organizations generally, and corporations in particular, play a more significant role in society and the lives of people than ever before. Bureaucratic authority has replaced individual power and charismatic influence. The focus today is on the corporation as a moral unit.’ (McHugh,
1991:13) Without a sense of care or some level of responsibility organisations, rather than improving human lifestyles, become the instigators of their collapse (eg the collapse of Enron and Arthur Anderson in the US, One-tel, HIH insurance and Ansett
Airlines in Australia). Individual and community lifestyles can be severely impacted by their association with industry. ‘Economic benefit is not equivalent to moral good.
121 Indeed it can turn into a rank exploitation of others, as was the case during the early phase of free enterprise.’ (Jaki, 1976, reprinted in van Dam and Stallaert, 1978:156) To ensure a reduction in organisational indifference to individual and community ethics and to encourage the development of a corporate profile, which projects its empathy with human culture, the business sector needs to modify the fundamental tenets of ethics to harmonize them with business practice.
6.10 SOCIAL IMPLICATIONS
The social responsibility of modern business is not therefore limited to merely economic issues but rather encompasses the legal, ethical and philanthropic aspects as well. The growing lack of ethics shown by businesses until this century can be directly associated with the social and legal outlook fostered during the twentieth century, particularly in the post war years. ‘Custom was subordinated to innovation and society embraced, albeit unconsciously, new practices that defined the moral worth of a person.
The virtuous person was not the altruist or the saint but the economic maximiser.’
(Walton, 1992:3) An amoral society was born that saw no need or benefit in addressing the social flaws of the time. It was not until the corporate collapses of the 1980’s and their subsequent impact on society that the correlation between economic and social wellbeing were brought into question and new demands were placed on business practices.
Society now expects corporations not only to supply goods to consumers, but also to exercise care and foresight to make sure that the product is safe for consumer use… Society now demands that business avoid undue pollution and depletion of natural resources, and that it operate as much as possible in harmony with the natural environment. Business has been asked not simply to invest where it is most profitable, but to be sensitive to the social consequences of investment and to use its economic power to alleviate social injustice. It is
122 expected not merely to provide jobs for members of the community, but also to offer a safe, healthy and fulfilling work environment. (Hoffman & Frederick, 1995:574)
Given the dominant influence people have in the workplace and vice versa and the human-like qualities identified in organisational practices it is imperative we infuse corporate practices with human values. "Whilst strictly speaking companies are not persons; ideas and functions which are literally applied to persons can also be applied to institutions made up of persons." (McHugh, 1991:23)
Corporations can be considered to have a de facto right to be considered as moral persons as they hold similar positions of power to those institutions that have historically governed the social mores of society, having been accepted as the exemplars of human beliefs and actions. A corporate conscience can be developed in the same manner in which humans develop their conscience. Corporations need to be given a specific identity, one that accentuates the humanness. ‘Business is not merely a matter of finding the right financial or marketing or accounting program or of installing the latest machinery or the most efficient inventory system. At its core, its very heart, business is a complex web of human relationships.’ (Frederick, 1990:120) There is a strong need to incorporate human values within the organisation to allow social expression to develop and grow from within as well as externally, particularly given that most human interaction and development takes place in the work environment. The next chapter will expand on the basic tenets of ethics and develop a core philosophy for organizations to adopt in establishing their own ethical codes. It will highlight the type of language needed to present today’s ethically based business.
123 CHAPTER 7
BUSINESS CODES OF PRACTICE A SUMMARY VIEWPOINT
A man of integrity is a man of sterling worth; a man of character; a man
whose word is as good as his bond; a man who would not think of taking a
minute of time that does not belong to him; a man honest with himself. (J C
Penny 1918)
7.1 DEVELOPMENT OF THE CORPORATE ETHOS
As was discussed in the previous chapter, the globalisation of business coupled with technological advancements and changing lifestyles have meant a re-evaluation of the moral stance of businesses. As the nineteenth century bore witness to the birth and played a dominant role in the infancy of our industrial society the twentieth century nurtured and sustained its growth bringing it to its present state of maturity. The past fifty years could be described as perhaps, what is known in human growth as, the rebellious teenage years, whereby excesses were the norm and a preoccupation with
‘self’ was the number one priority. The concept of responsibility in business was only addressed in terms of corporate needs rather than encompassing a wider commitment.
The recession of the late eighties was possibly the turning point from youth to maturity.
‘In the face of widespread community disenchantment and criticism in the 1980’s, business schools and professional bodies came under increasing pressure to address the issue of business ethics and to develop and educate a new generation of more ethical business people.’ (Milton-Smith, 1995:684) The nineties saw companies begin to recognize and acknowledge a greater responsibility than just commercial commitments.
124 ‘In a trend that mirrors the environmental movement in its infancy, managers began turning to codes of conduct and corporate social responsibility schemes to define their values.’ (Sasseen, 1993:30) They began to openly publicize what they perceived to be their social obligations. This chapter will examine the popularisation of ethical codes of conduct that has been mushrooming since the early 1990’s as well as the lack of forethought in the determination of their content and enactment. It will also posit a possible structure and content of ethical codes of practice for business that represents the true sentiments of ethics.
7.2 THE PROBLEM WITH THE CURRENT ETHICAL CODES IN BUSINESS
Whilst the move towards social responsibility in the nineties was commendable, and certainly applauded by many (environmental and religious groups particularly) it appears to have been founded on premises other than those of ethics. No serious consideration appears to have been given with regards to the planning, development and implementation of so radical a change to corporate philosophy. The impetus behind the development, and often the content, came more from the threat of government intervention and regulation (e.g. the introduction of the triple bottom line reporting, the corporate governance listing requirements of the Australian Stock Exchange, extensive regulatory changes to pollution and environmental protection laws) than the selfless qualities of ethics or a desire to channel exemplary corporate behaviour. ‘The larger corporate codes of the nineteen eighties were legalistic and more likely to talk about ethics than the reputation of the company.’ (Benson, 1989:308) A survey by Farrell and
Cobbin (1993) relating to the ethical codes and cultures in Australian organizations found that the newly developed codes of the nineties were predominantly inward
125 looking and protective of the enterprise. Most tended to be self-serving rather than demonstrating some of the more idealistic qualities such as a corporate conscience, social tolerance and or commitment. ‘The desire to succeed has led many to the lure of expediency. The new moral code says ‘if others do it why shouldn’t I.’ (Pennington,
1992:14)
Business corporations have long been held legally accountable for their actions, yet this minimalist outlook has merely addressed local, short-term issues without acknowledging the broader, social implications. The law was not designed to accommodate all affected and potentially affected parties. Because laws are usually domestically determined they do not necessarily encompass social and environmental issues relating to other countries or the world in general. Legal debate is usually situational and contextual without aiming to provide universal solutions and as such can only contribute limited control over corporate practices.
Given that business organisations transverse many social as well as business dimensions it becomes evident that they must be held accountable in each of these social arenas.
The ethical views of Rorty, Habermas, Rawls and Gilligan all offer ways in which organizations can adopt a more proactive ethical stance. An ethical code should identify those cultural values, both within and external to the organization, that address the connectedness between the various groupings. Aspects such as self, equity, justice, demography etcetera need to be acknowledged and attended to in a code of ethics. As such organizations must acknowledge and accept their social responsibilities in addition to their legal and economic duties. ‘Corporate social responsibility is an ongoing process constantly monitoring the environment and relationships... The source of this
126 responsibility is based on the power and influence which organisations have which leads them to cause, both directly and indirectly, moral effects in society.’ (L'etang,
1995:127)
The proliferation of codes published over the past ten years has tended to be narrowly defined, restrictive in application and incompatible within industries and across cultures. Codes are failing to acknowledge and interpret the virtuous elements of ethics in line with the ever-changing current moral outlook. As Rorty suggests current ethics should reflect the ‘shared moral identity’ that links the community with the business sector rather than each sector developing their own in isolation of the other. ‘Many people, perhaps most, in business organisations are intensely concerned about their careers and about their job performance and hence tend to adopt a Darwinian view of self preservation. This creates strong pressures to choose the easier wrong rather than the tougher right in a difficult situation.’ (Badaracco & Webb, 1995:23-24) Consistency in interpretation and practice is not evident. What is deemed acceptable by one organisation is considered inappropriate by others.
The codes of the nineties focused on such issues as bribery and corruption, harassment, coercion and insider trading matters, issues that, whilst carrying some ethical elements, are more appropriately covered by legislation. The codes developed ‘were for the most part not ethical statements, but dictates or rules that either prohibited or demanded specific behaviours …the message ‘don’t break the law’ whilst desirable is substantially different from the ethical viewpoint.’(Robin et al, 1989:70-71) From a corporate viewpoint the emphasis should be centred on identifying the moral tone of the organisation and establishing the guidelines to empower staff to act in a socially
127 responsible way in the workplace. In essence, what is needed is the development of an ethical system that addresses ethical issues, one that complements legal directives.
Wellman describes such a system as follows,
An ethical system is a complete, coherent and articulate set of ethical theories… It has both a vertical lineage and a horizontal topography. The vertical lineage consists in the logical derivatives by which ethical and moral conclusions are drawn from more fundamental premises and the horizontal topography consists in the arrangement of its subject matter… The practical function of an ethical system it implies moral principles that can, in turn, guide moral choice and human conduct… The practical function of an ethical system is primarily to direct our attention to the relevant considerations, the reasons that determine the rightness or wrongness of any act. (Wellman, 1988:300-305)
In business, as with any cooperative, the development and implementation of any new policy or procedure requires a formalised process that allows for identification, evaluation and structuring of the elements needed to present a functional product or result. In developing a corporate code of practice the process should be the same.
The setting up of a code of practice is often image-driven and consequently leads to a vague and ambiguous policy, reducing the potential benefits that should normally flow from its use. ‘The primary goal of an ethics code ought to be the promotion of ethical awareness and reflection.’ (Barnes, 1990:25) It should act as a motivator to behave ethically; direct responsibility; set the constraints; and guide actions. It ought to be viewed as a form of self-regulation, conceptually empowering a company to act in particular way, demonstrating ways in which others also benefit, rationalising choice and establishing the corporate conscience. ‘The drafting and adoption of a code is an opportunity for a firm to think and articulate its values and objectives… Devising a code of ethics could be seen not as an end in itself but more as the beginning of a monitoring and reform process.’ (Grace and Cohen, 1996:192) Most Corporate codes of
128 ethics are communicated by way of a written statement or set of guidelines and as there is likely to be language and cultural differences among the users this can often lead to differing meanings and interpretations. The ethics of caring highlights the need also to address the relationship between ‘self’ and others’ and whilst Gilligan discusses this issue in relation to the male/female dichotomy, a parallel could be drawn between the organization and those with whom it interacts. Differential qualities and issues of equity and justice are but some examples of matters to address in a code of ethics.
Clarification of these issues should aid in reducing the level of confusion and misunderstanding of the code and promote consistency of interpretation and optimal results.
Whilst the tenets of ethics may not be capable of restrictive identification to the point of establishing one monistic view it is possible to establish perhaps some clear associations or patterns of meaning that allow individuals, industries and societies to collectively establish the ground rules for identifying acceptable ethical behaviour in the workplace.
7.3 CORPORATE ETHICS OF THE NINETEEN NINETIES
Whilst the post world war II era may have dichotomised the relationship between business practice and ethics the nineteen nineties moved to unify the two. It may have seemed, particularly in the eighties that businesses were able to grow and prosper without any thought to the ethical issues involved however the nineties showed that this was not the case. Today this attitude would not be tolerated. ‘More and more executives have begun to realise that in today's increasingly competitive and complex business
129 environment, ethical conduct plays a vital role in the success of business. Indeed it is essential to economic freedom.’ (Hennessy, 1986:19)
A new sense of morality and ethical insight is emerging. The moral attitude of society has expanded from a predominant emphasis on individualistic and localised issues, such as the rights of the worker and pollution of local waterways, to incorporate more global issues such as the world environment and the protection of underdeveloped nations from exploitation. This is in keeping with Rorty’s postmodern pragmatic viewpoint in which the social moral order has had to be modified to adapt to its new boundaries. The focus of business on an international arena has forced organisations to address the ramifications of their actions on the multiple societies in which they operate. It is insufficient to counter the economic practices of business by offering donations or gifts when the actual practice of ethics is lacking from within the organization. As Neimark
(1995) comments, the business of ethics in the corporate world is often in conflict with the ethics of business practices. Social considerations such as labour exploitation, living standards, community survival etc are all inextricably entwined with ethical beliefs and hence should be transparent in the way businesses operate. More often than not the corporate ideology fails to embrace these aspects in their global operations. Benevolent acts do not compensate for the social hardship caused by the lack of a business conscience. ‘Just as language uses symbols to express its author’s essence, hopes and fears, so too must business develop and express, through concrete behaviour, its values of right behaviour.’ (Pienta, 1990:189)
The corporate indiscretions and malpractices of the past five decades have united social organisations this decade in the fight against environmental and social destruction.
130 Today's global society is far more vigilant in maintaining and nurturing our world assets in order to ensure a habitable world for the future.
This inclusion of ethical ideals with corporate policies is a resurgence of the ancient philosophy of ethics, whereby the ethical values of the individual were intermingled with their daily activities. For the greater part of our history, the two, ethics and business, have tended to be distinguished but now there appears to be a return to the ancient beliefs wherein work and wellbeing are intrinsically linked. Today the ethics of
Aristotle and Aquinas have been rejuvenated and modified to embrace a new and far more complex and demanding environment. ‘In the past the concept of ethics was considered primarily as a moral issue, but today it is acknowledged as a business issue that can have a major impact on profitability.’(Brooks, 1992:22)
The recession of the nineteen eighties saw a hiccup in business progress which gave the business sector the opportunity to stop and reflect on the interrelationship that existed between them and the community. The fact that both sectors felt the impact from the downturn accentuated the need to realign business practice with social demands. Now is the time for the business sector to address the relationship it has with society and develop a business environment that includes the ideals of ethics, which parallel with current social trends and attitudes. Kant and Rawls’ deontological concepts of duty and obligation align perfectly with the organization’s need to acknowledge their social responsibilities.
