(a) Always to Act Within the Law
The obligation to act legally may seem so obvious as to hardly be an issue of ethics at
all. There are, however, many grey areas. Is minimal compliance with the letter of the
law enough, e.g. in safety or equalities issues, or does an ethical approach imply more
proactive commitment? Is it unethical to pay bribes as the only means of securing an
export order which will be in the interests of the firm's shareholders and workers?
This is now illegal under UK law, but is believed to be still practised.
Is it ethical to adopt offshore tax avoidance schemes which are not illegal, but which
can result in firms paying very low UK taxes and thus failing to meet the social
responsibilities discussed in the previous section? On the other hand, given the legal
requirement for companies to be run for the benefit of shareholders, would it be
proper for the mangers not to take advantages of opportunities for tax avoidance,
which is in the interests of shareholders?
There may be different interpretations of the law, and what is illegal may only be
determined in the courts after the event. The question of legality is often related to the
concept of what may be reasonably foreseeable as the consequences of actions.
Acting close to the margins of the law and anticipating that you will not break it, in
spite of any reasonably foreseeable risks, will be driven by the prospect of rewards
accruing
– usually in relation to securing contracts or achieving efficiency savings. These are,
therefore, conscious decisions by the organisation's management and involve difficult
assessments of their responsibilities, to shareholders and to others on whom the
decision may impact. The extent of the potential impacts may be key factor in the
decision.
(b) 'Do As You Would Be Done By'
The principle that you should treat others with respect, as you would expect to be
treated yourself, gives rise to a number of expectations of behaviour in respect of the
interactions between the managements of different organisations, between individual
managers and the organisation and between individual managers and their colleagues
and subordinates.
We can see a number of ways in which this general principle may condition behaviour
when related to the pursuit of one's own interests.
Not to deprive others of the true facts about a situation, to which they are entitled, in
order to pursue one's own interests or those of the organisation. This may be
to cover up misdeeds or mistakes, or the misrepresentation of the financial position to
shareholders (or to the government, for taxation reasons).
Not to use one's power to exploit others in the pursuit of one's own interests or those
of the organisation, or to use them for one's own gain. This includes misrepresenting
the views of others, such as in claiming the responsibility for others' work or making
misleading claims in order to obtain sales. It also applies to cases of sexual
harassment by managers of subordinates.
(c) Not to Pursue One's Own Interests at the Organisation's Activities
Managers must not take advantage of their position in an organisation, and the power
and information which may come from that, to further their own interests. This clearly
includes taking bribes and may extend to the acceptance of any personal favours
associated with, for example, dealings with particular suppliers. It also includes using
information which is confidential to the organisation to make personal gains. The
most obvious example of this would be speculation in shares (insider dealing), but the
unauthorised disclosure of information (for financial gain or otherwise) may also be
covered by this (we shall discuss 'whistle-blowing' below). Yet other examples may
be found in respect of the use of inside information to set up a rival business.
This obligation may also extend beyond the period of employment. Contracts of
employment may forbid key personnel not to work for rival companies for a period
after resigning, in order to protect the inside information which they possess. The
fairness of such contracts can be challenged in the courts. Considerable disquiet has
been expressed, however, about senior managers in the public services (and even
politicians) forming close links with particular firms working in their service area and
then leaving to work for those firms.
There are also concerns that senior managers and directors may act in their own
interests rather than those of shareholders. Not only has the pay of top management
risen far faster than pay levels generally, but there are also allegations that the
prospect of large bonus payments tempts managers to take risks which bring them
immediate rewards but which may be against the organisation's longer-term interests.
As long as returns on investment are satisfactory, however, shareholders may take a
too relaxed towards managers' behaviour.
This brief review of some of the principles and issues involved in ethical behaviour is
just one approach to understanding the subject. There are many other interpretations, with the
emphasis on different aspects of behaviour and the pursuit of interests. You should be
aware of the range of issues which may arise and pose ethical dilemmas.
Titany answered the question on November 9, 2021 at 06:05