Ethics management auditing and developing the ethical content of organizations

ETHICS MANAGEMENT www.allitebooks.com Issues in Business Ethics VOLUME 10 Series Editors Henk van Luijk, Nijenrode, Netherlands School of Business, Breukelen, The Netherlands Patricia Werhane, University of Virginia, U.S.A Editorial Board Brenda Almond, University of Hull, Hull, U.K Antonio Argandoiia, lESE, Barcelona, Spain William C Frederick, University of Pittsburgh, U.S.A Georges Enderle, University of Notre Dame, U.S.A Norman E Bowie, University of Minnesota, U.S.A Brian Harvey, Manchester Business School, U.K Horst Steinmann, University of Erlangen-Nurnberg, Nurnberg, Germany www.allitebooks.com Ethics Management Auditing and Developing the Ethical Content of Organizations by MUEL KAPTEIN KPMG Integrity Consulting, Amsterdam, The Netherlands, Erasmus University, Rotterdam, The Netherlands SPRINGER-SCIENCE+BUSINESS MEDIA, B.V www.allitebooks.com A C.I.P Catalogue record for this book is available from the Library of Congress ISBN 978-0-7923-5096-5 ISBN 978-94-011-4978-5 (eBook) DOI 10.1007/978-94-011-4978-5 Printed on acid-free paper AII Rights Reserved © 1998 Springer Science+Business Media Dordrecht Originally published by Kluwer Academic Publishers in 1998 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner www.allitebooks.com "Where art thou?" (Genesis 3:9) www.allitebooks.com Table of Contents INTRODUCTION 0.1 Confidence as key 0.2 The ABC of Business Ethics 0.3 Three research questions 0.4 Structure of the study PART I: DEFINING THE ETHICAL CONTENT 1: THE CORPORATE MISSION 13 1.1 The corporation as a responsible entity 14 1.2 The corporate mission as central principle 17 1.3 What the corporate mission is not 19 1.4 What the corporate mission is 24 2: ETHICS MANAGEMENT 31 2.1 The moral trustworthiness of corporations 32 2.2 The organizational context 36 2.3 Ethics management as discipline and practice 42 www.allitebooks.com viii 3: THE ETHICAL COMPANY 47 3.1 An ethics audit as diagnostic tool 48 3.2 The ethical content defined 51 3.3 Six parts of an ethics audit: a brief outline 60 PART II: AUDITING THE ETHICAL CONTENT 4: THE ETHICAL QUALITIES MODEL 67 4.1 A conceptual model of evaluating the ethical content of organizations 68 4.2 The "entangled hands" dimension 75 4.3 The "many hands" dimension 92 4.4 The "dirty hands" dimension 106 5: THE ETHICS AUDIT IN PRACTICE 119 5.1 Six parts of an ethics audit: an elaborate discussion 120 5.2 Case X: the ethics audit at the Department of Justice 135 PART ill: DEVELOPING THE ETHICAL CONTENT 6: THE ETHICS PROCESS 145 6.1 Conflicting issues during the ethics process 146 6.2 A view of ethics management 151 6.3 Case Y: the ethics process at the Amsterdam Airport Schiphol 158 www.allitebooks.com ix 163 7: THE ETHICS MIX 7.1 An ethics office 164 7.2 Training 166 7.3 Dilemma discussions 168 7.4 A code of conduct 170 7.5 The Ethics Team Test 173 7.6 Sanction mechanisms 176 7.7 Other measures 178 7.8 The Qualities-Measures Matrix 183 7.9 Case Z: recommendations for the ethical development of the Dutch Furniture Factory 186 7.10 The Ethics Management Wheel 191 8: SUMMARY AND CONCLUSIONS REFERENCES 195 201 APPENDICES 1: Agenda for follow-up research 215 2: The Ethics