Options Available In Ethics Programs

What are the general types of ethical statements yourorganization could develop, along with their relative strengths andweaknesses? And how do you go about developing such a statement andimplementing it day to day?

There are four general types of ethical statements: a Code ofEthics, a Code of Conduct, a Conflict of Interest Agreement, and aStatement of Values. Each is intended to serve the general publicby guiding the behavior, methods and manners of communications ofthose subject to the ethical statements in their long-term andday-to-day activities.

Yet each is different in the time necessary to create them, theresources required for compliance, and the degree of involvement ofindividuals in the creation of the ethical statement.

A Code of Ethics is the most comprehensive and difficult togenerate and maintain. Most codes contain at least “Canons” and“Rules of Conduct.”

Canons are general standards. They are lofty, altruistic andindicate inspirational goals for the individuals subject to thecode. They serve as principles and the basis for the Rules ofConduct.

Rules specify the minimum level of conduct required.Disciplinary action may result from a rule violation. In somecases, intermediate statements are included in codes. These may becalled “Guidelines” and fall below canons and above rules inoffering specific guidance to professionals subject to thecode.

Canons and related rules are difficult and time consuming todevelop. After each iteration during their creation, they aresubject to review and revision by those who will be subject tothem.

Further, because rule violations dictate punishments, methods ofreporting of violations, punishment standards and a structure ofdue process must be created. These activities require an increasedcommitment of manpower.

Once codes are in place, further time and effort is required fortheir enforcement and for offering specific guidance. For example,The American Institute for Chartered Property CasualtyUnderwriters, in addition to canons and rules, provides guidelines,advisory opinions and summaries of previous opinions.

Codes of Ethics are generally impractical for all butprofessional societies and the largest organizations. Mostorganizations cannot afford the manpower and monetary resourcesrequired to develop and enforce a code.

A Code of Conduct is a second type of ethical statement. Thecode could be written as general principles, and hence beaspirational. At the other extreme, a Code of Conduct could bestatements of acceptable, unacceptable or both types of behavior,and hence, more like legislative or regulatory sets of rules.

Codes of Conduct are easier to write given that there tend to befewer arguments about pure aspirations for good actions or aboutspecific actions that are deemed either acceptable orunacceptable.

Codes of Conduct that tend toward a set of rules usually arereinforced with penalties for violations. In many cases, dueprocess is either ignored or left to whatever due process isinherent in any human resources action.

A potential problem with Codes of Conduct is that they tend tobe developed without broad-based participation of those subject tothe code. This tends to diminish the individual commitment to thecode so often found in Codes of Ethics or Statements of Value.However, a Code of Conduct can be developed more quickly than theother types of ethical statements.

The third type of ethical statement is a Conflict of InterestStatement. These may be incorporated into any of the other types ofethical statements.

For example, actions that would be considered conflicts ofinterest may be similar to the rules that would accompany a Code ofEthics. A Conflict of Interest Statement may also be stated as moregeneralized principles of conduct, such as, “any appearance ofconflict is to be avoided.”

Conflict of Interest Statements are usually easier to createthan a Code of Ethics because they tend to arise because of aspecial situation and their creation is assigned to one person orsmall group. They tend to be easy to enforce because employees maybe asked to sign and date the statement. In some cases, an annualsigning of the statement is required.

One problem with a Conflict of Interest Statement is that theyusually are internal documents, and whatever benefits of thestatement for the general public are not made known to thepublic.

A fourth type of ethical statement is known as a Statement ofValues. Ethics and values are intimately related, so use of theword “values” does not diminish the importance of the statement.The top managements of commercial entities typically institutestatements of values.

As an expression of ethics, Statements of Values serve thegeneral public. However, the real value of Statements of Values isthat they address all distinct groups, or “stakeholders,” that comeinto contact with the organization.

Statements of Values are usually conceived by management, butborn with the employees. They reflect a belief of what theorganization is and what drives the organization toward its goals.It can be a powerful recruiting tool in that the statement showsthe type of person the organization is seeking, and allows one whodoes not share the same values to back out early, before a hiringdecision.

The heart of a Statement of Values is expressions of thosevalues that the organization seeks to embody in all of itsactivities with all of its stakeholdersemployees, owners,customers, suppliers, regulators and so forth.

As with any general policy statement of an organization, thestatement can be developed either by top management for adoption byemployees or by employees for consent of top management.

There is a third way a Statement of Values can be developed.That method begins by asking customers and other stakeholders,“what do you want from us?” (See related story with thisarticle.)

Ethical statements of any kind will require a commitment of timeand money. However, if we truly want to serve the public, we needto be aware of activities they consider valuable, recognize thosevalues in the statement and deliver on those values.

Peter R. Kensicki is a professor of insurance at EasternKentucky University in Richmond, Ky., as well as a member of theEthics Committee of the CPCU Society in Malvern, Pa.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, October 22, 2001.Copyright 2001 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.

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