business ethics - do businesses behave ethically?

Introduction The word ethics means standards of right and wrong behaviour. Another word often used is morality. This revision note is about whether or not businesses behave in an ethical way. There is a popular image of the cruel and wicked Victorian mill owner. But in the 19th Century everybody in the UK more or less accepted the Christian code of ethical behaviour, and businesses were expected to follow. Some businesses, especially those owned by Quakers such as the Fry and Rowntree families, set very high standards indeed. The Modern Business Environment Today, things have got more complicated:1. There is no longer one agreed moral code. Most people have a weak sense of religion or none at all. So their morals must come from somewhere else. 2. There are competing religious and social moral codes, especially for multinational companies ("MNCs") operating in different parts of the world and employing people from different cultures. 3. The pursuit of profit has become a goal in its own right, and this puts pressures on people to compromise their standards, not just ethically, but in less important areas also. For example, a very rude manager might be tolerated because he (it usually is a he) makes large profits. So when good behaviour and good profits come into conflict, businesses find it difficult to resist the profits. 4. Businesses are only the people who work there; businesses dont decide anything its the people who make decisions. But businesses have group cultures with their own norms and standards. Individuals have a strong need to fit in and be accepted, so it is very difficult for any individual to stand up against attitudes and decisions they disagree with. 5. Greater wealth in the western economies means people have less tolerance for ethically dubious behaviour. We are no longer so desperate for growth and employment at any cost. People are also better educated and better informed. People are less deferential ie they are less accepting of what people in authority say. So there are higher expectations of how businesses should behave. 6. Businesses have to sell to consumers and employ workers who have their own standards and opinions. They are not going to buy from or work for a business they disapprove of. So there is a competitive pressure for better behaviour from businesses. 7. Many managers and owners have ambitions of social acceptance and recognition eg knighthoods, and so are not going to get caught behaving unethically. 8. Modern technology creates ethical dilemmas which never existed until quite recently. Medical products, and gene technologies, are a good example of this. Should parents be allowed to alter the genes of their unborn children, and should businesses sell the products to do this? You can see that these factors all pull in different directions. It has all got a lot more difficult and a lot more complicated. Some businesses set up special committees to discuss and decide ethical problems, and they may even employ a professional philosopher to help them.

The Growth of Corporate Responsibility Corporate responsibility is the phrase used to describe businesses which have decide to behave in a deliberately socially responsible manner. Obeying the strict letter of the law doesnt always solve these problems, although it does keep the business out of trouble with the authorities. Laws are general, and dont always act as a good guide to decisions in any one individual case. Laws have to interpreted by courts, and it is not always obvious what is illegal until the case goes to court. Laws dont cover all the areas that people consider important in ethical behaviour. For example, it may be perfectly legal to dump waste at sea, but many people would consider this to be unacceptable behaviour. In many cases different ethical principles pull in opposite directions. For example, closing a polluting factory may be good for the environment, but it is not going to help the local community who need the jobs and the incomes. What should the business do? Whatever it does, it is going to upset one group of people or another, because society at large cannot clearly answer these questions, and there is no clear guide to the business how to behave. Businesses which get caught acting unethically suffer much more damage than used to be the case. The press is much more active in investigating and publicising such cases. The population at large takes more interest, has their own views, and is more willing to let their displeasure be known. Pressure groups opposed to some activities of business are much better organised, better financed and better able to attack such businesses. Huntingdon Life Sciences has been an extreme example, because the Animal Liberation Movement is prepared to use extreme (and ethically dubious) methods. Not only have employees been threatened, but the employees of shareholders and banks, so the business nearly went bust through lack of finance. This shows that the opponents of business understand business and its weak points very well. The internet now allows very rapid sharing of information across the world (and MNCs operate across the world). There are many web sites devoted to publicising and discussing the behaviour of businesses. Whistle-blowing is more acceptable, and even protected by law in some countries, so access to secret information is now better. Increasing Consumer Activism Consumer campaigns can be very effective. If enough consumers stop buying from a business revenues will fall until the business is forced to change or go bust. Managers dont like the negative publicity, and are sometimes embarrassed by their own decisions anyway; they know they are dubious decisions. Suppliers may want to switch away from such a business because there is guilt by association. In extremes there may be an investors strike where large numbers of people refuse to buy the shares of such a business and the business cannot raise finance. A large number of US pension funds (especially in the public sector) used to refuse to invest in US businesses involved in apartheid S Africa. Businesses may also have trouble recruiting enough good employees. Benefits of Ethical Behaviour The main benefits for a business of behaving ethically are: 1. Avoidance of expensive and embarrassing 2. Better image with consumers and 3. Better 4. Better employee motivation because employees are proud of their jobs. PR better disasters. sales. recruitment.