Today's business organisation needs to project a more humanistic approach to its operations. ‘The dominant ethos of any society is reflected in its institutions. To survive
131 as responsible, humanistic organisations, business corporations will have to investigate the needs of their employees and the demands of society, both of which are based on value systems.’ (Viola, 1976, reprinted in van Dam and Stallaert, 1978:98-99)
7.4 BUSINESS AS A MEMBER OF THE SOCIAL STRUCTURE
Society comprises a number of independent, well-defined institutions which, when conjoined, form the structural foundation for human existence and continued survival.
How strong or weak the social structure is will be dependant on the strength, cooperation and interaction of its member institutions. ‘The people and institutions in society are the ultimate source of ethical constraints and directives and help define the meaning of social responsibility.’ (Robin et al, 1990:12) It is this conjunction of all societal institutions that identifies and rewards human endeavour. There is a perception though, that human wellbeing is determined and controlled by specific minority groups or institutions rather than the combination of them all. Traditionally the religious and governmental bodies, through their teachings and legal dicta, were considered the dominant force behind acceptable behaviour and economic distributions. However with the growing movement away from religion and the reduction in government influence due to the globalisation of social interaction, individuals, and communities in general, have identified the business environment, and specifically business interaction, as the new driving force behind currently accepted social practices.
In the current economic climate it is the dictates of business practice that appear to directly influence individual and communal activities. If it is accepted that such a power exists then it becomes imperative that businesses demonstrate responsible behaviour in
132 all their operations. The concept of community interaction and argumentation, as posited by Habermas, ideally provides an appropriate arena for discourse between businesses and communities to develop a shared view of acceptable ethical behaviour.
‘Rather than encouraging business in the single-minded pursuit of profits and waiting for social well-being to follow, the public is demanding that business broaden the scope of its concerns and assume a more active role in solving social problems and in working for a good society.’ (Hoffman, 1992, reprinted in Hoffman & Frederick, 1995:574)
Businesses are constructed within a social framework and, as such, their performances are judged by the social values currently prevailing, values which are determined in consultation with the other member institutions. As their practices form part of the community network they should maintain a constant dialogue with the other institutions to ensure the most beneficial outcome possible for our global society. ‘Businesses are not distinct social entities but merely activities of society as a whole.’(Evans, 1991:872)
It is the interaction between these members that ultimately determines acceptable social behaviour and the equitable distribution of scarce resources. It is the responsibility of all affected parties to enter into a moral dialogue to classify and validate the social norms of that time. The decisions of a few powerful enterprises may but only make a dent in such a complex interactive social process. Businesses have a social responsibility, as a team member not as an isolated power. Their operations form part of the overall social structure, with their prime function being to utilise the earth's resources wisely and effectively, not to necessarily control their very existence.
133 Modern day business has new responsibilities, which until now, were under government control. Now they must provide the means to support social as well as economic welfare. Fostering a morally based corporation can uphold such a task.
7.5 THE CORPORATE CITIZEN
Society thus comprises a group of institutions jointly working towards establishing a harmonious environment in which individuals, singularly and collectively, can grow and prosper. For a society to grow and prosper all institutional members must be prepared to contribute to the fullness of their capabilities. Ethics are but one of the intangible tools available to aid in the accomplishment of such a task. Ethical values reinforce the strength of the social structure by providing guidance in the attainment of internal and external harmony and ultimately promoting integrity, loyalty and trust.
Individually and collectively, the social institutions have a responsibility to contribute to the well being of the community. Businesses not only have a moral responsibility to be productive and economical with the scarce resources available they have a social responsibility as well.
The demand for social responsibility has regenerated the need for business to adopt more ethical practices in their operations. ‘The idea that business should be a good citizen motivates the public to demand that business should be interested in substantially more than just the maximisation of profits.’ (Bailkin, 1993:55) Business practices should not be distinguished from social practices but rather be fused together with social practices to become a strong framework for an ethically productive world.
‘The moral point of view applies as much in business as in our other human
134 relationships. Business does not confer any special grant of immunity from ethical behaviour.’ (Frederick, 1990:124) Business organisations comprise the same cohort of individuals as society (albeit in different quantities and combinations) and as such suffer the same societal constraints and benefits. It is their responsibility to establish practices and procedures that demonstrate a proactive outlook towards the community.
Since businesses are constructed and effectively controlled by humans they need to be held responsible for their actions in a manner similar to those of the individuals running them. ‘Corporate organizations and their acts depend on human individuals... individuals underlie the corporate organisation and consequently human individuals are the primary carriers of [corporate] moral duties and moral responsibilities (Velasquez,
1992:19)
The very existence of business is conditional on human involvement which in turn is governed by the social mores of the time. Just as individuals are expected to act as good citizens so too should business corporations. Businesses have an obligation to promote self-fulfilment, which in turn should benefit society. This does not however mean a pre- occupation with profits. The materialistic ethos of the past should be replaced by a more pragmatic ethos, one that aligns with the postmodern pragmatic viewpoint suggested by
Rorty and one that embraces the ethical virtues initiated by Aristotle and developed by
Aquinas and others. ‘Advocates of a corporate social responsibility argue that ethical management requires more than merely following the dictates of the law or signals of the market, two institutions that otherwise guide business behaviour.’ (Stark, 1993:39)
Too many organizations have demonstrated that profit-centred operations do not necessarily lead to economic wellbeing (eg Bond Corp, Scase enterprises, OneTel, HIH
135 etc). As Brooks (1989) comments, a number of factors have influenced this changing view of business such as:
• A crisis of confidence about corporate activity
• The issue of increasing emphasis on quality of life – our health, our leisure time, our working conditions
• Society no longer regarding the interests of the corporation or its shareholders to be paramount in importance
• The growing power of special interest groups
• A change in the objectives, which control business – a trend to de- emphasize the maximization of short-term profits as the only goal (Brooks, 1989:120)
What can be seen to be emerging is a new definition of success that not only addresses profits but also social and economic factors as well. Qualitative factors (eg environmental issues, the rights of the individual, treatment of third world countries etc) have started to override the `bottom line' mentality associated with profitable operations.
The interaction between business and society goes well beyond the mere exchanges of goods and services. ‘Business organizations are part of the basic structure of society, and the moral standards that serve to ensure a stable, productive and secure society by restraining the self-interest of its members in mutually beneficial ways must also apply to the members of business organizations.’ (Velasquez, 1992:20)
Today's society demands that business adopt the ethical stance of the community in their daily activities, be that on a local, national or international level. For businesses to achieve optimal results they need to amalgamate corporate strategies and policies with cultural beliefs and social mores. ‘It is believed that business has a certain amount of
136 power to achieve societal goals. Activating social responsibility should precede economic analysis. Social and moral considerations are a natural and necessary complement to economic analysis.’ (Schreuder, 1976, reprinted in van Dam and
Stallaert, 1978:79-80)
Businesses can respond to social issues in many ways. One of the most prominent approaches used is through philanthropic gestures such as donations to needy groups, support for higher education or by merely supporting fund raising ventures. Each of these acts, whilst responding to social needs, contains an element of self-interest so that not only does society benefit but the reputation of the donating organization is also enhanced. Alternatively organisations may adopt practices and policies that incorporate the social mores in their day-to-day operations thus allowing them to assimilate into the community in a more proactive and productive manner.
Whilst it is very pragmatic to advocate the adoption of moral responsibility by organisations questions have been raised as to its real value given the additional costs involved and the short term competitive edge competitors may have if they do not follow the same philosophy. If all organisations cannot be convinced to adopt the altruistic stance then those that do may feel at a competitive disadvantage and the benefits flowing on to society will be diminished or even invisible. For organisations to embrace a socially responsible outlook it then becomes imperative that everyone actively participates. What is required are exemplars, set up to demonstrate how organisations can respond to their social obligations. ‘Business social responsiveness complements the explicitly normative orientation of business ethics and the 'íssue- outcome' stress of business social responsibility. Development of the social audit and
137 codes of conduct are examples of the pragmatic orientation of social responsiveness.’
(Manley, 1990:18) The use of social audits/performance reports, corporate codes and peer reviews, ongoing seminars and training are some of the more practical ways of demonstrating how businesses can implement ethical guidelines in the workplace.
The trend today is to develop corporate codes of conduct that identify and support an ethical approach in the workplace. In order to demonstrate a genuine social responsibility business practices and professional organisations alike need to establish mission statements, strategic objectives and operational practices that exemplify social ethics. ‘The moral imperative of serving the public good through the responsible design, manufacture and distribution of products and services is essential to the firm's long term survival and relationships.’ (Weiss, 1994:252)
Some would argue that the corporation itself is morally neutral, that it specifically has no moral stance but rather management sets the corporate tone. According to Ewin
(1991) ‘Corporations, as artificial persons, can have all sorts of rights and duties, but they lack the emotional life without which there can be no possession of virtues and vices… They are merely instruments for others to use.’ (Ewin, 1991:749,754) If this were the case then the idea of developing ethical codes of practice is doomed as there is a presumption here that management always has an acceptable moral stance and that it is in concord with those of the other stakeholders. A more appropriate position is that an organization is the personification of the combined efforts of all its members and as such should not be restricted to one perspective. Rather it should exemplify the consensual view of its diverse membership, providing living proof that the different cultures and beliefs can co-exist and contribute to the ethical welfare of the community.
138 Just as social ethics is the combined views of its individual member’s business ethics should derive from the combined activities of its members in conjunction with the social mores. ‘Because business activity is human activity, it can be evaluated from the moral point of view, just as any other human activity can be so evaluated.’ (De George,
1999:11)
Corporations are structured in such a manner that it requires the combined efforts of all members for it to function, not just the dictates of the people at the top. Whilst management has a strong influence with respect to the direction and practices of the firm they cannot enforce their decisions without demonstrating that they have taken into account the cultural differences and needs of all members. If corporations are to develop corporate codes they need to identify all ethical components and their practical application to practice and this can be achieved through the adoption of a modified version of the ethical tenets discussed previously.
7.6 CODES OF PRACTICE: AN EXEMPLAR OF BUSINESS ETHICS
Many, as a means of enunciating the corporate ethos in terms of acceptable social behaviour, both internally and externally, perceive a code of practice as a form of self- regulation, empowering business to behave in a manner that aligns with social ethics.
Given the international forum in which today's businesses transact it becomes imperative that codes of practice are designed to incorporate the cultural and cross- cultural influences that impact on business operations. As mission statements and strategic plans become the enabling devices for corporate direction, codes of practice represent the moral tone of the organization.
139
Many reasons have been put forward in support of the creation of ethical codes in business practice. Pelfrey and Peacock (1991:14) cited a number of reasons why companies promulgate codes of practice, some being:
• To explain the ethical philosophy of the organization
• To provide information relating to set ethical issues
• To provide a set of enforceable rules
• To help maintain credibility and public trust
• To foster greater professionalism
• To synthesise the relationship between business, law and social practice
Yet whilst each, if not all, these reasons provide valid argument in support of ethical codes most organisations tend not to address these very issues but adopt a protective stance. They focus on such issues as bribery and corruption, harassment and coercion, etc which are adequately covered by most legislation. ‘To be effective codes of ethics must embody the thinking and policy beliefs that management and employees alike desire in the organization… They should represent sincere communication efforts to guide employees’ acts and behaviour.’ (Carroll, 1993:152)
Business ethics must not only apply to the overall operations of the organization but must be sufficiently pliable to relate to specific situations. ‘Management must take steps to orient, institutionalise and sustain the [appropriate] corporate conscience or value system of the organization.’ (Goodpaster, reprinted in Hoffman et al, 1990:25) Where organisations have numerous levels, divisions and or locations their codes need to be
140 structured in such a manner as to involve all areas. The corporate conscience should not be seen as referring to the external constraints that confront a business such as legislation and competition but rather the internally derived guidelines that ensure industrial harmony. As Townley (1992) comments,
A company's code of conduct establishes ground rules. These rules articulate the organization’s principles and purposes. They are an institutional mechanism that provides a continuing dialogue about the company’s mission and how it will be advanced… While codes will clearly not make unethical behaviour extinct, it is widely felt that they will make employees at all levels more responsible and more accountable for their actions.’ (Townley, 1992:210)
Whichever ethical philosophy businesses adopt, whether it be teleological, deontological or a hybrid of both, to promote their codes, it is imperative they identify what are ethical issues and what are matters of law. ‘No longer can a corporation take refuge behind the argument that an action is within the law; it must also be seen to be morally acceptable. (Brooks, 1989:118) Ethical codes need to address the basic principles of ethics such as beneficence, justice and benevolence. ‘An ethical framework for business must include a principle of justice (as fairness) and a principle of promoting common good (kindness or benevolence). Respect for the dignity of the individual and for the welfare of the group are the key operating principles.’
(Goodpaster, reprinted in Hoffman et al, 1990:30-31) A business code of ethics needs to provide the moral parity between the profitable operations of the organization and social harmony. It also needs to ensure that there is no conflict between corporate values and those of its members. ‘The point of business ethics is not necessarily to change anyone’s moral convictions but to build on them.’ (De George, 1999:12) Corporate ethics and personal ethics should not be distinguished but rather be fused together to provide a strong ethical framework, otherwise confusion may occur as to which ideal to follow.
141 As Newton (1991) states, ‘human players in the corporate enterprise very often act in accordance with personal and cultural imperatives’ (Newton, 1991, reprinted in
Hoffman and Frederick, 1995:585) and, as such, should not be forced to choose between their own values and those of the corporation, nor should they impose their values on the corporation. What is more appropriate is that one complements the other with the resultant corporate ethos being embedded in corporate practice. ‘Ethics is not something value-added to business operations; it is integral, necessary and central to managing successfully.’ (Weiss, 1998:15)
When interpreting business ethics, organizations should be guided in their decision process not only by those factors influencing profits and efficiency but also those associated with social wellbeing. Success may need to be redefined to include such aspects as social harmony and individual wellbeing. The inclusion of business ethics in organisational operations ensures that equity and fairness form part of the decision making process and this in turn ensures that the group ethics of the community are acknowledged and addressed. Such ethics are an applied form of social ethics, incorporating the deontological philosophy of duty and obligation along with the teleological philosophy of consequences of action. The ethics of business organisations are thus not founded solely on the individual's interpretation of what constitutes an ethical act nor are they based on the views of the powerful few. Rather they should exemplify an understanding of individual and social goals and the way in which their operations impact on such goals and principles which is indicative of the virtues espoused by Aristotle and Aquinas. It would appear, as Ferrell and Fraedrich state,
Ethical behaviour [is] a function of several dimensions of an organization’s system: the embedded organizational value system or corporate culture,
142 significant others (including superiors, peers and subordinates), and the personal value preferences of the organization’s groups and individual members. Significant others have been found to be the most influential variable affecting ethical decisions in business-related matters. (Ferrell and Fraedrich, 1997:151)
Whilst ethical codes cannot be clearly defined, qualities stand out which act as good indicators for addressing the ethical implications of a situation. ‘A code must be reasoned, logically consistent, defended by reasoned argument, and coherent with the usual understandings of ethics: they must demonstrate respect for the individual, a commitment to justice, and sensitivity to the rights and interests of all parties affected by corporate action.’ (Newton, 1991, reprinted in Hoffman and Frederick, 1995:587) It is important at this point to perhaps highlight some of the more idealistic qualities of ethics that should form the foundation of today’s organisations’ code of ethics.
