Compliance with Codes of Conduct will be mandatory for members and employees subject to the Codes. Ethical tests enable managers to consider ethical consequences of decisions where
The wording of codes may be imprecise
Where situations arise that are not covered in the Codes.
The Institute of Business Ethics offers three tests to apply to decisions to assess whether they raise ethical issues:
1. Transparency: Do I mind others knowing what I have decided?
2. Effect: Who does my decision affect or hurt?
3. Fairness: Would my decision be considered fair by those affected?
Impact of Ethics on Business Strategy
Ethics can be thought of as impacting at several points in the strategy process.
In the formulation of strategic objectives. Some firms will not consider lines of business for ethical reasons.
External appraisal will need to consider the ethical climate in which the firm operates. This will raise expectations of its behavior.
Internal appraisal: Management should consider whether present operations are ‘sustainable’, i.e. consistent with present and future ethical expectations.
Strategy selection: Management should consider the ethical implication of proposed strategies before selecting and implementing them.
