Business Ethics

1
Business Ethics

• A Chief Ethics Officer?

A Chief Ethics Officer for Microsoft?
2
Roadmap

• Role of Chief Ethics Officer
• Pros and Cons of Chief Ethics Officers
• Can ethical standards be imposed top down?
• Chief Ethics Officer Fad or Here to Stay?

3
Chief Ethics Officer What do they do?

• Foster and maintain ethical behaviour within
  corporations
• Handle complaints (ethical dilemmas and
  associated problems)
• Legal compliance
• Navigate the grey space that is above the law
  Megan Barry, Former Chief Ethics Officer, Nortel

4
Pros and Cons of a Chief Ethics Officer
PROS
CONS

• Time pressures on CEO
• Specific expertise
• Independence
• Internal Ombudsman
• Internal Sounding Board
• Systematises ethical practice
• Positive signal (market/internal)

• Costs vs Benefits
• Is it necessary?
• Bad signal to the market?
• Responsibility cant be delegated
• Potential Abdication
• Window Dressing

5
Would a CEthicsO reduce the level of unethical
behaviour?

• HBS Study on performance of ethics based
  businesses 756 increase in net income!!!!! But
  is a CEO the best way to go?
• Can help decision making where ethical dilemmas
  exist
• Advantages over non-executive directors
  specific expertise, daily contact with the
  organisation
• Very useful as part of a wider culture change
• Will not address the issues around direct fraud /
  theft Enron etc.
• James Hardie Test would a Chief Ethics Officer
  have made a difference in this situation?

6
Can ethical standards be imposed top down?

• Equivalent to culture shaping from the top the
  3 Cs Culture, Control and Consequences
• Walk the Talk / Set the Tone Principled
  Leadership
• Provides a set of Principles that can guide
  actions (Grace / Cohen 1998) but for application
  to specific situations you need it embedded in
  culture to support individual moral
  decision-making.
• Needs to be supported by formal organisational
  processes HR practices (Employment decisions,
  Promotion decisions, Disciplinary decisions)
• Needs to be congruent with other functions in the
  organisation
• When the chips are downreal test

7
Latest fad?

• Is it a fad or part of an evolutionary process in
  business?
• Macro trends enforcing need for CEO
• Shareholder activism (CALPERS)
• Regulatory compliance (Sarbanes-Oxley)
• Globalization (cross-cultural ethical systems)
• Practical considerations that may limit it to a
  fad
• Contemporaneous political considerations (Spitzer
  et al)
• Requires a skilled and capable individual
• Role could be ambiguous and create unnecessary
  bureaucracy
• Efficacy