Effects of Ethical Behaviour 1. Increased costs as businesses try to do what is expected eg not pay bottom wages, or dump pollution cheaply at sea. 2. Conflict between profit and ethical standards. 3. Business practice and organisational culture will have to be changed. 4. Changes in relations with suppliers. This may mean passing the same standards down the supply chain, and severing relations with suppliers not prepared to meet the same standards. Alternative suppliers may be more expensive. For example, the export of Brazilian mahogany is illegal for reasons of conservation, but it is very difficult (and expensive) to buy mahogany that is absolutely guaranteed to come from an officially recognised sustainable source. Should Businesses Be Expected to Behave Ethically? One argument is that businesses are products of the society in which they operate, in which they sell their products, and in which they hire their employees. So businesses should be expected to reflect the ethical standards of the surrounding society. One problem with this view is that society doesnt always have clear ethical standards to which businesses can stick. For example, some people care passionately about animal experiments, and argue it is deeply unethical, whereas many other people say such experiments are justified if real people benefit medically from the research. What is a business supposed to do? The opposite argument is that business are supposed to make a profit for their owners, to create jobs for employees, and to create wealth for society as a whole. Anything else is at best an irrelevance and at worst simply gets in the way of profitable business. See What's Wrong with Ethical Corporate Behaviour for a counter-argument. The middle argument is that businesses in the real world (or most of them, at least) would like to do both, if possible. But there will always be conflicts. What then happens? Does the business stick with the ethical behaviour? Usually the business will go for the profits and it is this which upsets many people, although perhaps people sometimes expect too much and havent really thought through the consequences of their own opinions. Are Businesses Behaving More Ethically? Research suggests middle and junior managers care quite a lot about ethical behaviour, but that senior managers still care mainly about profit. To the extent that it is senior managers that make the decisions, then little has changed, but middle managers can gradually shift the climate of opinion in a business. Well-publicised cases such as Shell and the Brent Spar suggest businesses have become more sensitive to public opinion about ethical behaviour and have begun to behave more ethically (as opposed to just saying that they do). Cynics argue this is not because of a change of heart, but merely yet another changed response to changed market conditions in the eternal pursuit of profit.

Ethics in the field of hiring, staffing and recruitment is based on a combination of things and depends on who is actually involved in the hiring process. Certainly the job searcher, hiring manager and recruiter are just three possible people involved in a hiring decision. As a recruiter, I try my best to gauge the truthfulness of comments by both job searchers and hiring managers and they presumably are gauging my truthfulness as well. Commonly, job searchers often lie about various aspects of their resume ie. their salary, why they left their last job, their job responsibilities, their educational achievements, etc. Hiring managers might lie about why they are looking to hire a new person ie. they might lie about why the previous person left the job they are trying to fill (if the last person who held the job was fired for something embarrassing like having an office affair or something like that, do you think the hiring manager will tell you the truth about why the person was fired? Me neither). Similarly a hiring manager probably won't tell you that the previous person quit the job because they were bored or because they thought their manager was a jerk either. A recruiter needs to find the truth and often needs to read between the lines of comments that are made to them by either the job searcher or the hiring manger. Similarly some recruiters aren't always capable of telling the truth 100% of the time either. Recruiters often have a reputation not much better than a used car saleman - no offense to used car salesmen - and sometimes it's not difficult to see why. Whether you're a job searcher looking for a job, a hiring manager looking to fill a job, or a recruiter looking for a job searcher to fill a job, the truth tends to come out one way or the other. As a recruiter, I have a hard time working with people I can't trust and I'm usually a pretty good judge of character. I tell the truth when working with job searchers and hiring managers alike and I expect them to do the same. There are plenty of job searchers and hiring managers - and recruiters - out there and life is just too short to waste time with people who aren't trustworthy.

