The recruiter faces an ethical dilemma: [1] The recruiter realizes the search process for a new corporate president is flawed and unlikely to find the best candidates, but [2] the recruiter's firm stands to earn over $750,000 if a candidate is hired, and [3] the recruiter's supervisor advises not offending the client. However, [3] the recruiter believes informing the board of the flawed process is the right course of action.

1. Tony Roark, PhD
Geoffrey M. Baker, JD

2. Presented by:
Tony Roark
Associate Professor of Philosophy
Associate Dean of Arts and Sciences, Boise State University

3. ‘Business ethics’ =df the standards of behavior
(whether strictly codified or merely implicit)
applicable to the members of a business entity, where
the propriety of the behavior in question is not
measured in terms of productivity, profit generation,
or procedural convention.

4.  The intellectual answer:
Because (obviously!) one ought to conduct himself in an
ethically proper way.
 The practical answer:
Because improper conduct can have profoundly negative
consequences on the success of a business, whereas a
proactive, intentional commitment to business ethics
can have profoundly positive consequences.

5.  Exposure to external harm
Legal liability
Fractured relationships with other businesses
Sullied public/consumer image
 Deterioration of internal workplace environment
Decreased employee morale
Distraction from legitimate business activity
Loss of prized employees

6.  AIG
 Massey mine disaster in West Virginia
 Toyota
 BP

7. Presented by:
Geoffrey M. Baker
Vice President, General Counsel, and Chief Compliance Officer
United Heritage Financial Group

8.  News reporting generally focuses on “poor” or lacking
corporate ethics and resulting downward economic
effect
 No reporting (generally) on businesses having a strong
ethical culture
 “No news is good news!”
 A strong ethical culture has a proven
positive economic effect! How?

9.  What is it?
 “Optimizing operations to minimize environmental
impact and improve social outcomes while
maximizing performance.” © IBM, 2009
 Self-regulation that is built into a business model,
designed to produce long-term positive social and
environmental impacts, and which improves the
business’ long term economic value.

10.  Ethics is a proactive concept: doing the right thing
because you should, not because you have to.
 CSR is the proactive acceptance of responsibility for
the impact of business activities on the environment,
consumers, communities and all other members of the
“public sphere” – aka “stakeholders.”
 Promoting the public interest by encouraging
community growth and development, while also
eliminating practices that harm stakeholders
regardless of the legality of those practices.

11.  Building CSR into the corporate strategy and culture is
the key.
 CSV – “Creating Shared Value”
 Corporate success and social welfare
are interdependent:
 To be profitable, a business must have a healthy and
educated workforce, as well as sustainable resources.
 For society to thrive, profitable businesses must be
developed and supported to create income, wealth, tax
revenues, and opportunities for philanthropy.

12.  Who actively engages in CSR?
 Shell
 IBM
 McDonalds
 Patagonia
 Timberland
 Nike
 CLIF Bar
 Generally, these companies do not isolate their CSR
departments from their operating units, but rather
integrate them to assist in critical strategic decisions.

13.  Human Resources – recruitment and retention
 Risk Management – reputation protection
 Brand Differentiation – unique value independent
from price; “ethical consumerism”
 Governmental Oversight – reduce by taking
substantive voluntary steps

14.  IBM survey (2009):
 224 business leaders surveyed worldwide
 60% believed that CSR became more important in past
12 months
 Denmark: 2008 law mandating that 1100 largest
Danish companies include information on CSR and
SRI in annual financial reports: CSR policies,
implementation, results

15. The City of Boise’s Ethics Commission

16.  Commission was born from City’s desire to provide
ethical leadership, insight and direction for its
employees and officials.
 “Where government is based on the consent of the
governed…the proper operation of democratic
government requires that public officials and
employees be independent, impartial, and responsible
to the people, the community and the government;
that public office not be used for personal gain, and
that the public have confidence in the integrity of its
government.” Boise City Code § 1-21-01

17.  December 2004:
 In reaction to an ethics scandal resulting in criminal
charges and jail time for three City officials, the Boise
City Council and Mayor adopted a policy creating the
state’s first municipal “Ethics Commission.”
Recruitment process begins.
 February 2005:
 Five commissioners are selected from over 50 applicants.
Rules of procedure and forms created. Commission
releases 7 Advisory Opinions in 2005.

18.  The Commission allows employees and officials of the
City to present “real world” ethical questions to an
impartial and informed board.
 The Commission brings ethics and ethical conduct
into the “everyday consciousness” of City officials and
employees.
 It does so through a process in which employees may
ask for an Advisory Opinion about their own past,
present or future conduct.
 All members of the public may file an “Inquiry” as to
whether the conduct of any city official or employee
violates the code of ethics.

19.  As of February 2010, Commission has issued over 30
“Advisory Opinions” and addressed one “Inquiry”
 All City employees actively participate in ethics
training and advised regularly on new opinions
rendered. 68 training sessions attended by over 1400
employees.
 Ethics Handbook provided to all
employees, which includes the
City’s Code of Ethics

20.  Outside business interests
 Conflicts of Interest
 Acceptance of Gifts and Discounts
 City Purchases and Contracts

21.  A police officer meets with a person who is the target of
harassment by an ex-spouse. The person does not want to
press charges, but needs the assistance in monitoring the
ex-spouse’s behavior. The officer prepares a possible action
plan, noting that there are private firms that offer threat
assessment services.
 The police officer has a private business that provides
threat assessment and monitoring services in cases of
domestic violence. He does not mention this to the person
at the time, despite knowing that she would benefit from
the service. He wishes to contact this person and provide
his services for a fee.
 Is this an ethical conflict?

22.  The Boise City Code § 1-21-03(A) prevents a city employee
from using his official position to obtain financial gain for
himself, any member of his family, or any business with
which he or a member of his household is associated.
 If the officer were to contact the victim and offer the
services of his consulting firm for a fee, it would be an
ethical violation. The officer was on an official call when he
learned of this situation. He is privy to this information
only because of his official position with the City. While
employees can use knowledge and experience gained from
their positions to start outside businesses, employees
cannot use knowledge obtained from employment to
pursue clients.

23.  If, however, the victim were to initiate contact with the
officer’s consulting firm on her own, the statute would
allow the officer to conduct the work for a fee, because
in such a situation the employee would not have used
knowledge obtained on the job to pursue clients.
 Further, if the officer were to contact the victim and
offer his consulting firm’s services for free, this section
would not come into play, because there would
be no financial gain for the employee.

24. You are a recruiter for an executive recruitment firm
that has recently been retained by one of the largest
corporations in the United States to find appropriate
candidates for the position of President of the
corporation. If the corporation hires one of the
candidates you find then your firm will receive one
third of the President’s cash compensation —— salary
and bonus, an amount in excess of $750,000. Several
weeks into the recruitment process it becomes clear to
you that the company has gone about the search in a
severely flawed way, making it highly unlikely that it
will find the kind of candidates it needs.

25. The Board of Directors, in your judgment, has allowed
the CEO to control the search. It is clear to you that he
wants someone who will be deferential towards him,
which, in your judgment, will make it extremely
difficult to attract the most highly qualified
candidates. You discuss the issue with your superior.
She says that given the intensely competitive
environment for executive search firms, it would
seriously disadvantage your firm to offend the Board of
Directors of one of America’s largest corporations. She
reminds you that the Board of Directors is responsible
for hiring the President of the Corporation.

26. A recruitment firm, she says, bears no legal liability if
a candidate it presents to a company is hired and
proves unsuccessful in his position.
What should you do in this situation, and why?
Robert Ladenson © 1998