Thermometer 217 3: Ethics profiles offour organizations 219 1NDEX 225 www.allitebooks.com Introduction "Causes of unethical actions are not simply the result of rotten apples in the corporate barrel " (Hoffman, 1990:630) Imagine that you are the general manager of an international trade organization You are proud of the international quality award that you received last year and you are convinced that your company is in tip-top condition However, during the past few months, you have been confronted with a number of unsettling matters The US country manager appears to have been brushing up the annual figures systematically He also has been entertaining certain business practices which have drawn the attention of the local officials of the Department of Justice The media claim that you have been selling sport shoes which were produced with child labor in India The trade inventory shows a number of unexplainable shortages The criminal investigation staff paid you a visit in connection with a member of your sales department who they claim were overly generous towards several government officials during a transaction with their Ministry To make matters worse, your secretary recently ran home in tears because she was tired of always being blamed for mistakes for which she did not bear any responsibility During a personal meeting with her, she informs you that she is no longer interested in working for a sexist organization Is there something that you missed? You begin to question the ethics within your corporation and start pondering the possible measures that should be taken to set matters straight What are you going to do? www.allitebooks.com Index A ABC of Business Ethics, 4; 17; 38 achievability, 71; 74; 84; 85; 99; Ill; 117; 184 administration, 182 audit, 5-9; 45; 47-51; 59-63; 65; 67; 68; 90; 119-123; 127-130; 134; 135; 140;141;145; 147; 150; 154; 159; 161; 173; 185; 193; 197; 198; 216; 217 auditor, 48; 51; 61; 63; 122; 127-130; 134; 140; 150; 173; 197 autonomy model, B backward policing, 181 business ethics, 4; 17; 177; 195 c Cards on the Table, 130; 190 clarity, 71; 73; 77; 78; 96; 108; 117; 184 climate, 56; 57; 153 code of conduct, 5; 27; 55; 56; 61; 63; 78;80;84; 109; 120; 129; 134; 137; 139; 147; 149; 150; 154; 155; 156- 163; 166; 169-173; 177; 178; 183; 185; 190; 191; 193; 197; 198; 222 complaints system, 181 Conduct Detector, 60-62; 120-124; 134; 183; 197; 198 confidence, 3; 6; 31; 88; 102; 150; 172; 173; 176 conflicting interests register, 179 consequentialism, 5; 57 consistency, 71; 73; 80; 97; 109; Il7; 184 consumer, 3; 14; 22; 23; 25; 26; 29; 35; 42;49;52;53;79; 110; 124; 125 context, 18; 32; 34; 36; 39-42; 44; 51; 52;55-61;63;67;68-75;77;80;84; 86;91;94;96;98; 105; 106; 110; 116; 117; 120; 121; 127; 128; 134; 139; 140; 150; 154-156; 159; 161; 165; 173; 178; 183; 188; 196; 197; 215; 219;220 contextual ethics, 41 contract, 5; 34; 54; 55; 77; 79; 80; 85; 89; Ill; 180; 196 corruption, 3; 52; 62; 88; 123; 135; 148; 153; 165;217 culture, 4; 41; 43; 44; 54; 55; 57; 87; 88; 103; 106; 138; 149; 169; 170; 182; 216 226 Index D defensibility, 68 deontological ethics,S; 56; 57 development, 4; 7-9; 13; 15; 26; 35; 4144;51;54;56;57;59;76;82;94; 105; lO7; Ill; 136; 137; 140; 145-167; 179; 181; 183; 186; 