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Ethics are the principles or standards that guide day-to-day business activities in accordance with established corporate values. Ethical business conduct offers a wide range of organisational integrity, involving strategy, business goals, policies and activities. Among ethical values are trust, respect, honesty, responsibility and the overall pursuit of perfection.

Code of ethics for employers

Treat all jobseekers equally No discrimination based on race, origin, religious or political views, gender, age or sexual orientation Do not request Jobseekers to include their photos in the resume Rely only on relevant and job-related information when making hiring decisions

Code of ethics for jobseekers

Ensure Resume accuracy Accept and expect employment history verification Assume personal responsibility for publishing resume, pictures and other.

Mondialhotelier.com, as a company and professional website, aims for high ethical standards, and pledges to operate fairly and ethically. It will protect equally the rights of its clients and its own rights, and appreciate the importance of its customers, staff, and business associates. Be reminded that mondialhotelier.com serves solely as a tool of contact between prospective employers and jobseekers. As such, mondialhotelier.com, its entire staff and company representatives are to be deemed free of any liability resulting thereof. Employers and Jobseekers alike must be in full compliance with the laws and policies pertaining to their respective countries. In order to achieve the above goals, mondialhotelier.com has set the following principles of business ethics:

Treat all clients and business associates fairly and honestly. Protect the interest of all customers. Be politically and religiously impartial. Operate on the basis of fair competition

A definition of ethics refers to accepted principles, judgements or notions of what is right or wrong, moral or immoral (Larimer, 2004). Furthermore, professional ethics are standards of conduct expected of members of a particular profession. It is therefore crucial that the professional involved in the selection process is cognisant of the ethics governing the scope of practice around assessing people. These ethical considerations are key, as they stand to protect the professional, but more importantly, the individual participating in the selection process. ETHICAL CONSIDERATIONS: DECISION-MAKING AND EMPLOYMENT Recruitment and selection is an area of decision-making that requires thorough attention, accompanied by best practice guidelines to ensure that risks of corruption and unfair practices are minimised. Fortunately, recruitment and selection decision-makers have a wide range of material to guide their decision-making. Company Policy Company policy refers to guidelines, circulars, memoranda, policies and procedures published by the relevant organisation and should be freely available on the Intranet of the organisation. Best Practice Guidelines in Recruitment and Selection Best practice can be viewed as a well defined procedure, technique, method, process, activity, incentive or reward that is known to produce near optimum results. It is usually regarded as more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance. It also focuses on delivering the best results with the least amount of effort, by applying procedures that have proven themselves over time. A specific best practice guideline is generally applicable to a specific condition or circumstance and can be modified for similar circumstances. Best Practice can transform or mature as the industry discovers new developments. Key Set of Values According the Independent Commission Against Corruption (www.icac.nsw.gov.au, 2002) the following are viewed as key values that apply to Recruitment and Selection: Impartiality: all stages of the recruitment process should be impartial and objective in its execution Accountability: all stakeholders in the recruitment process should be accountable for all their decisions and ensure proper record keeping to support such decisions Competition: the pool of potential candidates must be maximised to the extent that it is practicable and appropriate Openness: factors impacting on recruitment and selection must be clear to all stakeholders involved, and the decision-making processes should be transparent, while maintaining confidentiality with regards to the

candidate

Integrity: recruitment and selection practices must be carried out in accordance with relevant guidelines, codes or rules The following case studies illustrate some of the key values in the context of various common areas of complaint in recruitment and selection: Case Study 1: Maximising The Field (www.icac.nsw.gov.au, 2002)

Remarks: Joe has been acting as the IT manager for 18 months when it was decided to advertise the job. His Director prepared the advertisement without specifying any recruitment for qualifications or extensive experience in information technology, which had previously been part of the selection criteria. The Director decided to advertise the job internally. Joe was the sole applicant and was appointed to the position permanently without an interview. o Receiving one application does not mean that is necessarily the best person for the job but could indicate that the job has not been advertised widely enough to maximise the potential field of applicants. o Perceptions of favouritism may result if the job that requires technical skill, tertiary qualifications or industry knowledge is advertised without requiring such competencies. It may appear that the Director deliberately removed such selection criteria that appeared previously, but may have precluded Joe from getting the job. What can be done instead? Acknowledge the importance of maximising the pool of applicants Specifying the qualities sought from applicants, in addition to specific knowledge required, may broaden the field e.g. instead of having knowledge of a specific act, the candidate can show he/she has the ability to interpret legislation. Ensure that potential candidates are not discouraged from applying for a job for reasons other than the content of the job advertisement; for example: advertisements placed in journals to which few people have access or managers making statements regarding the competitiveness or lack of competitiveness of applicants.