7.7 THE DEVELOPMENT OF ETHICAL CODES
The first step in the development of a corporate code is to establish the central theme.
Idealistically this theme should articulate the core beliefs of ethics and apply them to corporate practice. In other words, ‘the selected moral standards [of an organization] should retain the core significance despite differences in culture, religion, time and circumstance. (Schwartz, 2002:29) The main theme of ethics centres on the idealistic qualities of benevolence, righteousness and beneficence. An applied set of values can be derived from these qualities that are capable of being built into the workplace and, at the same time, be sufficiently transferable to accommodate the international environment.
143 As stated earlier, whilst being broad in design, a corporate code must target all levels of the organization from top management to the most junior employee. The code should be specifically worded and realistic in outlook and whilst it will not necessarily provide tangible outcomes acceptable to all parties it should provide clarity and discourse relating to the issues at hand and possible courses of action. ‘Since codes are rarely specific to the ethical dilemma at hand, interpretation and extrapolation must be undertaken.’(Brooks, 1993:44) If the basic ethical tenets are clearly articulated then there should be no problem in applying them to a practical situation, be it in a domestic or a global environment.
7.8 THE CORE QUALITIES OF AN ETHICAL CODE
The ethical codes of the organisations should demonstrate a reinforcement of social ideals. Both should aspire to honesty and fairness in their dealings whilst providing
`good' results that benefit the majority (accepting that the meaning of the word good is very broad and open to numerous interpretations). Many of the socially derived qualities can apply to business practices in the same way. The Josephson Institute of ethics
(2002) identified six pillars of character to guide behavioural choice, all of which align with virtue ethics and which can easily translate to the business sector. These are:
• Trustworthiness (incorporating such aspects as honesty, integrity, reliability and loyalty)
• Respect (incorporating such aspects as civility, courtesy, decency, dignity, autonomy, tolerance and acceptance
• Responsibility (incorporating such aspects as accountability, pursuit of excellence and self-restraint)
• Fairness (incorporating such aspects as process, impartiality and equity)
144 • Caring (incorporating such aspects as welfare of others, altruism)
• Citizenship (incorporating such aspects as civic duty)
(Josephson Institute for Ethics, 2002)[Accessed 14 October 2004]
The qualities of honesty, integrity (found in trustworthiness) and fair-mindedness (a part of fairness) are perhaps the more obvious qualities discussed and codified in business policy statements today. Yet the less acknowledged qualities of benevolence such as compassion, understanding, tolerance, temperance and courage, which often go unrecognised, are equally as important to business in its dealings. ‘Each of the moral standards has fundamental importance and must be included if the code is to be morally comprehensive and complete.’ (Schwartz, 2002:30) A good corporate code of ethics will embrace all the cardinal virtues, initiated by the ancient Greeks and expanded upon by the religious doctrines, and apply them to business operations. This can be achieved through a clarification of their meaning from a business context and by providing exemplars that demonstrate their relevance.
Honesty connotes openness and frankness apart from the more traditional interpretation of truthfulness. If businesses adopt a more frank and open attitude in their dealings they will achieve respect and trust from their clients and colleagues which can do nothing but enhance operations and profits.
Integrity is often thought of in the same vain as honesty yet its meaning too can be broadened to depict more than uprightness. Integrity brings with it a sense of strength and unification, an air of sincerity and purpose. A business that is known for its integrity is seen to be one that can be relied upon and trusted, a company with sound practices,
145 acknowledged and accepted by both staff and society. In the professional field it is acknowledged as one of the core elements needed to establish professional autonomy.
Justice, from a business perspective, can only be addressed in terms of fair-mindedness.
It deals more with equity than equality. ‘Fairness seems to have two aspects. It requires that one treats like cases alike and that each case be treated as it deserves. (Wellman,
1986:189) In other words business decisions need to be determined in a fair manner, based on the situation at the time and taking into consideration the relative merits of the participants and choices available at the time.
The benevolent qualities of compassion, tolerance and understanding are not as easily identified with business practices as they are with the individual. One may well ask what relevance these qualities have to business performance and development. It is these covert qualities that provide the ‘human’ character of the business and without their presence businesses may struggle to sustain long term profitability, particularly if they appear indifferent to the human condition. These qualities form part of the core characteristics of human interaction and without their demonstrated presence a company’s business activities could suffer in the marketplace.
With the aid of the following acrostic, the word ethics can be used to translate the ideals of ethics into a table that links ethics with business practice and highlights some of the more pertinent issues that need to be addressed in any corporate code of practice.
146 Letter Synonymous with Areas for Discussion
E Equity & Justice Work practices, health and safety issues, dealings with clients and suppliers re fair trading, impartial processing of complaints both within and outside operations T Tolerance & Trust Cultural differences, personal differences and needs, developing a state of mutual trust and reciprocity in the work environment, mutual respect H Honesty Within the workplace it may address such issues: work performance, quality of output, use of work materials etc. Whilst outside the organization it may deal with the way in which the company interacts with its clients, its creditors and the community in general. I Integrity Addresses the image of the corporation, defining and providing guidance on corporate practices relating to such matters as receiving gifts and ensuring promises and commitments are within the capability of the organization C Conscience and Commitment Deals with work attitude, economic use of time, performing to expectation, striving to achieve corporate goals and personal expectations, corporate citizenship S Sincerity Cultivating a genuine, straightforward, earnest attitude to work and the company in general, caring, benevolence,
Business ethics can thus be seen to comprise six core elements which, when combined, provide a cornerstone for 'good business practice'. A Business code of ethics would build on these elements and tailor it to suite their specific culture. Whilst it is accepted, as discussed in previous chapters, that these ideals are broad and open to multiple interpretations, the table demonstrates that they are relevant to the business environment and if addressed properly they should serve as a useful guide in directing appropriate behaviour both within and outside the organization.
147 The adoption of a code of ethics for an organization does not, of course, begin and end with the written document. It is but the means to an end. The inclusion of a code of ethics within any organization is an ongoing process that grows and changes in line with corporate changes. The main point in the development of the ethical framework is that it is all-inclusive. All staff should be involved in the development of its contents. It needs to embrace all cultures, be couched in language that is easily understood and specific in meaning, be capable of implementation and enforcement, be readily available and form part of the daily activities of the organization.
Whilst this chapter has concluded that there are some ethical principles that should always be included in any corporate ethics code it is apparent that businesses still fail to address these qualities when establishing their corporate codes. They omit to address the vary essence of ethics, which centres on the understanding of these virtues.
The next chapter will use these qualities as a measure in evaluating a sample of the codes of ethics currently available in the Australian business sector. It will deconstruct the sample codes to see whether they embrace the philosophy of ethics or whether they are still adopting a minimalist approach in accord with law and self-preservation. It will look at the content and evaluate the language used in their presentation to determine the benefit if any.
148 CHAPTER 8
DECONSTRUCTING CODES OF PRACTICE, THEIR CONTENT AND LANGUAGE
In written communication, we trust our entire presentation to the words we
select. (Fabian, N, 2001:74)
Discussion thus far has centred on the philosophy of morals and its relevance to the business sector. The preceding chapter identified at least six core elements that appear constant throughout the development of ethical theory from no matter whichever perspective it is viewed. They, in essence, represent the sentiments of ethics and thus it is from these broadly defined concepts that a corporate code of ethics should be derived.
This chapter will deconstruct a sample selection of corporate codes of ethics from the
Australian business sector to ascertain whether companies retain the spirit of ethics in the format, content and language they use in their codes or whether they adopt a more applied and often lesser, legalistic approach.
As discussed in chapter five, language, culture and context play a dominant role in the transference of meaning and action and hence the way companies’ codes are written and distributed can affect its ethical intent. The remainder of this chapter will be divided into three sections, the first section will discuss the concept of deconstruction, a praxis that will be used to dissect and draw out the aporias in the codes currently populating the business sector. The second will evaluate the format and content of a sample of
Australian corporate codes and the last section will deconstruct the language of these codes and identify areas that need further explanation. A sample set of corporate codes has been drawn from the Australian Stock Exchange listing of public companies in
149 Australia. In conclusion a summary will be given of the information content found in the sample of codes that purports to represent ethics and finally a comment will be made as to their congruence with ethics.
8.1 ETHICAL CODES OF BUSINESS
As can be seen from previous discussion, the business entity can be viewed from four distinct positions, these being the internal functional level, the entity level, the domestic community member level and the member of an international cooperative. Each of these levels raises specific ethical issues pertinent to that level of corporate activity and, as well, collectively they contribute to the ethical issues relevant to the business sector in general. The idea thus of introducing an all-embracing code of ethics, a business ethics, that incorporates and accommodates the needs of all these facets of business would appear to be physically impossible yet this is precisely what is required to ensure the spirit of ethics is retained. At this point it is pertinent to reaffirm two aspects of ethics that support this argument.
Firstly ethics, by definition, is a philosophy; a set of principles or ideals upon which actions or issues can be interpreted. ‘The point of a code of ethics is to outline a set of expectations regarding relations to others at any given moment.’ (Jones, 2003:239)
Hence the issue in question is not whether the overarching ideals of ethics can be portrayed in a code but whether the code is being appropriately used in depicting the ethical stance of business. Whilst it is unquestionable (given the current trends and popularity with the topic) that businesses are genuine in their attempt to embrace the philosophy of ethics they seem to fall short with regard to its intent in that they fail to
150 authenticate its ideals. What today is being postured as business ethics is not ethics per se. It appears to relate better to moral practices and behaviour that conform more to legal and cultural practices than ethical beliefs. ‘Encoded in law, codes of ethics expound what is possibly better described as ‘morality’, an outline of the ‘mores’ or cultural values expected or hoped for at a particular moment.’ (Jones, 2003:240) As such it is an applied form of ethical theory and should not then be used as its surrogate.
Rather it should be used to compliment the philosophy. In unison ethics and morals define the character of the business.
Secondly, because the tenets of ethics are ideals, an ethical code should be used as a base for articulating those desirable qualities that are perceived to exemplify the moral fibre of a business. It should distinguish the elements of ethics and provide some discussion as to the desired meaning germane to the business organization, which then helps to enunciate their particular position. In this sense it is thus possible, if not a prerequisite, to establish a generic code of ethics, which underlines the thesis of ethics and provides a framework for the development of relevant codes of conduct and behaviour.
The tenets of ethics are but the starting point in the development of a morally conscious business community. The idea of developing an ethical code in modern times is ‘to establish a world [idealistically] free from moral ambivalence. Such a code offers a direct escape from a lot of anxious groping in the dark over moral matters... providing practical help in achieving moral certitude’ (Elliott, 1995:27)
151 8.2 DEMYSTIFYING COMPANY CODES
Ethics thus, from no matter whichever viewpoint one adopts, comprises a core set of ideals with broad, if not inconclusive, definitions. Whilst these tenets may not be capable of a restrictive monistic classification it is possible to establish some patterns of meaning that allow individuals, industries and societies to collectively establish the ground rules for identifying acceptable ethical behaviour. As Kant argued, it is in the application of the accepted meaning of these ideals where practices will differ and not so much with the underlying philosophy. Organizations should provide an explication of the elements of ethical codes and link these with their codes of conduct or governance practices in order to situate their specific position.
Today most companies acknowledge the need for a code of ethics, even if only to accommodate the regulatory demands placed on them by the various legislative bodies in their operating precincts (e.g. the Australian Stock Exchange listing requirements addressing corporate governance). As a form of attestation to the current corporate interest in codes of ethics, and by way of identifying a link between the ethical ideals, as previously defined and corporate practice, a random sample set of companies, drawn from a cross section of publicly listed companies on the Australian Stock Exchange,
(refer to appendix 1 for the list of companies examined) was chosen and a letter sent to the chairman or their representative inviting them to provide a copy of their current code of ethics. As was stated in the letter, the aim was to compare codes from a variety of industries to discern what businesses saw as ethical issues and to determine whether it was possible to derive from them a generic code that could assist any company in the development or refinement of their own industry-specific codes. Those codes that were
152 received were subsequently examined and deconstructed to ascertain the structure, content and language adopted. The ethical position of the companies examined was consistently depicted in the form of a code of conduct and/or governance statement and was rarely titled as a code of ethics (approximately 13% of the companies examined used the term ethics in their title). In most instances the codes were modelled on the
Australian Stock Exchange guidelines and were generally in keeping with a teleological perspective in that they constantly aligned with the consequences of actions though their intent was associated more with self preservation than with ethics.
At a glance, it would seem that the corporate world is united in their endeavour to include ethics in their practices however the depth and or level of the commitment to ethical values is not so obvious. In the sample taken, company concern with ethics ranged from a two-paragraph statement in the governance section of the annual report
(e.g. Savage Resources Ltd, Werrie Gold Ltd, Magellan Petroleum Australia Ltd) to a twenty three-page booklet(Coca Cola Amatil), which provided a detailed guide to business conduct. Yet none elaborated on ethical issues. Whilst, in general, the companies tended to focus on the same moral issues some codes were slightly modified to accommodate differentials such as industry type, social demographics, global positioning and more specifically the way in which each internalised ethical values in line with their own operations.
Broadly speaking the codes examined demonstrated a strong interest in morality, which is a significant improvement to the sentiments of the latter half of the twentieth century.
