“Moral as well as legal obligations will be fulfilled openly, promptly, and in a manner which will reflect pride on the Company’s name.”
These words form the basis of a very fine code of conduct. Unfortunately, this code did not prevent Enron’s problems when it finally collapsed. U.S. legislators passed the Sarbanes-Oxley Act to fix the problem. The problem still grew, resulting in the near-collapse of the financial system in 2008. The more regulations passed to address the problem, the more they seem to magnify the next series of problems.
Various professional organizations provide for very comprehensive codes of conduct. Some groups have expanded their codes to include such things as principles for diversity. Just about everyone agrees that these constitute fine statements to which people should aspire. Some disagree and believe they should not be forced to sign documents to abide by such principles. Others disagree, claiming that the principles do not go far enough.
If anyone needs to be reminded to simply act as a decent human being then, yes, the codes do not go far enough. But do fine statements actually work? Do people needing to change their behaviours actually change their behaviours based on something written down on a website, PDF, piece of paper, scroll or basalt? The last refers to the Code of Hammurabi of eye-for-an-eye fame, which you can find in the Louvre. A replica would make a fine reminder in any office lobby of the possibility of retribution for nefarious acts.
The various societies of professional biologists developed a pithy one-page code of ethics outlining responsibilities to the public, employer or client and within the profession. Membership requires adherence to the various codes listed, but these societies do not appear to govern the ability to practice as a biologist. You become a biologist when someone else calls you a biologist. I am not aware of any society that handles complaints, even if there were any. The biologists in breach rarely get into the paper.
The code of ethics for engineers begins to look more like a brochure. The code requires the highest standards of honesty and integrity. Engineers are expected to perform under a standard of professional behaviour that requires adherence to the highest principles of ethical conduct. Over the past four years, the Ontario society may have averaged six complaints per year. It seems to be doing relatively well, ethics-wise.
We begin to enter a serious stage with the code of ethics for professional accountants. At 114 pages, the code does go into greater detail as to how one should serve not only the client but the greater public interest. The fundamental principles include integrity, objectivity, professional competence, confidentiality and professional behaviours. The Ontario CPA decisions list more than 600 cases of ethics abuse over the past 30 years. Interesting, and perhaps indicative of accounting behaviour, the cases are listed by rule infraction instead of by year. The discipline journal of cases resembles a tax code.
The various law societies also come in at around 113 pages, but I have expanded this with some useful commentary and handy indexes found in the back. They include something that is not found in other codes of conduct: definitions. These are found at the beginning of each section. The essence of the code holds out integrity, competence, quality of service, confidentiality and conflicts as some of the main pillars. In Ontario, there appears to be a steady increase of complaints: In 2008, there were 132 decisions, while, in 2017, there were 199 decisions. It’s an almost 50-per-cent increase over a decade.
For comparison purposes, we might look at the Canadian curling association’s code of ethics of six bullet points and fair play of five bullet points, which would easily fit on a beer label. This would at least keep it top of mind. Infractions never seem to make the paper unless they occur at the national level. To avoid the most common infraction, some rinks use a detector if a curling stone is released after crossing the hog line.
So, more regulation does not appear to be solving ethical infractions. An argument could be made that the problem would have been worse, but it’s always difficult to prove how many icebergs you missed. People only remember the one you didn’t miss.
What appears to be missing from the paper code of conduct solutions would be an ethical culture and an overall ethical program. An ethical culture must originate from management. The various governing societies can help visualize what the tone should sound like, but management must be the one singing it. An ethical program requires more than just a well-defined code of conduct. It also requires guidance and a system for obtaining advice and ethical training.
Some of this necessary infrastructure appears to be lacking in a number of governing societies. Compulsory Professional Development can cover some ethical training, but one hour and a half of required training a year may be far too low to effect meaningful change. Even one day a year would be insufficient to change some groups reticent to let go of old paradigms.
A system should also be put in place to ensure that others can ask questions if necessary. The most effective way to impact change would be to add sufficient transparency to what is occurring prior to any problems arising. Attempting to resolve an issue is far more difficult than trying to prevent the problem from arising in the first place. Reporting of problems after they have occurred can be problematic as people can be reluctant to report issues for fear of direct or, far more likely, indirect reprisals.
Studies have shown that people act more honestly and ethically if they think they are being watched. For example, people are far more inclined to contribute toward the coffee fund if a poster containing a pair of eyes is set up on the wall. The same effect could be had by filling in reports on levels of diversity or other steps taken by firms to minimize or otherwise address ethical issues.
Filling in a report may increase regulatory requirements, but this is actually different from simply adding another page to the code of conduct, which may have no effect. Adding a process that increases transparency could have a beneficial impact on changing the corporate culture and address other systemic societal issues. Making small process changes can nudge various organizations and the people within them to make better ethical choices.