professional conduct if we are going to restore investor confidence and trust. This cannot be a onetime commitment or a passing response to recent events. For example, as CFA charter holders and AIMR members, we attest annually in writing to our continued adherence to the AIMR Code and Standards…. Violations can and do bring enforcement actions that can lead to revocations of AIMR membership and the right to use the CFA designation.”17
EXHIBIT 2.2 Excerpts from AIMR Code of Ethics and AIMR Standards of Professional Conduct
AIMR Code of Ethics
Act with integrity, competence, dignity, and in an ethical manner….
Practice and encourage others to practice in a professional and ethical manner….
Strive to maintain and improve our competence and the competence of others in the profession.
Use reasonable care and exercise independent professional judgment.
AIMR Standards of Professional Conduct (in part)
… Act for the benefit of our [investing] clients and place their interests before our own.
Use reasonable care and judgment to achieve and maintain independence and objectivity.
… Have a reasonable and adequate basis, supported by appropriate research and investigation, in making investment recommendations or taking investment actions.
Avoid any material misrepresentation in any research report or investment recommendation.
Disclose to clients and prospects all matters that reasonably could be expected to impair our ability to make unbiased and objective recommendations.
Deal fairly and objectively with all clients and prospects.
Not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation.
Exercise reasonable supervision to prevent any violation of the Code and Standards by those subject to our supervision and authority.
Source: Thomas A. Bowman, “An Open Letter to Leaders of the Investment Community,” Wall Street Journal, January 23, 2003, page C3.
Codes of ethics are easily reduced to a mentality of compliance (e.g., observance of checklists and other external reminders that can be monitored). The flaw with the mentality of compliance is that it is fundamentally mindless. Ethical issues are subtle and demand mindful engagement to be detected and resolved.
Talk about Ethics within Your Team and Firm
The sound approach builds upon a mentality of commitment or mindfulness. One’s objective as a team or enterprise leader should be to create a culture of integrity that promotes reflection and discussion. Many firms introduce such a culture with a program of seminars and training in ethical reasoning. Companies such as Sun Microsystems, Boeing, United Technologies, and Johnson & Johnson have launched comprehensive ethics training programs for executives. A reporter noted, “Most corporations have long had codes of conduct and have publicized them in employee handbooks and elsewhere. But now, [one expert] said, they are ‘looking to create ethical athletes out of their managers’ who are capable of navigating the gray areas.”18 Part of leadership should be to make ethical issues a legitimate point of discussion in both informal and formal ways within the working group.
A leader can stimulate reflection through informal discussion of ethical developments (e.g., indictments, convictions, civil lawsuits) in the industry or profession or of ethical issues that the team may be facing. This kind of discussion (without preaching) signals that it is on the leader’s mind and is a legitimate focus of discussion. One executive regularly raises issues such as these informally over lunch and morning coffee. Leaders believe ethical matters are important enough to be the focus of team discussions.
Find and Reflect on Your Dilemmas
The showstopper for many business professionals is that ethical dilemmas are not readily given to structured analysis, as one values a firm or balances the books. Nevertheless, one can harness the questions raised in the field of ethics to lend some rigor to one’s reflections. Laura Nash (1981) abstracted a list of 12 questions on which the thoughtful practitioner might reflect in grappling with an ethical dilemma:
1 Have I defined the problem correctly and accurately?
2 If I stood on the other side of the problem, how would I define it?
3 What are the origins of this dilemma?
4 To whom and what am I loyal, as a person and as a member of a firm?
5 What is my intention in making this decision?
6 How do the likely results compare with my intention?
7 Can my decision injure anyone? How?
8 Can I engage the affected parties in my decision before I decide or take action?
9 Am I confident that my decision will be valid over the long-term future?
10 If my boss, the CEO, the directors, my family, or community learned about this decision, would I have misgivings?
11 What signals (or symbols) might my decision convey, if my decision were understood correctly? If misunderstood?
12 Are there exceptions to my position, “special circumstances” under which I might make an alternative decision?
In addition to analysis, you can bring moral imagination to the reflection on ethical dilemmas. Mark Johnson defines moral imagination as “an ability to imaginatively discern various possibilities for acting within a given situation and to envision the potential help and harm that are likely to result from a given action.”19 Patricia Werhane lists four qualities necessary for moral imagination: “(1) a disengagement from an individual’s role, particular situation, or context; (2) an awareness of the kind of scheme one has adopted or that is operating in a particular kind of context; (3) a creative vision of new possibilities—fresh ways to frame experiences and new solutions to present dilemmas; and (4) an evaluation of the old context, scope or range of conceptual schemes at work, and new possibilities.”20
Act on Your Reflections
This may be the toughest step of all. The field of ethics can lend structure to one’s thinking but has less to say about the action to be taken. Confronting a problem of ethics within a team or organization, one can consider a hierarchy of responses, from questioning and coaching to “whistle blowing” (either to an internal ombudsperson or if necessary to an outside source) and, possibly, to exit from the organization.
MINI-CASE: GREENMAIL PAYMENT