However, there is a problem with the way in which the ethical intent was translated in the samples used. Whilst, as was expected, the structure, content and language
153 employed all related to specific business issues and practices there was little to no preamble introducing the concept and relevance of ethics to business ( less than 7% introduced the code). Companies, it would seem, are treating ethics and moral conduct as synonymous, which is not attending to the purpose of ethics. Ethics or ‘moral philosophy refers to the philosophical reflection on morality’s nature and function.
Morality, in contrast is used to refer to the conventions in society about right and wrong human conduct.’ (Beauchamp, 1991:5) As a consequence the codes examined failed to give any definition or support to the principles underpinning ethical practices within the confines of the business environment.
In addition, the ethical vernacular used (words such as honesty, integrity, good etc) gave the impression that meaning was clear, distinct and indisputable, a point which is highly debatable. Expressions such as ‘we conduct ourselves with integrity’; ‘honesty, integrity and fairness are essential to the way we conduct our business’ and ‘fairness, openness and honesty are part of all dealings’ , are common phrases used by the companies but none are clarified as to the corporate intent. Whilst all companies explained in detail, and with examples, the practices they expected staff to follow, in particular work situations there were no such parameters to the ethical expressions used, which meant no boundaries to interpretation and levels of compliance. It would seem that companies, in assuming that the meaning of the language used was unmistakable and universal, failed to note that meaning is conditional and contextual and hence can change depending on its linkages and associations with its surrounding. ‘The meaning of a given sign may change with the speaker/writer, the circumstances of its making (the history, the context, the speaking community from which it derives), and the reader’s unique contribution on the text.’ (Walters-York, 1996:49)
154 The content of the codes, as well, related to specific behavioural issues that aligned more with particular forms of business conduct rather than in association with ethical principles. For example most had sections dealing with conflicts of interest, insider trading, employee rights, contributions to political parties and other specific practices with only the odd word alluding to the ethical precepts, these being strategically situated in the statement. The problem with this format is that if there is no preamble or reference to which the broad principles of ethics are identified and conceptualised then their adoption and or inclusion in the day-to-day operations of business becomes semantic. It may even lead to confusion and misrepresentation of its intent and that will mean it will fail in its purpose. For effectiveness there has to be a publicly displayed statement that gives a meaningful explication of the principles of ethics that the business wishes to follow which hopefully then becomes part of their persona. The metaethical position, in the form of the virtues or tenets of ethics, thus provides the ‘meaning and the necessary tools to engage intelligently in personal and social analysis of moral issues.’ (De George,
1999:23)
It is this concept of meaning that needs to be discussed and deconstructed to demonstrate why it is important to spell out the intended meaning to ensure the desired behaviour is achieved. In this thesis a deconstructive praxis has been adopted to accentuate the aporias in the design and content of the codes. ‘The very meaning and mission of deconstruction is to show that things – texts, institutions, traditions, societies, beliefs and practices of whatever size and sort- do not have definable meanings and determinable missions.’
Caputo, 1997:31) By using a deconstructive analysis it is possible to highlight the ambiguities of meaning, ‘the blind spots’ of understanding and expose the preferred objective of the statements. ‘Deconstruction refuses to accept the idea of structure as in
155 any sense given or objectively ‘there’ in a text. It questions the assumption that structures of meaning correspond to some deep-laid mental ‘set’ or pattern of mind, which determines the limits of intelligibility. Deconstruction starts out by rigorously suspending this assumed correspondence between mind, meaning and the concept of method which claims to unite them.’ (Norris, 2002:3)
8.3 DECONSTRUCTION
The deconstructive approach is able to identify the range of interpretations and areas of ambiguity or confusion available to the users. ‘Deconstruction concerns itself with negotiating the aporias of business ethics… inviting us to experience these aporias, to encounter their undecidability and the way that the terms invade one another.’ (Jones,
2003:241) Whilst management may feel that they have clearly outlined the ethical attitude of the company in setting their directives and specific codes of conduct, those in receipt may derive an alternate or even an ambiguous meaning to the one proposed, particularly if the language used is open to multiple interpretations. Jacques Derrida, a postmodern philosopher, uses the deconstructive praxis in his analysis of the written word in his book of Grammatology, wherein he argues that a ‘conceptual closure’ for words does not exist, that their meaning is determined through their associations and interactions with other words and symbols at a particular time. He states that ‘language is a structure, a system of oppositions of places and values. No language has an absolute situation, only a differential one.’ (Derrida, 1984:213) Deconstruction is thus employed as a tool to identify the plurality of meanings available to words and highlights the significance of guiding the direction of intended meaning. Derrida uses the concept of differance as a form of tracing to distinguish differences, associations and or linkages
156 between terms. ‘Differance is the systematic play of differences, of traces of differences, of the spacing by which elements relate to one another. This spacing is the production, simultaneously active and passive, of intervals without which the full terms could not signify nor function. (Derrida, 1981:38-39) The plethora of meanings that can be attached to the linkage of one or more words demonstrates the importance of choosing the combinations carefully. It is possible for an implied meaning to subsume the intended meaning of a statement providing an inappropriate application of the policy or code if it is not clearly stated.
Management should aim to ensure that some common understanding and application is possible at all levels and cultures of the organization. It is imperative to acknowledge and incorporate the differences and deferrances of each level of the organization in developing the corporate code. A code pitched only at the middle to high level of management will not draw the support of those less powerful. Similarly a code written too simply may not attract the support of upper management as they may consider it too simplistic and dismiss it as unimportant or obvious. ‘To be effective, codes of ethics must embody the thinking and policy beliefs that management and employees both desire in the organization. They should represent sincere communication efforts to guide employees' acts and behaviour.’ (Carroll, 1993, p.152)
Within any organization numerous policies and procedures are employed as a medium for instructing staff on company matters and directing operations and it is the success of these mediums that governs corporate survival and maintains their competitive edge. In this sense the wording and structure of the statements can play a significant part in the successful transition from instruction to action. Deconstruction can aid this process and,
157 with the support of examples or more detailed explanations, the appropriate signal is passed from the instructor to the recipient. This process identifies the linguistic linkages and differances1 of the words to produce a particular interpretation and subsequent response. Deconstruction attempts to underscore the plurality of meanings by structurally liberating the prose, giving it no absolute sense, forcing the author to delineate the parameters within which they wish to identify their intent. Whilst the plurality of meaning, and consequently, the interpretation, pose a number of problems for any person or group wishing to establish standard practices or procedures this is not to say that management could not structure policies or codes in such a manner that one level of interpretation can be privileged over another.
Since most directives are passed on through the use of written language any code, like policies or procedures, should be couched in language that at best confines the ambiguities of meaning. ‘The mere recitation of lofty principles, rules and exhortations in itself does not lead to deeper ethical awareness, understanding or commitment.’
(Milton-Smith, 1995:686) The language used should be as graphic as possible taking into account the externalities that may influence the recipient’s interpretation of meaning. The aim should always be to obtain that optimal level of meaning, which coincides with management’s intentions and the ability of staff to perform. Any policies or procedures developed must be periodically reviewed to ensure continuity of intended meaning.
1 As discussed previously ‘differance’ is a term used by Derrida in describing not only the difference in the multiple ways a word can be defined it also highlights the way meaning can derive through the deference of the word to its surrounding words or expressions.
158 Cultural, demographic and educational differences (as discussed by Hofstede, [1983,
1984, 1991], Gray, [1988], Gudykunst et al, [1996], Ding et al, [2005]) are but a few, easily identifiable, factors that can impact upon interpretation of meaning. Information cannot be disseminated and applied if there are no commonalties identified with respect to the thought and interpretation of the parties concerned. ‘An effective code results from trade-offs among the key elements of notice, discretion, risk and tone, which reflect the culture of the organization. The more detailed a code of conduct (the greater the degree of notice) the less the risk there is, but the less discretionary and more negative in tone the code becomes.’ (Redeker, 1990:83, 86) A balance between these factors is the ideal mix. The signification of meaning derives from some distinguishing feature or quality, usually a deference to the surrounding words, which implies the intended meaning. To some extent we will always read texts in the context of our own time of currently dominated ideas and will reject or reinterpret them according to our present preoccupations’ (Tredell, 1987:98) To signify any form of beneficial meaning the written word must be able to be replicated by parties other than its originator. Its reproduction, although not necessarily exact in all ways, must be able to impart the same intent as if its author was stating it, otherwise meaning can be distorted or lost completely on translation.
8.4 THE FORMAT OF COMPANY CODES
Whilst appropriate language is a significant factor in the development of a functional and effective code of ethics other, more informal cues, also impact on its success. To begin with the visual presentation of the code indirectly acts as a reference to its level of importance and position in the organizational literature. ‘Ethics codes come in multiple
159 formats: simple lists, narrative scenarios, question-and-answer pairs etcetera.’(Weaver,
1993:53)
The manner in which a code is presented is often the means by which it is distinguished from other company policies or guidelines and hence if it is merely combined with the other such literature the force of its import can be hidden. With respect to the codes examined, three prominent formats were presented, these being, multiple versions of loose-leaf pages ranging from two to four pages (e.g. North ltd, Incitec Ltd), a section of a policy manual or annual report (e.g. Commonwealth Bank of Australia, Magellan
Petroleum Australia Ltd), again either two to four pages depending on whether it formed part of the annual report or the staff manual and finally the booklet format (QNI
Ltd, WMC Ltd) which ranged from six to twenty four pages. Of those companies that used the loose-leaf format these generally were presented to staff on appointment by way of a flyer alerting them to particular forms of conduct the company expected from them in the course of their employment (e.g. Star City Pty Ltd, GWA International Ltd).
From an observational perspective, their impact in this instance would be minimal as they formed part of an induction package and could easily be overlooked by the recipient. Unless the code is prominently displayed other more current concerns, such as work and pay conditions, could eclipse the message and its level of importance. The use of flyers or bulletins in this instance does not appear to be the most beneficial way of introducing the ethical position of the company. If the aim is to ensure that ethics is a key aspect of the organization then it has to be more conspicuously promoted.
A similar experience was also noticed with regards to the code being included as part of a manual, policy document or annual report. The codes presented in this format, whilst
160 providing discussion on ethical issues and acceptable practices, tended to be minimalist and ineffectual as other, operational matters, which dominated the content, tended to again overshadow their significance. Codes incorporated in the annual report, as part of corporate governance (e.g. McGuigan Simeon Wines Ltd, Southcorp Ltd), had the least impact on the importance of the topic. Their format was usually by way of two to three paragraphs, which served merely to introduce the concept of a code of conduct in compliance with stock exchange listing requirements, which means that the codes were not written for in-house use. Those that formed part of a manual (e.g. Petroz N. L.) also failed to highlight the ongoing relevance of ethics to corporate life. Whilst manuals and reports, used in the right domain, are informative and instructive in this instance they are inadequate in terms of publicising corporate beliefs and behaviour and should not be used as the sole resource for disseminating such information.
The last, but also most widely used, format adopted by the sample group was that of the booklet or brochure (e.g. Western Mining Corporation, Rio Tinto). This format appeared the most serviceable in that it distinguished the code from other company policies and allowed for easy access and quick reference. The use of a booklet also allowed management the opportunity to present the content of the code in a more definitive and promotional manner. The booklets were broadly titled (eg. ‘Code of
Conduct’; ‘The Way We Work’; What We Stand For, etc) but were representational of their contents. They were generally broken up into sections with clear headings that easily distinguished each of the issues the company felt relevant to their operations and they were often supported by quotes and or pictures, which aided in providing an immediate visual image of the area under discussion. Typical examples of the content of the booklets would be sections dealing with the corporate vision and objectives, policy
161 statements addressing such issues as conflicts of interest, gifting and personal conduct when dealing with clients and concluding with information about the ethics advisory committee and their role. It would seem that, from a behavioural viewpoint, the booklet format provided the greater degree of scope for discussing moral issues or particular work practices and served as a reliable and informative guide to assist staff with specific moral concerns. However, as a means of articulating an ethical code, this format is also ineffective.
An ethical code acts as an exemplar of ethical virtues or beliefs, which are a way of life, and hence should not be referenced only as issues arise. It should be constantly visible, readily identifiable and act as a constant reminder of the corporate character. Possibly the most open and informative method of instructing staff in terms of ethical codes would be a poster or display board strategically placed in multiple sectors of the company. The use of this format ensures that the message is clearly presented and constantly viewed by staff and other corporate users so that it forms part of the daily scenery and cannot be lost, forgotten or misunderstood. This format can only be adopted however if the concepts of ethics are addressed and not the behavioural recommendations that are currently expressed in company codes.
The current codes employed by companies should still stand as codes of conduct but with the difference being that they would now be framed from a code of ethics, a code that provides the background to their development. This introduces the next issue that arose from evaluating the codes of the sample group chosen and that is the content.
162 8.5 CONTENT OF COMPANY CODES
The theme of the sample group of company codes that were examined was predominantly one of behaviour with a strong emphasis placed on reputation, good citizenship and compliance with the law (as summarized in appendix 2.) The composition of the codes followed a reasonably standardised structure regardless of whichever format the company adopted, with only the depth of the discussion providing the distinguishing features. The majority of the codes examined followed the structure as presented in The Principles of Corporate Governance and Best Practice
Recommendations published by the Australian Stock Exchange Corporate Governance
Council. ‘This document states aspirations of best practice for optimising corporate performance and accountability in the interests of shareholders and the broader economy… Companies are encouraged to use the guidance as a focus for re-examining their corporate governance practices. (ASX Corporate Governance Council, 2002:5, refer to appendix 3 for extracts from the guidelines) [Accessed 15 December, 2004].