190; 196; 197; 216;218;224 dilemma, 4; 9; 16; 20; 27; 30; 54; 57; 58; 60;61;63; 75; 77;79;87;90;91;98; 106; 130; 132; 133; 137-139; 149; 154; 155-157; 160; 161; 167-170; 173; 182; 185; 190; 191; 193; 198; 216 dilemma session, 61; 130; 169; 170 dilemma discussion, 168 Dilemmas Decoder, 60-63; 120; 129; 161; 197; 198 dirty hands, 25; 72; 74; 106-109; 112; 115; 116; 122; 135; 161; 172; 173; 184; 197 discussability, 71; 75; 90; 104; 115; 117; 184 ethics gap, 47 ethics management, 7; 8; 42-45; 146; 148; 149; 151-153; 155-157; 164; 176; 197; 198 Ethics Management Wheel, 191; 192; 198 ethics office, 164; 165; 172; 173; 175; 198; 199 ethics process, 145; 146; 149; 153; 158; 159; 178; 182; 183; 185; 198 ethics profile, 136; 215; 219 ethics program, 134; 145; 164 ethics report, 51 Ethics Team Test, 168; 173; 198 Ethics Thermometer, 120; 134; 137-139; 140; 161; 162; 171; 173; 183; 186; 197; 198; 215-217 exit discussions, 183 F fraud, 3; 40; 51; 52; 62; 73; 86; 90; 91; 104; 122; 123; 135; 148; 153; 157; 165; 186; 217 E effectiveness, 14; 18; 19; 23; 29; 145; 155; 157; 161; 165; 168; 170; 175; 198; 211 effort, 7; 18;28; 31;33;34;36;45;54; 59;70;72;87;97;98; 107; 110; 117; 138; 150; 152; 155; 156; 158; 172; 173; 176; 180; 187; 196; 198 egoism, 55; 56 empirical approach, entangled hands, 71-77; 79; 84; 116; 120; 122; 127; 129; 161; 172; 173; 197 environment, 2; 3; 15; 16; 21; 25; 27-29; 37;40;42;48;49;53;54;69;76; 84; 114; 149; 153; 158; 172; 173 ethical content, 6-9; 14; 47; 51-60; 67; 68; 70-73; 115-122; 145; 154-157; 163; 183; 184; 195-198;215-218 ethical corporation, 6; 53; 58 Ethical Qualities Model, 67; 71; 117 ethics audit,S; 7; 8; 9; 47; 48; 50; 51; 60; 62;63;67; 119; 120; 135; 140; 141; 145; 147; 154; 155; 161; 196-198 ethics certificate, 51 ethics checklist, 173; 198 G government, 1; 2; 3; 14; 15; 21; 25; 29; 51;52;92; 102; 161;220;223 I implementation, 44; 127; 150; 153; 161; 163 Individual Characteristics and Circumstances Assessment, 60; 61; 63; 120; 130; 135; 184; 197 institutionalization, 44; 165 integrity, 27; 55; 86; 135; 164; 169; 170 intention, 3; 4; 5; 7; 26; 36; 38; 40-42; 44;45;54;55;58;61; 109; 123; 130; 131; 196; 218 intuition, 38; 41; 42; 44; 45; 55; 58; 61; 130; 132; 133; 149; 150; 152; 156; 161; 162; 165; 169; 172; 173; 196 J job rotation, 180 Index 227 L legislation, 15-17; 35; 52; 193; 196 profit, 2; 4; 7- 9; 18; 19; 21; 22; 24; 26; 33;42;50;53;70;78;82; 104; 110; 111; 112; 125; 215 M Q many hands, 72; 74; 92; 94; 96; 97; 102; 103; 133; 135; 161; 172; 185; 197 market, 15; 16; 24; 25; 33; 35; 53; 77; 81; 82; 95; 109; 111; 113; 114; 157; 196;215 measure, I; 2; 5; 8; 38; 42; 44; 45; 50; 55;59;63;98; 104; 108; 119; 121; 122; 123; 125; 127-129; 134; 136; 145-149; 152; 154; 155; 157; 159; 161; 162; 164;-166; 173; 175; 176; 178; 182; 183; 196; 198; 216 quality, 18; 23; 35; 40; 48; 49; 54; 58; 59-61; 67-75; 77; 80-82; 84; 87; 88; 90; 95; 96; 100; 108; 109; 110-117; 119; 120; 121; 124; 125; 128; 129; 133; 134; 136; 137; 149; 150; 153; 157; 161; 163; 164; 181; 183-185; 196; 197; 198;215;216;219 Qualities-Measures Matrix, 183; 184; 193 Measures Chart, 127; 136 recognizability, 71; 86; 102; 112; 117; 184 recruitment and selection procedures, 178 reductionist model, Measures Matrix, 127; 136 