The 8 Ethics principles Flashcards
What is the definition of Principles?
- Defined boundaries for behavior
- Intended as universal and absolute
- Lead to rules, laws
E.g., freedom of speech
What is the definition of Values?
- Used to develop socially acceptable and enforced norms
E.g., integrity and accountability - Violations of norms: sanctions (SEC penalties) or stakeholder backlash
What is Global Business Standards Codex (GBSC)?
- Intended to frame rules and values adopted by businesses and leaders
- Meant to be absolute but difficult to interpret and practice
What are the 8 ethical principals?
1 - Fiduciary principal 2 - Property principal 3 - Transparency principal 4 - Fairness principal 5 - Responsiveness principal 6 - Citizenship principal 7 - Dignity principal 8 - Reliability principal
What is the Fiduciary principal?
- Leaders have a legal fiduciary duty to act in the best interest of the stakeholders (owners first).
- How to behave when caring for someone else’s possessions
- Legal aspect applicable primarily to officers and directors
- Values aspect applicable to all employees
How to leaders handle conflict of interest?
No actual or potential conflicts of interest should exist regarding employee actions.
- Leaders do not put self-interest above firm interests.
- Appearance of a conflict is a conflict.
- Compromised situations include
Friends on the board, nepotism, interlocking interests, favors, and excessive privileges - Firmly understood policies and rules are needed.
What are Good Faith Efforts?
Leaders and employees will give good faith efforts in carrying out their responsibilities.
- Best of work time, resources, energy, and abilities
- Faith = trust
- Honest intent to fulfill responsibilities, follow through
What is Prudence and Due Diligence?
Leaders will be prudent with firm’s resources and exercise due diligence regarding quality of work.
- Efforts are judged by results.
- Lack of due diligence is cause of many fiduciary lawsuits.
- Qualified, competent resources must be assigned.
What is Loyalty?
- Restrict use of job titles, positions, and access to firm resources to firm purposes only.
- Report potential conflicts of interest.
Anticipatory and voluntary - Refuse gifts that influence behavior.
What is the property principle?
Every employee must respect property and rights of owners of the property.
Employees should protect, be good stewards, and not allow third parties to harm, prohibit asset misappropriation, and disallow competitor access.
- Don’t steal or look the other way when others steal.
Mainly money, through falsification
High percentage of minor theft
Includes intangibles
- Data (company and customer) - Aggressive language calls for a proactive approach.
What is the transparency Principle?
- Leadership should conduct business in a truthful and open manner.
- Employees should not make decisions based on a personal agenda.
Describe the transparency Principle in regards to Employees and Associates:
One should be an open book, straightforward, give full disclosure.
Describe the transparency Principle in regards to Recordkeeping:
- Accurate and current records are a primary responsibility of leadership.
- Uncompromising accuracy in communications with investors is required.
Describe the transparency Principle in regards to Stakeholders:
- Stakeholders should understand actions and decisions of leaders.
- Leaders must explain and align.
Describe the transparency Principle in regards to Suppliers and Partners:
Relationships with suppliers and partners should be handled in an honest manner.