In Australia all listed companies are required (Listing Rule 4.10) to disclose the extent to which they have followed the ASX guidelines and, whilst there is provision to deviate from these guidelines, any deviation from them must be explained. Hence, in compliance with the regulatory requirements, the content of the codes generally followed the pattern recommended by the Council and were not designed to particularly deal with ethical matters. Only one section of the guideline specifically alluded to ethical issues, this being Principle 3, Promote Ethical and Responsible Decision-making however no ethical dialogue is evident. The principle recommends companies establish a code of conduct that should address the following issues:
163 RECOMMENDED CODE OF CONDUCT
(Source Box 3.1: 26 Principles of Corporate Governance and Best Practice Recommendations, ASX Corporate Governance council, march 2003)
As can be seen from the above-suggested content there is little correlation between the code of conduct companies adopt and the ethical issues raised in previous chapters. The content of today’s corporate code focuses on particular behavioural aspects of business dealings and only broadly introduces some of the ethical precepts. For example, in most of the codes analysed, the preamble features integrity as a particularly key element to good business but fails to elaborate on its intent, as the following excerpts demonstrate:
Our profession is founded on very high standards of personal integrity and conduct, which requires absolute honesty. You should be absolutely honest in all your professional activities. Be aware that the Bank is often a target of attempted fraud, and be alert to ensure that the bank’s position is protected and that it does not inadvertently participate in any illegal activity…You should adopt personal standards consistent with the high reputation of the bank and endeavour at all
164 times to enhance the standing of the Bank. (Commonwealth Bank of Australia, statement of professional practice, 2004) [Accessed 15 December 2004]
Incitec Pivot employees must act with integrity and honesty in the day-to-day performance of their jobs and in any situation where their conduct and behaviour could influence respect for the company. (Incitec Pivot Limited, Code of Ethics, 2004) [Accessed 15 December 2004]
The company encourages all of its employees to maintain the highest standards of integrity and honesty in the day-to-day performance of their jobs and in any situation where their actions could influence the reputation of the company. (Caltex Australia Limited, Corporate Governance, Principle 3, 2004) [Accessed 21 December 2004]
The words integrity, honesty, respect and reputation are all common to the above company statements and are germane to ethics but, as any dictionary would show, there are many ways of interpreting these terms and in some instances, they are used synonymously. With regard to the above examples there appears to be an overlap of meaning between the words, which could have easily been eliminated had more clarity been provided in the commentary. The significance of the statements derives from the explication of the linkages and an association of the words used rather than from their mere broadly-understood definitions and it is in this regard that companies should change their linguistic structures and provide contextual clarity. By way of example, consider the word integrity. Undoubtedly integrity, suitably defined, is a vital element to good business practices but the power of the word draws from particular aspects of its root definition without having to embrace all interpretations of the term. The Oxford
Dictionary defines it, from its root definition of integritas, as:
Wholeness, entireness, completeness, chastity, and purity and in the moral context as a) Unimpaired moral state; freedom from moral corruption; innocence, sinlessness; b) Soundness of moral principle; the character of uncorrupted virtue, esp. in relation to truth and fair dealing; uprightness, honesty, sincerity. (Oxford English Dictionary, 2004)
165 It is clear from the above definition that the strength of integrity, in a business context, comes from its symbolization of uprightness and sound moral principles, which incorporate such qualities as honesty, respect and social standing. An integral business could be considered as one that is unmarred, uncorrupted or untarnished in their practices, which, in turn, postures a particularly positive image for a company. Had the above examples included a clear explanation of the terminology used, it would seem that, if employees are acting with integrity, then they should also be acting honestly
(whether this is done absolutely or otherwise) and upholding the reputation of the firm.
The definition automatically embraces these elements and provides a more explicit interpretation of the quality which enhances understanding and compliance.
The body of the codes studied supported the requirements of Rule 4.10 and generally discussed such issues as:
• Appropriate practices when dealing with clients and suppliers
• Occupational health and safety issues
• Compliance with relevant laws rules and regulations
• Compliance with human Rights issues
• Social and environmental responsibilities
• Specific business practices such as gift giving, conflicts of interest and
honesty, trust and fairness in trading.
Whilst all these areas are pertinent to staff performance and are derivatives of ethics, none clearly demonstrate the philosophy underpinning such moral practices. Some companies, such as WMC Limited, did attempt to contextualise a few of the terms they
166 used, as for example, honesty in their terms was ‘not using coercive or misleading practices or falsifying or wrongfully withholding information.’ However, generally companies did not bother to elucidate the intent of the ethical terms quoted. One can only assume that management and employees alike felt themselves so conversant with the words and expressions used that no specific explanation was necessary. However given the volume of corporate corruption in recent times perhaps this assumption was somewhat premature or naive.
The concluding sections of the codes generally consisted of housekeeping issues such as the administration of the code, the various dispute panels available for assistance and discipline and an acknowledgement form to be signed by all staff on receipt of the document. Most companies also acknowledged the transience of the document and made provision for an annual review to accommodate changes in practices and cultures.
For example the Western Mining Corporation code provides an implementation strategy to ensure firstly that all staff is given a copy of the code along with an explanation of its contents. It also refers to the existence of an advisory panel which is there to provide advice on ethical and conduct issues and concludes with a comment to the effect that the code is re-assessed each year to accommodate for changes. However in all cases of the codes examined, there was a lack of explanation and or linkage of the document to the tenets of ethics from which they supposedly emanated. One of the key flaws with the current codes thus is their lack of definition and illumination of the ethical position posited. Had companies taken more time and care with the structure and language they adopted with their codes they may have succeeded in embedding a more efficient ethical environment than the one currently flourishing. Companies wishing to present
167 an ethical image would profit greatly if they firstly articulated the principles of ethics and then linked these to their code of conduct or practice.
All the codes examined provided ample discussion pertaining to specific business conduct issues such as conflicts of interest, dealing with clients or suppliers, insider trading or human rights issues, however when reference was made to an ethical term it was so broadly used that it offered little to no support for its interpretation or enforcement. Had the terms been better explained their acceptance and adoption would have been more obvious at all levels of operation. ‘Behaving ethically requires that individuals articulate what their ethical values are. It means having a standard upon which acts are judged. Most codes suffer from a lack of coherency, or are just rhetorical.’ (Walker, Tate & Associates) [Accessed 13 February, 2001]
In summation, if the sample of codes evaluated is indicative of the current ethical codes available in the business sector of Australia, and there appears to be no evidence to the contrary, then the conclusion that can be drawn from this deconstruction is that the business sector is still ignorant of the meaning of ethics and how it impacts on their operations. What is needed is a re-education (or possibly an education) in the purpose and aims of ethics and how it impacts on business’ acceptance in the community, whether that is local or international.
As all discussion thus far indicates, for an organization to be truly ethical they need to understand the meaning of ethics and identify the ethical framework from which they can establish acceptable codes of conduct. The codes currently in place lack such a foundation. What is needed is to go back to the basic cardinal and theological virtues, as
168 introduced in chapter two, and redefine these in context with the business sector.
Aspects such as integrity, honesty, fairness and respect have a stronger meaning if they are introduced as derivatives of the ethical principles. As Walker, Tate & Associates advocate ‘it is more important to understand and adopt the principles behind a code as it is a code’s ethical foundations that provide the only real guide to our acts.’ (Walker,
Tate & Associates) [Accessed 13 February 2001]
The wording of the current codes supports the principles of ethics but due to their lack of clarity they fail to enunciate any particular meaning. Expressions such as, ‘Honesty, integrity and fairness are essential to the way in which we do business;’ ‘in all our dealings we will act fairly and honestly’ or ethics are the set of principles by which our actions are judged to be good or bad, right or wrong’; are but a few of the common statements found in the current codes of conduct but none are clearly explained. In what ways do companies act honestly? Are they completely open and candid in their dealings, are they totally truthful and trustworthy in their actions or are these terms relative to the situation? Is it honest for companies to have different standards depending on the country in which it is operating (for example the trade arrangements with third world countries as opposed to the more affluent ones)? What exactly does acting fairly or being good entail? How is fairness judged? Is there a universally accepted benchmark familiar to all business entities or is it again relative, perhaps in line with profits and competition? All these statements are broadly understood and accepted and can align with the principles of ethics but, as is also evident, in the business context the conventional meaning tends to be skewed.
169 8.6 ETHICAL VIRTUES OF BUSINESS
The introduction of a true business code of ethics can help reduce the need for such industrial distortion. The cardinal virtues of temperance, courage, prudence and justice, as introduced by Plato and Aristotle, along with the theological virtues of faith, hope and charity, as summarised by Thomas Aquinas, are as valid to the business sector today as they are to individuals and the broader communities with whom they interact.
All that is required is a modification to these principles to situate them in a business environment. Appendix 4 provides an exemplar of a code of business ethics, which embodies the philosophy of morals. The example represents a reflection on the principles of ethics within a business context and is not posited as an absolute or definitive statement. Rather it is offered as a pro forma to aid businesses in aligning their own specific business philosophy with that of ethics. If such a code were adopted and displayed in an appropriate manner and place, it would serve as the foundation piece for an ethical business.
The ethical code, as posited at appendix 4 and contrasted with the above codes, privileges the concept of character as the most relevant criterion for developing the ethical tone of business practices. The use of personal qualities or virtues as the benchmark offers a more compatible and comparable way of evaluating ethics at all levels of business. In keeping with the Aristotelian theme of Eudaimonia or human flourishing, the ethical codes of corporations, based on the virtues, are more readily identified and accepted by the community. The adoption of virtues as opposed to utility or duty or any other ethical perspectives may also help to ameliorate some of the cultural differences that impact on business practices. ‘Much cultural disagreement
170 arises, it may be claimed, from local understanding of the virtues, but the virtues themselves are not relative to culture.’ (Nussbaum, 1988: 40) Whilst none of the ethical tenets has an absolute meaning, they are the most universally recognised symbols of ethics. They can readily be adapted to accommodate specific business situations and offer the most transparency for organizations wishing to project an ethical posture.
As MacIntyre comments,
The catalogue of the virtues will therefore include the virtues required to sustain the kind of households and the kinds of political [and business] communities in which men and women can seek for the good together and the virtues necessary for philosophical inquiry about the character of good. (MacIntyre, 1981:204)
The inclusion of the personal dimension of ethics in business practices thus provides a more plausible modus operandi for an ethics code to succeed in the business sector.
‘What has been missing from much of business ethics is an adequate account of the personal dimension in ethics. Business ethics so conceived is not “personal” in the sense of “private” or “subjective”; it is rather a sense of oneself as an intimate (but not inseparable) part of the business world with a keen sense of the virtues and values of that world.’ (Solomon, 1992:321)
This chapter has shown that, whilst the sentiments of ethics are universally known, the true intent of their meaning draws from their contextual relationship rather than their etymological roots or their historical bastardisation. Ethics represent ideals and these need to be interpreted in context with their current environment for them to be understood and embraced. Factors such as format, content and the construction of linguistic interpretation all aid in establishing the parameters around which a corporate ethos can exist and function. It is insufficient to privilege certain codes of behaviour over others without first explaining the rationale behind such behaviour. The codes of
171 conduct, currently purported to represent the ethics of the business sector, would be far more beneficial if they were first prefaced with a code that elucidated the meaning of ethics before any actions were taken. This then may lead to a more socially conscious business operation and the concept of business ethics would no longer be considered the oxymoron that it is often touted to be.
A code of ethics in today’s business environment is a vital aspect to the successful alliance of business with the community and the resultant social harmony that should follow. Similarly, the professional sector also has a responsibility to promote an ethical outlook in their daily dealings. Their specialised knowledge promotes them as trusted advisors and confidants and in this capacity, they should be beyond reproach. The attributes of ethics are invaluable in aiding them in achieving this status. The next chapter will conclude the section on the current visibility of codes of ethics by examining the role of ethics from the professional standpoint. The joint code of conduct established by the accounting profession will be specifically examined as an example of a professional field’s adoption of ethics.
172 CHAPTER 9
THE ETHICS OF A PROFESSION THE JOINT CODE OF CONDUCT OF THE ACCOUNTING PROFESSION
The social values of a professional group are its basic and fundamental
beliefs, the unquestioned premises upon which it very existence rests.
Foremost among these values is the essential worth of the service which the
professional group extends to the community. (Greenwood, 1957)
The previous chapter acknowledged the need for all businesses to incorporate an ethical statement in their profile to ensure workplace behaviour compatible with social mores.
For the greater part of the last century this philosophy was not often factored into business dealings with the result that company behaviour was rarely challenged and amoral behaviour became the norm. However the past twenty years has seen a significant shift in social tolerance to unethical business behaviour. Nowadays, ‘the public demands ethical conduct on the part of business persons and professionals but their expectations regarding professional behaviour are higher than their expectations regarding business persons.’ (Karim & Bowie, 1995:703) Whilst there has always been a public perception that if one is deemed to be a professional then one would be expected to possess the ethical qualities of trustworthiness, honour and integrity in their actions, today this is no longer an expectation but a requirement.
The challenge confronting the current professional market is the changing business climate and the gradual increase in specialization of occupations. The question now becomes one of definition. What today defines a professional? Are there still
173 distinguishing qualities that privilege the status of a professional over other employment areas or has the term become so generic that the higher order qualities, which originally distinguished such positions, now have been supplanted by skills based attributes?
This chapter extends the discussion on ethical Codes within the business sector to embrace those in the professional domain. The first section of the chapter will delineate the term profession (professional) by identifying those generic qualities that distinguish this level of employment from other competency based occupations whilst the second half will draw on one specific profession, the accounting profession, and use it as an exemplar to discuss the involvement of an ethics Code on performance and acceptance of professional practices in the community. The latest ethical Codes of conduct compiled by the Australian Society of Accountants and The Institute of Chartered
Accountants, and employed by the accounting profession, will be examined to determine their effectiveness and support for members and recipients of the professional services.