Measures Scan, 60-63; 120; 127-129; 134-137; 139; 140; 161; 183; 190; 197; 198;220;222 mission, 7; 13-31; 59; 61; 68; 73; 137; 138; 171; 172; 196 mistakes register, 181 moral entity, moral responsibility, 4; 5; 24; 42; 43; 52; 153 moral stress, 78 multiple decision-making, 182 mutual advantage, 27; 28; 29; 172; 173; 196 N norm, 4; 39; 43; 63; 73; 74; 79-81; 84; 85; 112; 130; 138; 147; 149; 151; 167; 169; 170; 223 o ombudsman, 5; 157; 162-165; 223 p performance feedback mechanism, 181 philosophical approach, procedure, 43; 49; 55; 57; 61; 69;78; 85; 128; 129; 132; 135; 139; 148; 151; 156; 180; 186; 189; 190;220;222 R respect, 24; 27-29; 32; 35-37; 41; 44; 53;58; 112; 130; 133; 158; 172; 196; 197 risk, 2; 3; 21; 32-36; 40; 41; 43; 44; 48; 53;59;72; 77;84;86;93;95-97;99; 100; 103; 112; 113; 117; 120; 128130; 148; 150; 154; 165; 168; 190; 223 rule, 3; 20; 33; 55; 61; 62; 78;79; 82; 83; 85; 86; 98; 105; 127; 129; 132; 133; 135; 136; 139; 145; 148; 150; 156; 167; 171-173; 176; 186; 189; 190; 220;222 s sanction, 43; 62; 74; 75; 82; 97; 104; 117; 122; 123; 148; 150; 151; 153; 154; 176; 177; 185 sanctionability, 71; 74; 82; 98; 110; 117; 184 segregation of duties, 179 social audit, 48-50 social responsibility, 15; 17; 22; 49 social responsiveness, 15; 17 society, 2; 3; 5; 14; 16; 18; 22; 28; 29; 35; 38; 49; 59; 120; 179 spearheads, 134; 137; 183; 186; 189; 198; 216; 220-222 228 stakeholder, 7; 15-17; 19-28; 31-38; 41; 42; 45; 48-52; 54; 58-60; 62; 68-72; 74;75;77;92; 106-119; 123-126; 128; 133; 134; 139; 148; 149; 153; 154; 158; 161; 164; 166; 170; 172; 175; 177; 180; 181; 186; 189; 190; 193; 196-198;220;222;223 stakeholder model, 16 Stakeholders Reflector, 60; 62; 70; 120; 124; 126; 134; 135; 184; 197 stockholder, 3; 14; 21; 22; 24; 27; 28; 35; 42;49;52 strategy, 13; 18;43;57; 106 structure, 3; 4; 29; 41-44; 55; 57; 94; 101; 104; 146; 158; 159; 164; 168; 179; 180; 182;216;217;223 supplier, 3; 14; 21; 25; 52; 73; 77-79; 82; 89;90;97; 100; 111; 129; 148; 171; 190 supportability, 71; 74; 86; 102; 112; 117; 184 survey, 110; 120-122; 124; 134; 135; 197;217;218 Index T training, 5; 55; 148; 155; 162; 163; 166168; 190; 198;220 trust, 2; 3; 9; 16; 31-38; 42; 48; 50; 74; 80;86; 102; 125; 150-152; 158; 159; 165; 177; 179; 196; 197 trustworthiness, 3; 7; 31; 32; 36; 37; 165; 196 u utilitarianism, 5; 56 v vruue, 3;4; 8; 20; 21; 23; 26-28; 39;40; 43; 63; 74; 78-82; 84; 85; 112; 117; 130; 137; 139; 147; 151; 157; 161; 167; 169; 170; 172; 173; 177; 187 virtue, 5; 6; 28;58; 59; 92; 107; 196 virtue ethics, visibility, 71; 74; 75; 88; 103; 113; 117; 184 vulnerability, 33; 40; 59; 68; 198 "See, here I am" (1 Samuel, 3:4) ... part I (defining the ethical content) , part II (auditing the ethical content) , and part III (developing the ethical content) In the first chapter, the question of the rationale of corporations... dismantling it on land On the grounds of these hard facts, you and the other members of the Board of Directors decide to let to sink off the platform The government of the UK supports and approves... www.allitebooks.com Ethics Management Auditing and Developing the Ethical Content of Organizations by MUEL KAPTEIN KPMG Integrity Consulting, Amsterdam, The Netherlands, Erasmus University, Rotterdam, The Netherlands