ETHICAL CONSIDERATIONS: A MODEL OF ETHICS FOR THE EMPLOYMENT PROCESS Ethical Model: Recruitment & Selection Van der Westhuizen (in Brand, 2008, p.208) states that there is an increase in appreciation for ethics management and the positive economic impact it has on the performance of organisations.

Phase 1: During phase one, a job analysis is conducted to compile a job description and job specification. The advertisement is then compiled based on criteria specified in the job description. It is essential that the method of advertising does not lead to discrimination or exclusion of applicants. When considering initial applicants, they should be compared to the minimum criteria in the advertisement. Eliminations are then done according to the guidelines in the company recruitment and selection policy and procedures.

Phase 2: During phase two, applications are acknowledged by sending out a letter to all the applicants. Applications are screened based on criteria from the advertisement making use of the same decision criteria for all the applications. Thereafter, a regret letter is sent to applicants that did not pass the initial screening. Phase 3: Phase three includes conducting interviews of all applicants that meet the criteria. The interview should be asked the same questions of all applicants and should exclude anything discriminatory. The assessments are then conducted by using instruments that are valid and reliable. Final assessment scores and information from the interview are integrated for the applicants. Next, final interviews are conducted with short-listed applicants and an offer is made to the successful applicant. It is essential that all documentation relating to the recruitment and selection process is completed accurately. (Ethical model adapted from H.E. Brand (2008) Journal of Contemporary Management, Volume 5, 205-222)

ETHICAL CONSIDERATIONS: THE USE OF PSYCHOMETRIC ASSESSMENTS The Health Professions Council of South Africa regulates the health professions in the Republic of South Africa with regard to registration, education and training, professional conduct and ethical behaviour. Below are some ethical considerations pertaining to psychometric assessments from their ethical guidelines document, Form 94. When making use of psychometric assessments, it is important that they are seen to be one part of the selection process and are not solely relied on to make decisions regarding the

employment of an individual. The psychometric assessments should predict success in the work situation as accurately as possible. Thus it is critical that the professional conducting the assessments has knowledge and understanding of the psychological instruments with which they work. The psychometric assessments should be reliable and valid, and free from bias or discrimination against any group of people. According to the Employment Equity Act No. 55 of 1998, psychometric testing and other similar assessments of an employee are prohibited unless the test or assessment being used: (a) has been scientifically shown to be valid and reliable; (b) can be applied fairly to employees; and (c) is not biased against any employee or group. (www.labour.gov.za) The assessment process should be standardised and consistent to ensure that each candidate being assessed go through exactly the same process. The professional conducting the assessments should do so within the context of a professional relationship that is transparent. Informed consent must be obtained from the individual undertaking the assessment, informing them of the purpose of the assessments and how the results will be used. The confidentiality in terms of who will see the results should be clearly explained to the candidate. It is the responsibility of the professional to take the necessary steps to ensure that the results of the assessment are not misused by others in any way. This would include refraining from releasing the raw test results to any persons other than a qualified professional. It is essential that the individual or client organisation to whom the results are released, understands the ethical implications of how they should make use of the results. The interpretation of results should include additional information that has any bearing on the overall results pertaining to selection such as situational factors. When communicating the results of the assessment to the client, the professional should ensure that this is done in such a manner that the individual receiving the results fully understands those results. (Health Professions Council of South Africa (2010). Form 94.)

REFERENCES Larimer, L.V. (2004) Ethical Virtuosity: Seven Steps to Help You Discover and Do the Right thing at the Right Time. Massachusetts, HRD Press, Inc. Department: Labour, Republic of South Africa. www.labour.gov.za/legislation/acts/employmentequity/employment-equity-act. Health Professions Council of South Africa (2010). The Professional Board for Psychology. Form 94. www.icac.nsw.gov.au. (2002). Recruitment and Selection: Navigating the best course of action. A Corruption resistance resource: guideline, Independent Commission Against Corruption, Sydney NSW.