9.1 WHAT CONSTITUTES A PROFESSION?
In order to ascertain whether the ethics of a professional, in the business milieu, are distinct to those of the average lay worker it is necessary to firstly define the expression profession in the context of today’s workplace. The word itself derives from the Latin word professiōn-em meaning to declare or proclaim. (Oxford English Dictionary online)
[Accessed 10 March 2005] Historically, the term was more commonly associated with occupations that required higher learning coupled with an ongoing commitment to community wellbeing as exemplified by such occupations as those of doctors, lawyers
174 and the religious orders. However, as most dictionaries will attest, its meaning has expanded over time and now embraces many varied occupations ranging from those with a commitment to serving God and community at one end of the spectrum to those whose service to the community is often perceived as unsavoury and questionable at the other (e.g. prostitutes and thieves). ‘Virtually all groups that can distinguish themselves by virtue of distinct tools or tasks seek the status that accompanies the designation of professional.’ (Behrman, 1988:96) In today’s community individuals are often judged by their occupation and hence the inference of privileges and power associated with the term professional often influence the popularity of its use whether legitimately or otherwise. Calling oneself ‘a professional’ tends to raise the social standing of the occupation along with those it employs. ‘What a person does for a living forms the most important indicator of position in the structure of social power.’ (Daniel, 1983:11) With specific regard to the business sector the use of such a descriptor can privilege one occupation over others giving them greater power and control in the workplace. The
Oxford Dictionary online defines profession in the business context as:
a) The occupation which one professes to be skilled in and to follow;
b) A vocation in which a professed knowledge of some department of
learning or science is used in its application to the affairs of others or in
the practice of an art founded upon it (applied specifically to the three
learned professions of divinity, law, and medicine; also to the military
profession);
175 c) Broadly, any calling or occupation by which a person habitually earns
his living. Now usually applied to an occupation considered to be
socially superior to a trade or handicraft;
d) The body of persons engaged in a calling eg in theatrical use, actors as a
body or performers generally. (Oxford English Dictionary Online 2004)
[Accessed 17 March 2005]
Thus, within the business sector the concept of profession is linked with so many and varied occupational classifications that it has blurred its original intent, one of a calling or vocation dedicated to community service. ‘The word profession has been used in such different contexts and so differently defined that the original concept has become confused and watered down to the point of virtual meaninglessness.’ (Behrman,
1988:97) It is precisely because of this current, broad adoption of the term that it is important to reassess its usage and reaffirm some of the fundamental features that distinguish the service oriented professionals (lawyers, doctors, accountants and engineers) from those that are predominantly identified based on skills. ‘What makes these professions different is that they are significantly delineated by and founded on ethical considerations rather than purely techniques or tools.’ (Behrman, 1988:96) The distinction should be self evident given the influential role these occupations have within the community. As Longstaff (1997) comments, ‘a professional is distinguished based on their commitment to the social good, their ability to self-regulate, the high social status they are accorded along with the specialised body of knowledge they have acquired through higher order studies.’ (Longstaff, 1997:3)
176 Professions Australia (formally known as the Australian Council of Professions
Limited), which represents a collective of professional fields, has refined the dictionary definition of a profession and offers the following in its place:
A profession is a disciplined group of individuals who adhere to ethical standards and hold themselves out as, and are accepted by the public as possessing special knowledge and skills in a widely recognised body of learning derived from research, education and training at a high level and who are prepared to apply this knowledge and exercise these skills in the interests of others.
It is inherent in the definition of a profession that a Code of ethics governs the activities of each profession. Such Codes require behaviour and practice beyond the personal moral obligations of an individual. They define and demand high standards of behaviour in respect to the services provided to the public and in dealing with professional colleagues. Further, these Codes are enforced by the profession and are acknowledged and accepted by the community. (Professions Australia, 2005) [Accessed 18 March 2005]
This definition distinguishes the higher order occupations from other occupations by emphasising the role they have in dealing with the interests of others ‘This service orientation has become the keystone among professional values, those commonly held beliefs that serve to cement individual practitioners into a single profession.’(Bivins,
1993:117) Whilst most professional groups carry a level of academic achievement it is the combination of education and service that define today’s professionals. Behrman,
(1988) identifies ten characteristics that differentiate a profession from other forms of employment:
1. A clearly defined field of expertise, which distinguishes members from all other careers 2. A period of prescribed education or training which precedes entry into membership 3. A selective process of entry, restricting membership to those qualified 4. A procedure for testing and licensing
177 5. A dedication to social services, meeting obligations to society and performing services other groups are not capable of offering 6. Correlatively, substitution of service for income and wealth as the primary motivation for members, plus high quality service regardless of fees received 7. Provision of adequate services for the indigent or those in extremis 8. The application of differential fees for the same service according to circumstances or ability to pay 9. A set of self-governing rules, inculcating a high Code of ethics 10. Means of self-surveillance and application of penalties for misbehaviour or negligence of members.(Behrman, 1988:97-98)
It would seem that these traits reasonably exemplify the current viewpoint as to what constitutes a profession of social standing in today’s society and, in return for their service, the professions enjoy a privileged, powerful and relatively autonomous status in the community. ‘Members of a profession set their own standards, regulate entry, discipline their own members and function with fewer restraints than others... In return for such autonomy they are properly expected to serve the public good, to set higher standards of conduct for their members and enforce a higher discipline on themselves than others.’ (De George, 1999:490)
As stated earlier, a key element that distinguishes a professional in the working fraternity is the requirement that they have a high quality Code of Professional Ethics.
Professionals are expected to demonstrate exemplary behaviour in all their actions and any deviations from such behaviour is severely censured by the community. Ultimately
‘what distinguishes a profession from other complex institutions is that it is anchored in a public purpose, an intellectual tradition and fiduciary relationships.’ (Lennertz,
1991:577)
178 9.2 PROFESSIONAL ETHICS
The fact that ethics is embedded in the definition of a profession also reinforces the sentiment that ethics is relevant to all sectors of business. ‘The principle underlying professional ethics is exactly the same as that of ethics however the rules and standards are crystallised in the Code of Professional Conduct.’ (Dellaportas, 2005:63) Ideally professional ethics are expected to be more open and attuned to the core tenets of ethics than business ethics. ‘A profession’s Code of ethics is perhaps its most visible and explicit enunciation of its professional norms. A Code embodies the collective conscience of a profession and is testimony to the group’s recognition of its moral dimension.’ (Frankel, 1989:110) Professional ethics need to be transparent and supportive of the role that the professional has in serving the interests of the community above all else. The privileged position of the professional groups, in part, arises from the community’s expectation and trust in the moral image they project and should this image become tainted they run the risk of forfeiting their power and status within the community. ‘Thus, a code of professional conduct is a set of rules designed to induce a professional attitude and behaviour consistent with the high ethical standards expected by the public.’ (Dellaportas, 2005:64) Given the nexus between professional services and social needs the ethical component of the relationship becomes a key factor in ensuring cohesion between the two sectors.
The development of a professional Code of ethics is founded on the premise that social wellbeing is central to the Code. ‘A Code of ethics codifies the group’s relation to society.’ (Behrman, 1988:106) It still incorporates the basic tenets of temperance, courage, prudence, justice, faith, hope and charity but perhaps, for the professional,
179 greater emphasis is to be found more from some elements than others as for example the virtues of temperance, prudence, and charity. These virtues are easily aligned with the theme of service whilst the other tenets are more general in their correlation with professional practices. A brief discussion on each of the tenets in the professional context illustrates the correlation between ethical principles and professional practices.
Under the banner of temperance, qualities such as integrity and honour would be expected to be highly visible and openly displayed in professional dealings as these form the basis for the trust and respect accorded to the professionals by the broader community. Courage can be equated with loyalty, tolerance, mutual respect and commitment to the needs of others whilst prudence represents due care, diligence and transparency in the use of the professional’s specialised knowledge and skills when representing or dealing with others. The doctrines of justice and faith are evidenced through the way in which professions are structured and controlled. ‘Professional Codes are supposed to govern the professional activity of all members of the profession, whether they are working for themselves or for an employer.’ (De George, 1999:495)
Professional associations, through their standards and guidelines, provide mentoring systems and discussion forums to aid members their practices as well as ensure consistency and uniformity of the service offered to the broader community. It is the responsibility of the professional association to ensure that the Codes promulgated for their members are supportive and highly visible.
The derived concepts of fairness and equity are confirmed through the professional’s use of their specialized knowledge and expertise to provide a service that benefits both clients and community before self. ‘To exercise a skill for the benefit of others places
180 the professional person in a special moral relation with his or her clients.’ (Bowie &
Duska, 1990:7) This special relationship reinforces the trust and dependence placed on professions by society and why, in recent times with so many corporate collapses (e.g.
HIH, Enron, and One-tel) and questionable alliances, they have begun to question the legitimacy of such faith and trust.
Of the last two tenets, hope remains the same as that stated in evaluating its relationship with business activities in that it provides the moral conscience for the professional to decide which actions are the most appropriate at a particular point in time. The final tenet, charity, should take prominent place in the professional Code of ethics as it accentuates the altruistic element of a profession to the client and community.
In summary a professional Code of ethics provides the framework upon which professions can authenticate their social position and maintain an image satisfying to both their individual members and the clients and communities with whom they interact. The Code exposes the moral signposts guiding members as to appropriate behaviour in their relationships with clients, colleagues or the broader community.
Frankel (1989) summarises the functions of a professional Code of ethics as follows:
An enabling document A source of public evaluation A form of professional socialization A means to enhance a profession’s reputation and public trust A way to advance and preserve the values that defines their social role A form of deterrent for unethical behaviour A support mechanism An adjudicator when disputes arise (Frankel, 1989:111-112)
In order to accommodate the above functions careful consideration needs to be given to the viability, structure and the language used in the Code development.
181 9.3 AREAS OF CONCERN
Whilst the professional sector has been more vigilant in the establishment and adoption of Codes of Ethics, more so than have their corporate colleagues, there still remains a problem with the structure and language they use in the promulgation of the Codes. The professional groups also have the added issue of divided loyalties. The professional serves the needs of many groups, each possibly with their own Code. If these Codes do not hold the same, or are openly in conflict with, the values of the profession then a concern arises as to which Codes take precedence. In the professional province issues such as conflicts of interest and multiple clients’ needs are a common occurrence and as such a professional needs to be more vigilant in upholding the ethics of their profession whilst still serving the needs of their clients. Failure to do so may have the effect of subordinating their professional values and result in societal censure or even worse, criminal negligence.
An essential component of all professional handbooks is a sound Code of Ethics which, with careful lexical usage, can clearly verbalize the ethical position of the profession thus reducing, if not eradicating, any conflicts of interest and loyalty issues. It is thus a responsibility of each profession ‘to institutionalise the means for offering clear interpretations of ethical pronouncements if these are to function as meaningful guides to ethical conduct and they must ensure that they are accessible to all members.’
(Frankel, 1989:114)
182 9.4 THE ACCOUNTING PROFESSION
Professional practices in recent years have failed to demonstrate any serious commitment to upholding the ethical Codes of their profession and in fact there are too many recent incidents wherein a profession has come under the scrutiny of not only the broader community but also the law, resulting in a loss of face and social standing. One such example is the accounting profession which, due to many incidences of corporate corruption and failures (HIH, One-Tel, Enron, WorldCom, and Harris Scarfe) has all but lost the confidence of the community. Whilst the profession’s Code of conduct adapts, in part, many of the virtuous tenets of ethics, it would seem that its members have difficulty in interpreting and supporting the intent of the Code. This may be due to a lack of clarity in the language adopted in translating the principles into practice or it may be that it fails to provide members with sufficient tools or support to ensure its adoption. For some time now concepts such as service, loyalty and equity all appear to have lost their relevance to members of the profession, being supplanted by pursuits that privilege self gratification and high monetary rewards as of greater importance. In recent times ‘professional accountants had tended to subjugate fiduciary values to revenue generation until the collapse of Arthur Andersen. ’ (Brookes, 2004:109) Now, in the wake of so much corporate upheaval, the profession is reviewing its Codes with one focus being on how to retrieve the lost trust of the community and how to help their members maintain the independence and objectivity needed in their dealings.
As the accounting profession has recently been evaluated with regard to their ethical position it seems appropriate to use this profession as an exemplar in addressing the strength of a professional Code of Ethics in today’s business sector. The remaining
183 sections will provide a brief background as to the development of this profession in
Australia and will then evaluate the Australian Code of Conduct currently offered by the two prominent accounting bodies in this country (the Australian Society of Accountants and the Institute of Chartered Accountants) along with a brief comparison with the new international Code of Professional Conduct.
9.5 THE AUSTRALIAN ACCOUNTING PROFESSION
Whilst the accounting discipline has been in existence since pre Christianity its ascension to the current status of professional is but a relatively recent occurrence.
Throughout history the occupation has expanded its focus from being purely one of stewardship to that of providing multiple services (auditing, financial advising, corporate reporting and taxation services to name but a few) to aid a diverse clientele with the decisions they make. The accounting profession in Australia, like many of its confreres in other countries, is a relative newcomer to the professional domain having only achieved its professional status in the last one hundred years.
The transformation from an associated occupation to a professional organisation effectively began in the latter half of the nineteenth century and was not formally recognised till the early twentieth century, in line with federation.
The closing decades of the nineteenth century witnessed a concerted effort by Australian accountants to formalise and elevate their occupational status. The Incorporated Institute of Accountants, Victoria and the Australasian Corporation of Public Accountants became the key forerunners respectively of the Certified Practicing Accountants, Australia (CPA) and the Institute of Chartered Accountants in Australia (ICAA), the two dominant associations of accounting professionals within Australia today. (Carnegie et al, 2003:791-792)
184 Changes in the political, economic and social climate of this period accentuated a growing need for specialised accounting skills and reinforced the need for credentialed accountants.
The diversity of practice and work experience of Australian accountants was indicative of the growth of the profession. It was this expansion, and the public reliance on their services which helped the beginning of professional accounting institutions… The new accounting institutions sought to be the pathfinders of an Australian profession, setting examinations and entrance requirements to help establish a prestige and provide a measure of quality for the general public (Linn, 1996:79)
The associated organizations that formed in each of the Australian states at the time resulted from a growing demand for accounting services and the need to distinguish between the qualified and the unqualified practitioners of the era. The movement towards a professional status was seen as a necessary condition to the recognition and acceptance of the value of accounting to the commercial activities of the time along with an acknowledgement of the qualities required to fulfil the role.
The concept of professional accountant in these formative years was vigorously debated, not just between the educated versus non educated or self proclaimed practitioners, but also between the public practitioner and their corporate counterpart. A
‘dichotomy arose between practitioners offering a service to the public and those working in capacities as employees in industry, commerce and government…
Autonomy in the work situation – a central tenet of the professional ideology- was alleged to be compromised outside of the public practice environment’. (Carnegie et al,
2003:795) Those employed in industry or government were considered incapable of fulfilling their professional role given they had a divided allegiance between their employer and the profession. Hence the first professional accountants in Australia
185 predominantly comprised public practitioners and it was not until the mid twentieth century before other practitioners were given equal status in the profession. The criteria accepted to distinguish the profession included an educational component that incorporated public examinations and restricted entry depending on whether one worked in public practice, government and or industry. Since then however the accounting function has grown and diversified to such an extent that it now permeates all activities of the business sector and can no longer merely represent the public practitioner.
