Free Practice Test: DSST Business Ethics and Society

Before going into detail on the issues surrounding business ethics it is first necessary to understand the concept of ethics. Ethics comes from the ancient Greek word ethos and while it can mean many things to many people a common definition of ethics is well-founded standards of right and wrong that set out what we ought to do. Put simply, what is the common good? Early ethics writers included Greek Philosophers such as Plato and Aristotle and Roman Philosophers such as the Stoic Philosophers while more modern writers on the subject included the Utilitarians such as Jeremy Bentham and Thomas Hobbes.

So, how does the concept of ethics apply to business? If you look at it from one point of view business is competitive and the concept of a competitive business environment may not be at all fours with the ethical framework, but business ethics is defined and studied in a separate way from ethics. Business ethics is the study of important issues such as proper corporate governance, insider trading, bribery, discrimination and recruitment and hiring practices and the policies and procedures developed by a company to regulate them. This process is done by a company to ensure that they are a good corporate citizen in the global community and that they comply with both national and international obligations.

Cultural differences also play a part. What is unethical in one place may be ethical in another, but this is being settled to an extent with globalization.

You can gauge quickly what the attitude of a company of any size will be to questions of business ethics by going to the “our values “section of the website of any public company. The Canadian Construction Company SNC Lavalin is a classic case in point. The values listed by SNC Lavalin on their website are:

• Teamwork and Excellence
• Customer Focus
• Strong Investor Return
• Health and Safety, Security and Environment
• Ethics and Compliance
• Respect

You can see that the fifth point in their list of values, Ethics and Compliance deals effectively with the business ethics question. SNC Lavalin makes the claim in their values that they are committed to ethical business and they, like public companies and private companies of any size the world over, tend to set out the way in which they deal with questions of Business Ethics through the development of a code of ethics.

Firstly, what is a code of ethics. A code of ethics is a document, developed by major companies which basically sets out the rules that each company lives by and how they deal with situations where those rules have not been complied with. Typically, and the SNC Lavalin (our case study company) Code of ethics is a good example, deals with a range of issues including, but not limited to, the following:

• Bribery Corruption and Illegal Conduct – This refers to issues where there are allegations that criminal conduct has occurred
• Workplace Bullying and Harassment – This refers to harassment in the workplace including sexual harassment
• Discrimination – This is to ensure that company policies and, to the extent necessary, the law, is complied, and that people are treated fairly and equally regardless of age, gender, race, marital status, sexual orientation or any other head of power set out in the code of ethics or indeed in the relevant legislation that may apply in the jurisdictions where the company may do business.
• Conflicts of Interest – This is where you declare any relationships or situations which would impede your capacity to act properly on behalf of the company. For example, does your brother work for a client company?
• Acceptance of Gifts – The Code of Ethics sets out guidelines by which you can accept gifts from people as an officer of the company. Usually gifts above a particular value set out by the Code of Ethics must be declared
• Social Responsibility – This refers to the company policies and their desire to be good corporate citizens, both in their country of origin and internationally
• Protection of Assets – This usually refers to issues surrounding protection of the intellectual property held by the company

Employees of companies who have a code of ethics usually must do an online certification each year to validate that they are up to speed with their company’s code of ethics. Companies will also conduct investigations on possible breaches of their code of ethics. These investigations may be conducted by internal investigators employed by the company, external consultants or depending upon the circumstances of the case a combination of both. Some important points to note about investigating are

• You Need to Ensure Confidentiality – Investigations are generally required because an issue which is sensitive, may breach the company code of ethics as well as the law has been raised. The onus on the Company to do what they can to protect the protect the confidentiality of the person who has raised the issue. It should be noted that protection cannot be fully guaranteed.

• Protection of the Complainant – You need to do what you can to separate the person who has raised the complaint from the person who has been accused of the complaint. Options include vacation, a temporary transfer or a roster or shift change. You may also, if the allegation is serious suspend the accused on full pay pending the outcome of the investigation. However, the accused is always entitled to the presumption of innocence and to procedural fairness. They have the right to defend themselves against the allegations before judgement is passed.

• Select the investigator – An investigator must have an ability to investigate objectively without bias. They should not have a stake in the outcome nor should they have a personal relationship with any party. The Investigator should have Skills that include prior knowledge of investigation techniques and a working knowledge of employment laws. They should also have the right temperament to conduct interviews and an ability to investigate objectively without bias. The investigator’s job should not depend on the outcome of the investigation. Depending upon the issue being investigated internal HR staff or outside lawyers or consultants may be used.

• Create a Plan for the Investigation – An investigation must be properly planned to be effective. A complete and proper investigation plan needs to have an outline of the issue, a witness list, sources for relevant information and evidence, interview questions and a process for retention of documentation that could be treated as evidence.

• Develop Interview Questions – This should always be prepared. However, as the investigations and the interviews proceed other issues may come up. You should ask open rather than closed questions. An open question is designed to draw out more information while a closed question confirms what you already know. An example of an open question is “You have been working for ABC Ltd for ten years. Tell me what it’s like to work there?” The answer will give you more information. An example of a closed question is “I understand you have been working for ABC Ltd for ten years is that correct? “You can only give a yes or no answer in this case.

• Conduct the interview – The investigator should inform all parties involved of the need for an investigation and explain the investigation process. The investigator must remain focused on being impartial and objective. Investigators must determine the credibility of the people being interviewed. Interviews provide differing accounts and even conflicting versions of the events and the investigator must indicate ultimately the evidence that they prefer. Involvement in an investigation can be an emotional experience for parties concerned and this also needs to be considered.

• Report – An investigators report is the final stage of the process. The report should contain findings on the facts as well as recommendations for action. The responsibility for implementing the recommendations of the report rests with HR and the relevant line managers.

As well as conducting investigations big companies have also set up whistleblower mechanisms so that complaints can be reported anonymously

What happens if things go wrong? – There are many examples of what happens if companies get caught with unethical conduct. Volkswagen and the German Car companies are amongst the most recent but companies such as SNC Lavalin and Siemens have also had to deal with these issues and it has cost a lot of people a lot of money in legal fees, lost share values and loss of employment.

To conclude, Business Ethics are an important part of the business world and society in general. Doing the wrong thing will cost a company money in many cases, but even more importantly it will shred that company’s reputation. It is loss of reputation in the public domain that will cause the most severe damage to a corporation.