Today’s accounting profession embraces members from all forms of accounting oriented fields, from auditing to financial and management consultancies and the dominant professional bodies CPA Australia and the Institute of Chartered Accountants accept members from each of these fields. In fact the bulk of the membership with CPA
Australia comprises of members working in industry and or government sectors.
The emergence of accounting as an acknowledged profession in Australia at the turn of the twentieth century confirmed its position as an influential force in the community.
‘Accounting had moved an enormous distance to a profession considered indispensable to modern life… Accountants were now seen as important contributors to Australia’s future.’ (Linn, 1996:99) The empowerment of the profession, through the efforts of pioneers such as Thomas Brentnall, Charles Holmes and others, saw the materialization of a vocation that commanded exemplary conduct and commitment from their members.
‘Many issues raised by the founders remain: the search for excellence; due regard for integrity and ethics; a profound and enduring education and professional development and high quality of service.’ (Linn, 1996:202) Today’s accounting profession serves multiple interests in an educated market and as such requires stringent policies and
186 procedures in place to illuminate and reinforce the professional ideals. The adoption of the professional ideals such as autonomy, support for and protection of social interests and a demonstratable Code of Ethics all reinforced the legitimisation of accountants as professional members of the community.
9.6 THE ETHICS OF THE ACCOUNTING PROFESSION
In compliance with the concept of autonomy and in support for their privileged position, the accounting profession has, since its inception, developed policies and procedures to guide and monitor the practices of its members regardless of which institution they serve. A core element of the professional standards that evolved during the twentieth century was the development of ethical pronouncements which crystallised in the latter part of that century to form the basis of the current Joint Code of Professional Conduct.
‘The development of ethical issues in the Australian accounting profession as a whole is represented as a series of six distinct phases each representing a new point of development in the codification of ethics.’ (Parker, 1987:123) The ethical concerns that were raised throughout this period aligned with the development of the professional bodies themselves and the duties and obligations promulgated in their memoranda and articles of association. Issues such as advertising and competition, client confidentiality, member competencies and independence were but some of the issues addressed, with the focus being unevenly divided between protecting the professional image and that of maintaining social well being. ‘Historical evidence suggests that protection of the profession may have been a primary rationale underpinning many ethical issues and that such issues attained acceptance or publicity earlier than many issues concerned with protecting society.’ (Parker, 1987:136) Whatever the early impetus, by 1984 the
187 Australian Accounting profession, through the joint collaboration of the two dominant professional bodies, had developed a Joint Code of Professional Conduct which is still currently in force. The objectives of the Code are ‘to work to the highest standards of professionalism, to attain the highest levels of performance and generally to meet the public interest requirement.’ (Joint Code of Professional Conduct, 2005:1031)
9.7 THE JOINT CODE OF PROFESSIONAL CONDUCT
The Joint Code of Professional Conduct (hereafter known as the Code) is designed to provide minimum standards of conduct for accounting professionals in their dealings with clients, colleagues and the public. It is divided into six sections and covers the following areas:
Section A General Information including compliance, definitions and assistance for members
Section B The fundamental principles applicable to all members embracing public interest, integrity, objectivity, independence, confidentiality, technical and professional standards, competence and due care and ethical behaviour.
Section C Matters applicable to all members
Section D Matters applicable mainly to public practitioners
Section E Professional regulations and by laws relevant to specific aspects of professional conduct
Section F Professional Statements
Whilst each section is pertinent to ethical issues the main section that aligns with the ethical precepts is section B (see copy at appendix 5) wherein issues such as integrity, honesty fairness are briefly discussed. The Code however, as with previously discussed
188 Codes, suffers from a lack of clarity or alignment of the precepts of ethics with practice.
In other words it is a Code of conduct without a preamble reaffirming the very principles of ethics upon which it is supposedly based. Its standards, whilst offering moral guidelines for its members, reflect more the political and behavioural climate of the time. Only a cursory comment on its ethical theme is offered in the introduction when it states, ‘members should be guided not merely by the terms but also by the spirit of the Code.’ (Code, 2005:1031) Without a reflection on the tenets of ethics there is no clarity of meaning or emphasis on the true intent of the moral conventions offered.
The Code is deficient in a number of areas, the first appearing in its definitional section wherein it identifies and defines the various institutional and or member groups associated with and or affected by the Code but fails to provide an adequate explanation for some of the key terms used (e.g. credibility, professionalism, integrity, honesty, objectivity). This leaves the interpretation and enactment of the Code vulnerable to misconceptions and misrepresentations. A way to alleviate this problem is to provide a glossary for the key terms of the Code thus minimising some misinterpretations and misconceptions and reducing any opportunity for inappropriate actions by members.
One key element that is defined in section B of the Code and which is fundamental to the service factor of the professional ethos is the term ‘public interest’. It is defined as
‘the collective wellbeing of the community of people and institutions that the members serve.’ (Code, 2005:1035). The concern with this phrase however is that fails to elucidate what exactly the interests of the public are. A very simple deconstruction of the expression leads to multiple conclusions leaving the member with more questions than answers to support them in their compliance. What is ‘the collective wellbeing’? Is it a readily identifiable benchmark, clearly articulated and accepted by all interested
189 parties or is it a biased viewpoint in favour of one particular faction or power? Maybe the answer lies somewhere in between. One might even go so far as to ask whether the wellbeing of a third world country equates to their more affluent neighbours as this is not the impression given by most international transactions. Whatever the desired response, the Code clearly fails to explicate this issue to the point of deriving a unified response. How does one determine the point at which public interest has been dealt with and is there clearly a balance between fairness and equity across the community or is it stratified based on the position of the parties concerned and or desired results. As Rawls
(1971) clearly identified, there is no equality to community relationships merely an acceptance to an agreed level of entitlement. Hence whilst public interest is perceived as a vital element to public practice there needs to be further elaboration on its desired meaning. Recent performance by the profession also brings into question the level of community wellbeing the profession is willing to protect in contrast to their particular self interest. It would seem that some client needs are privileged above those of the shareholders and the broader community as these add value to the profession’s autonomy and community status.
Secondly is the level of empowerment within the language used in the Code. As was discussed in chapter five and identified in the example above, most words have multiple meanings and if no boundaries are stipulated then tangential interpretations will result, often with prejudicial consequences. Whilst it is not appropriate to singularise ethical actions, as multiple variables impact upon every situation or issue, it is necessary to reduce the level of flexibility available to ensure an identifiable level of understanding and conformity is proposed.
190 An evaluation of the principles posited in section B of the Code does not appear to offer this level of commonality of purpose rather it presents as little more than a broad framework from which members can derive their own application. For example the term
‘integrity’ is delineated with reference to such words as straightforwardness, honesty and sincerity. However these words, whilst generally associated with the broad concepts of truthfulness and genuineness, can in fact be interpreted in many ways depending on the context in which they are being used. Honesty can be linked to a person of reputable character such as a minister or highly principled position such as judge or doctor or it can relate to a person’s disposition in that it represents a form of candour or openness, a demeanour that presents as trustworthy, impartial or genuine in its outlook.
Sincerity and integrity, as well, are grouped under the same etymological framework as honesty and hence perhaps their inclusion in the commentary section makes the explanation deficient in interpretation. Perhaps a better technique for explaining the term integrity may be to provide anecdotal evidence to distinguish its position in the professional context from other more personal interpretations. For example members should always be open, even transparent in their dealings, acting in a manner conducive with how they would wish to be treated by others. In the professional context integrity delineates a person who is beyond reproach, one who is highly regarded by peers and clients and one who can reliably perform the task required of them without favour or fear of the consequences.
Interpretation of the term ‘objectivity’ is also a debatable issue. The Code states,
‘members must be fair and must not allow prejudice, conflict of interest, or bias to override their objectivity… they must maintain an impartial attitude.’ (Code,
2005:1036) No clarification is given to the meaning of the expressions fairness,
191 prejudice, conflicts of interest or bias leaving the reader to apply them in context with their own subjective interpretations. According to the Oxford Dictionary Online (2004) the word relates to ‘the ability to consider or represent facts, information, etc., without being influenced by personal feelings or opinions.’ [Accessed 12 July 2005] If members are to be objective within the context of the above definition then decisive borders need to be put in place as most accountants are required to interpret and construct accounting reports based on their subjective evaluation of what they perceive the desired results to be. Their level of impartiality is bounded by the demands placed on them by management or other interested parties. Any additional support by way of establishing the parameters of personal feelings or opinions must the level of impartiality required.
To make the accounting Code more effective would require that each of the principles provided in section B be clarified further in alignment with the ethical precepts they follow and this should result in a meaningfully understood and functional tool for members. Broad, open ended statements, as proffered by the current Joint Code of
Conduct, are ineffectual in providing the appropriate mechanisms necessary for an efficacious response by members. A preamble identifying the principles of ethics and a reflection on how they apply to professional conduct coupled with more anecdotal commentary throughout the Code should alleviate any misconceptions about the intent of the Code and reinforce the principles upon which the profession is founded.
9.8 ROOM FOR IMPROVEMENT
Whilst the Australian accounting profession is to be applauded in their endeavour to provide their members with a moral framework in support of their professional role, the
192 reality is that the deficiencies in its structure and its capacity for enforcement have constrained its effectiveness raising concern from the community as to the profession’s sincerity and commitment to the ideals of ethics. An additional impediment for this profession as well is that, unlike other professional organizations, they serve multiple stakeholders, simultaneously offering a vast array of services which tends to create a layered effect to the level of loyalty and service they can offer. ‘The complexity of the different ethical problems encountered by accountants requires not only good knowledge of a set of ethical principles but also the skills and competence to handle conflicting roles and interests relating to accountancy practice.’ (Leung & Cooper,
1995:32) This stratified level of service may lead to divided loyalties or conflicts of interest within a client organization or among the diverse group relying on their services. For example whilst shareholders are possibly the largest cohort to whom the accountant owes allegiance the interaction between these two is usually distant and impersonal. Correspondence between them primarily occurs via an intermediary, the company and its directors, and it is often this relationship (which carries a financial element) that is much stronger and more influential, particularly if the organization is multi-national and politically powerful.
The accounting profession is unique in that it pervades all levels of business and community activities, from the most local non profit operation to an international market. ‘Clients and business are looking to their professional advisers to provide a range of business advice and business solutions. The services and advice provided by accountants are now far broader in scope than the traditional core activities of accounting, auditing and tax.’ (Hoiberg, 2000:131-132) Thus in this environment it is exceedingly difficult to define and sustain a high degree of objectivity and
193 independence in their actions. The concept of a ‘one stop shop’, where the firm offers a vast array of services from traditional bookkeeping to financial planning and advising, coupled with a competitive market wherein non accountants offer similar services minus the constraints imposed on the professional group, means that concepts such as independence and or objectivity are becoming even harder to differentiate. Whilst the accounting profession may seem sincere in cultivating an ethical climate within which their members should operate there appears to be many obstacles not acknowledged or addressed in the Code that impede its success. As a consequence The Joint Code of
Professional Conduct seems to be designed more as a protective device for members rather than as a tool that supports the interests of the broader community. ‘Historical evidence suggests that protection of the profession may have been a primary rationale underpinning many ethical issues… It might be argued that self-protection through ethical pronouncements presented itself as a legitimate strategy to a profession seeking to ensure its long term survival.’ (Parker, 1987:136)
The recent movement of the professional Codes to an international arena, in line with the new international accounting standards, has seen some improvement in the level of explanations offered in support of the principles identified in the Code. The
International Federation of Accountants (2003) has proposed a ‘revised code of professional ethics’ which aims to address the potential concerns of the profession in terms of addressing obstacles that conflict with the spirit of ethics. The movement away from localised professional interests to the development of an internationally focused profession has meant that some of the competitive influences have been reduced leaving the opportunity to establish a truly global Code of Ethics for the profession embodied in its Code of Conduct.
194 Professional ethics along with its business counterpart are unquestionably vital elements to the successful distribution of services and products to the global community in a fair and equitable manner. The Code of Ethics offers the conscience underpinning corporate actions. This chapter has discussed the philosophy of ethics from the professional perspective. It has articulated the role of today’s professional group by distinguishing the central the elements that privilege these people above skills-based workers in society. Unquestionably ethics plays a central part in their ethos through their supposed commitment and service to the broader community. Professional codes of ethics or codes of conduct are a more common occurrence in professional organizations but an evaluation of one profession’s code still shows that there is a lack of interaction between the broader tenets of ethics and the codes of conduct proffered to members.
The next chapter will draw together the themes presented and discussed throughout the thesis and will offer some concluding comments and thoughts as to the position of ethics in today’s business world.
195 CHAPTER 10
ETHICAL CODES: THE END OR THE BEGINNING
In every community, even the crew of a pirate ship, there are acts that are
enjoined and acts that are forbidden, acts that are applauded and acts that are
reprobated (Bertrand Russel, 1954)
10.1 CONCLUDING THOUGHTS
This thesis began with a question regarding the definition and relevance of ethics to the business sector in today’s international climate. Initially the proposal that ethics and business were capable of being compatible appeared to be incongruent as ethics is considered to focus on altruism and beneficence in a broad social context whilst business is given to be extremely self-serving and myopic in its relationships. Thus, the first concern to be addressed was the determination of whether ethics was applicable to business. As the concept of ethics derives from a plethora of sources and cultures, the derivation of its meaning was constrained by restricting the evaluation to the Western philosophy as the business sector being considered was situated in this sphere of influence.
Commencing with the thoughts of Socrates, and drawing on the writings of a number of eminent philosophers and theologians that followed throughout history, the thesis has traced the development of the core of ethics from this Western viewpoint. Collectively the writings of these scholars established a canon that to this day still symbolizes the root meaning of ethics, an ideology that identifies those intrinsic and indispensable characteristics that represent the core of ethics. 196 Whilst it is accepted that language, through its lack of confinement to one absolute definition for any one word or phrase, cannot provide one universal, all-inclusive definition for each of the elements of ethics, it is argued that these virtues, conceived from historical discourse, provide the foundation from which moral models can be constructed to embody the principles in practice. This interpretation of ethics is then representational of its spirit and is relevant to all human related activities whether they link to one’s personal, social or business interests. The business sector, as a social member, as an employer and as a guardian of human resources can no longer insulate itself from its moral responsibilities and thus has a responsibility to adopt an ethical position as a part of its structure.
As the first section of the thesis identifies, there is no absolute definition of ethics however its historical discourse does provide an insight into its text, ultimately depicting it as a theory with a set of values which give direction to the development of moral health. ‘Ethics is bound up with life, made up of happiness and sorrow, hope and fear and the other cognate pairs of opposites that make us prefer one sort of world to another.’ (Russell, 1954:26) It is not meant to be posited as a problem solving tool or particular set of rules that can easily be standardised and adopted. Rather it is a paradigm that postures human wellbeing as its theme and the establishment of benevolent, beneficent, and just behaviour, as its goal. Its tenets are provided as a set of abstract ideals from which to cultivate a moral position. In the business sector the expression ‘business ethics’ is perhaps better interpreted more in terms of the ‘ethics of business’ or ‘ethics in business’ therein establishing the principles of ethics within its parameters. In the business sector the problem thus is not so much related to the existence and relevance of ethics to business but with its adoption and enactment. No
197 matter which philosophy or cultural environment we adopt, the basic tenets remain the same yet there appears to be some difficulty in translating the code into concrete actions or policies.
As argued in this thesis, one avenue that could be explored to address this problem is with regards to the language used to formulate the codes. In the case of ethics, the nexus between theory and actions relies heavily on the language structure adopted, with meaning being founded on the morphological couplings of the words and expressions used. As a consequence multiple meanings and references can easily be derived if the intertextual relationships are not considered and restricted to one particular interpretation, causing confusion and misdirection in enactment. Businesses need to be conscious of this possible barrier to understanding and compliance with the codes they circulate. The opportunity for misconception or a skewed interpretation is also exacerbated by the fact that most organizational codes are delivered in a written format with limited, if any, visual cues to support the desired intent along with the fact that the recipients of the code comprise multiple cohorts with diverse cultural backgrounds. In the business sector this is a significant issue as the number of cultural influences involved in business activities covers many socio-economical and political dimensions resulting in a plethora of possible combinations and interpretations. If left to individual interpretation the likelihood of achieving a standardised behaviour in the workplace is minimal and may even explain the current high levels of unacceptable behaviour from corporations in recent years. As argued in the thesis, the use of appropriate and bounded language is an imperative for the successful integration of ethics and its applied code of conduct with the business sector.
198 The second point of clarification made in the thesis concentrated on the applicability of ethics to business. The rise in prominence of the corporate sector has seen a sea change in the composition and lifestyles of communities. The parochial attitude of eighteenth and nineteenth century business has been supplanted by a fast pace, highly technical, global office that simultaneously interacts with multi cultures, both domestically and internationally and the multi judicial and political systems behind the regulatory control of international trade. The business sector today pervades all areas of an individual’s life, be that in their domestic, social or work environment thus making it a controlling influence on individual and community behaviour. Given its social prominence it can no longer afford to ignore the ethical issues or cocoon itself from its moral responsibilities. It must become actively involved in helping to set the moral position of the community. The workplace should be noted as one of the pivotal points from which moral hygiene egresses. The question now arises as to how the business culture establishes and delivers an ethical position to its communities.
The final section of the thesis has concentrated on the accountability aspect of business ethics. It addresses the use of corporate codes of conduct as surrogates for ethical awareness, identifying their structure, language and affiliation with the precepts of ethics. A sample of the corporate sector codes of conduct used in Australian businesses today was deconstructed to identify commonalities and or patterns in their structure and content. Most codes followed the principles of corporate governance as published by the
Australian Stock Exchange but none articulated the ethical precepts prior to discussing conduct or practices.
199 Whilst the ethical intent is evident in some of the terms used in the published codes there is a sense of superficiality about them. The codes concentrate heavily on self defence, centring their guidelines on such issues as public image and protecting the corporate name with the obvious intent being to reduce the likelihood of litigation or social censure. In a broader sense however the codes do adopt such concepts as conflict of interest, integrity, honesty and fairness which could be considered as elements of ethics. Yet without providing any clarification of meaning the opportunity for an infinite number of interpretations arises, with each version slightly different to the others depending on the powers of the cultural influences impacting on the recipients at that particular time and in that particular situation. Thus, the main criticism of the codes lies in their lack of definition or recognition of the essence of ethics as a precursor to the guidelines offered. Had companies prefaced their codes with a brief discussion on the meaning of ethics in a business context and provided some boundaries in definition of the terms used in their codes then the codes would have added greater ethical value to their moral behaviour. What needs to be done is to consciously and publicly acknowledge the principles of ethics and to openly demonstrate how they are followed in business practices, whether in the corporate or professional sectors.
10.2 WHERE TO FROM HERE?
Ethics is a common term used in today’s business community. Few question its meaning with most assuming that they are aware of what honesty and fairness, honour and trust denote. Yet corporate behaviour belies this perception. If these words are so fluent in our Western culture then why are they so easily misread or misapplied. As the saying goes, ‘words are cheap; actions speak louder than words’. Unless the words can
200 be translated into demonstratable practices then the purposes for which the codes are developed becomes impossible to achieve, making them defunct as a tool for highlighting acceptable behaviour for businesses. Ethics needs to be more than merely a buzz word for it to be hailed as part of corporate demeanour in today’s global market place. It needs to be a well-designed template that is capable of infiltrating the workplace and producing a set of moral guidelines that exemplify Aristotle’s ‘good life.’
If the business sector is serious about adopting an ethical position in its practices then what is required is for it to take a step back, reaffirm the tenets of ethics and their relevance to a modern day work environment and to then define them in context with current business objectives and practices. Once these boundaries are placed on the intended meaning it becomes possible to then translate them into a moral praxis that exemplifies their value to business, the community and its members. The exemplar provided in chapter eight is offered as a starting point for companies to use in the development of their personal code, allowing for them to expand on its content making it situation-specific or more appropriate to their line of operations. Ethics is best defined through example. It is, as Aristotle posited, a lived experience that completes one’s image, providing balance between wellbeing and success whether this is in the social or business arena. Ethics is unquestionably relevant to business today and whilst there is no ‘one size fits all’ version to the code, the principles it established many centuries ago are still as pertinent to the advancement of human wellbeing today whether that is in a social context or a business one. Ethics and business, rather than being considered as an oxymoron, should present as a coalition, harmoniously existing to the benefit of all.
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213 APPENDIX 1
COMPANY CODE FORMATS
Company Booklet/Brochure Manual/Annual Loose-leaf Report Sheets Western Mining Corporation X Permanent Trustee Company X Limited now known as Trust Company Rio Tinto X Mc Pherson’s Printing Ltd Group X Tap Oil N.L. X Acacia Resources X Spotless Groups Limited X Macquarie Bank X David Jones Limited X Savage Resources Limited possibly X now part of Pasminco Investments Werrie Gold Limited now media X Communications Limited Commonwealth Bank of Australia X Foodland Associated Limited X Perpetual Trustees Australia Limited X Adelaide Bank X Magellan Petroleum Australia X Limited QNI Limited X North Limited X Ross Mining limited X Transurban Citylink X Incitec Limited X now part of Incitec Pivot Limited WMC Limited includes Central X Norseman Gold Corporation Limited Kurts Properties including Forrester X Parker group Ltd Wesfarmers Limited X Arnott’s Limited X Ausdoc Group Limited X Cadbury Schweppes Limited X Caltex Australia Limited X Croesus Mining NL X Foster’s Brewing Group Limited X James Hardie Industries Limited X Oil Search Limited X Placer Pacific Limited now part of X Placer dome Inc
214 Southern Cross Broadcasting X Southern pacific Petroleum N.L. X Star City Pty Ltd X Telecom NZ Limited X United Group Limited X Westfield Holdings Limited X Tyndall Investment Management X Australia Metal Manufactures Limited X ERG Group X Coca Cola Amatil X Leighton Holdings Limited X Normandy Mining Limited now part X of Newmont Mining Corporation Tempo Services limited X Reinsurance Australia Corporation X Limited OPSM Protector Limited X MIM holdings Limited within X Xstrata Plc GWA International Limited X McGuigan Simeon Wines Limited X Southcorp Limited X WESFI Limited, now part of X Formica - the Laminex group Pioneer International Limited X AGL X George Weston Foods Limited X The Franked Income Fund (part of X Wesfarmers Limited) IAMA Limited – now part of X Wesfarmers Limited Colonial First State X Boral energy Holdings Limited X Petroz N.L.( in process of being X taken over by Phillips.com Westpac banking Corporation X Delfin Property Group Limited X Lend lease Corporation X Rio Tinto Limited part of Rio Tinto X Plc and includes Lihir Gold Limited Hambro-Grantham Limited now X Colonial First State Private Equity Tabcorp Holdings Limited X Jardine Matheson Limited X The Woodside Group X Hongkong Land Limited X Blackmores Limited X Pharmaxis Ltd X
215 APPENDIX 2 COMMONALITIES IN CONTENT OF COMPANY CODES
Introduction – identifies the • Introductory comment by CEO or Chairman of the Company purpose and relevance of the • Company mission/objectives code • Economic and Social Role • Image of company • Responsibility for the development and maintenance of the code • Relevance to employees
Body of Code- provides • At all times maintaining the integrity of the company guidelines to give clarity to • At all times be transparent in dealings but still maintain client the code and proprietary confidentiality • Health and safety issues • Human rights issues including equal opportunity, no racial discrimination or harassment of any kind and respect for fellow workers • Environmental issues • Always maintain business integrity, trust and fairness in dealing with others • Respect for and compliance with all relevant laws, rules and regulations • Foster a ‘good corporate citizen’ image, always giving something back to the community • Behaviour both within and outside the workplace should always be exemplary • Specific business practices o Gifts and entertainment o Conflicts of Interest, insider trading o Disclosure o Appropriate use of company assets o Responsibility and accountability for actions o Teamwork o Honesty in all transactions ensuring no opportunity for fraud, bribery or coercive behaviour o Duties of directors, managers and line staff o Limits on political contributions o Relationships with government officials o Act in the best interests of the company
Concluding sections • Administration of the code • Reporting breaches and their consequences • Committee members and delegated responsibilities • Compliance and reference to other institutions that help with ethical issues (eg The St James Ethical centre • Acknowledgement of receipt by staff member
216 Appendix 3 ASX Corporate Governance Council
Excerpts from Principles of Good Corporate Governance and Best Practice
Recommendations March 2003
217 Attachment B: Disclosure
Best practice recommendations
1.1 Formalise and disclose the functions reserved to the board and those delegated to management.
2.1 A majority of the board should be independent directors. 2.2 The chairperson should be an independent director. 2.3 The roles of chairperson and chief executive officer should not be exercised by the same individual. 2.4 The board should establish a nomination committee. 2.5 Provide the information indicated in Guide to reporting on Principle 2.
3.1 Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: 3.1.1 The practices necessary to maintain confidence in the company’s integrity 3.1.2 The responsibility and accountability of individuals for reporting and investigating reports of unethical practices. 3.2 Disclose the policy concerning trading in company securities by directors, officers and employees. 3.3 Provide the information indicated in Guide to reporting on Principle 3.
4.1 Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards. 4.2 The board should establish an audit committee. 4.3 Structure the audit committee so that it consists of: • only non-executive directors • a majority of independent directors • an independent chairperson, who is not chairperson of the board • at least three members.
4.4 The audit committee should have a formal charter. 4.5 Provide the information indicated in Guide to reporting on Principle 4.
5.1 Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance. 5.2 Provide the information indicated in Guide to reporting on Principle 5.
231 6.1 Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings. 6.2 Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
7.1 The board or appropriate board committee should establish policies on risk oversight and management. 7.2 The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that: 7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board 7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. 7.3 Provide the information indicated in Guide to reporting on Principle 7.
8.1 Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives.
9.1 Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and benefits of those policies and (ii) the link between remuneration paid to directors and key executives and corporate performance. 9.2 The board should establish a remuneration committee. 9.3 Clearly distinguish the structure of non-executive directors’ remuneration from that of executives. 9.4 Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders. 9.5 Provide the information indicated in Guide to reporting on Principle 9.
10.1 Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders.
232 APPENDIX 4 BASIC CODE OF ETHICS
APPENDIX 4.1 PREAMBLE
Twenty-first century business, in the main, operates in a global environment and, as such must be capable of maintaining a balance between the often-overwhelming pressures that come with economic success and those of social wellbeing. Social responsibility is now an accepted key element to any successful business process and, in acknowledgement of its importance to our business; we have introduced the following code of ethics.
It is the responsibility of our organization to ensure that our business operations acknowledge and are compatible with our social obligations. In any business venture that we undertake we accept the responsibility for all our actions in collaboration with the needs and influences of the multi cultures, multi governments and social developments that operate parrel to them. As a significant contributor to modern day human wellbeing, we have an active role to play in supporting the moral development of our members, the company and the communities within which we operate. It is in this capacity as an active and influential member of society that we have a moral duty to ensure our actions result in positive outcomes for all concerned, both in the short and long term.
To assist in achieving this aim the following code of ethics, which sets out the core virtues required to establish a morally conscious corporation, is offered as a guide for staff to use as a model for their actions and as an aid to help empower them to act in a
233 socially responsible way in the workplace. The emphasis of this code is on identifying the moral tone of the organization, which in turn codifies the company’s moral position.
The central theme of ethics is the achievement of honourable acts, through the cultivation of virtuous moral habits and this is achieved by adopting the following seven virtues. These virtues are used to depict the essence of ethics with the overarching virtues of benevolence, beneficence and justice acting as summaries. Each will be discussed in terms of their broad definition, as sourced from the Oxford dictionary
(2005), and then a parallel definition is proposed to give the quality its reference in the business sector.
APPENDIX 4.2 CODE OF ETHICS
234
Acknowledgment and adherence to these virtues ensures that our company will always be known and respected as a highly ethical and socially conscious business. Specific codes of conduct, derived from this code, are also provided for staff to assist them in the workplace.
235 Appendix 5 Section B of Joint Code of Professional Conduct
CPA Australia Members' Handbook: CPC Code of Professional Conduct
2005 CPA Australia
236