Ethics in staff recruitment

Introduction Most organisations recognise the need to adopt a formal and standardised process when recruiting staff, though some still prefer informal methods, and this will typically include preparing formal job descriptions and person specifications, advertising, interviewing and taking up references. This briefing note is not intended to prescribe the process by which new members of staff are recruited, though that is important, but rather to explore some of the ethical issues that surround the process. Increasingly organisations no only have a recruitment process but also a code of practice which they expect to be followed by everyone involved in the process. Recruitment policy Ideally your organisation will adopt a formal recruitment policy which reflects the organisations values. An example, which you may wish to amend to use in your own organisation, is shown in the box. Our staff recruitment policy reflects our values of fast, flexible, professional, respectful and accountable. We seek to appoint staff with appropriate knowledge, competence and attitude. Equality of opportunity is important and our recruitment and selection procedures have been designed to provide ways to assess and appoint the most capable and effective staff while ensuring that all individuals are treated with fairness and sensitivity. It is our policy to recruit the most appropriate person for each vacancy. Selection is ultimately a subjective process, but a systematic approach will help to ensure that decisions are soundly based, consistent, defensible and efficient.

Responsibilities Managing the process A complete process will encompass the following: One person will take responsibility for managing the entire process, though of course others may be involved. That person will however ensure that all involved are aware of their responsibilities and will ensure that all the requirements are observed. If necessary, the responsible person will provide briefing or training to others involved. Preparing a job description and a person specification which are clear, comprehensive and concise Writing an advertisement designed to attract people who meet the person specification. Establishing a panel, if appropriate, to select the new employee. Ideally, interviews should be undertaken by a panel of at least two people. Smaller panels are often more effective than large panels. The panel members should be able to assess candidates capabilities against the identified criteria. If there is a panel, one member should be appointed as chairman. Agreeing the format for the selection process including, for example, whether to use standardised application forms or whether simply to ask for CVs, whether to ask for a covering letter and what it should cover, the use of tests, whether to use a scoring matrix, the length of the interview etc. Depending on the number of candidates, it may be necessary to develop a long list for a telephone interview, or some other form of pre-selection. Selecting short listed candidates for interview (with other panel members, if

appropriate) according to whether they possess the requirements identified in the person specification for the vacant post. No other criteria may be used. It is unfair to ask too many candidates to interview, so limit the short list to four or five. Confirming an interview date, location and booking rooms. Be clear to candidates in advance about your policy on paying expenses to attend an interview. Interviews Chairmen of interview panels are responsible for ensuring that they have received appropriate information and training in recruitment and selection including knowledge of relevant policies. The interview process is intended to give the panel an opportunity to assess the relative merits of the candidates measured against the job description and person specification to establish which candidate is most suitable for the job. So, interviews must be conducted in a fair and equitable way. Panel members should take time, together, to prepare questions in advance, designed to test whether candidates meet the person specification and to ensure that every candidate is not only asked the same questions but given every opportunity to give a good account of themselves. Panel members should take notes during each interview to evidence their decision. When the selection process is complete, the next step is to consider in turn whether each candidate is appointable. If more than one is appointable, the appointable candidates should be ranked. If the top ranked candidate subsequently turns down the offer, it is then possible to work through the list of appointable candidates. Confidentiality At the end of the interview process, panel members should ensure that all their paperwork is given to the Chairman. They should treat all information gained during the entire selection process as confidential. In particular, they should not divulge who has been invited to interview or divulge any information that they learn about candidates during the selection process to any third party without the permission of the candidate. No records of any candidate are used for any purpose other than recruitment without the permission of the candidate. It is normal to retain files for a period, typically six to 12 months, in case of queries related to the process and then to destroy them. Checking the facts Before confirming any offer of employment, it is usual to take up references from at least two, and preferably three, referees which should include the most recent employer and ideally one other employer. Ideally, references should be taken up by phone and effort should be made to verify the authenticity of the referee. As with the interview, there should be a list of standard questions. References should ideally all be taken up by the same person. If qualifications are important, then candidates should be asked to provide evidence, such as degree certificates, to substantiate all claims in their CV. For some jobs, medical clearance may all be required. Appointment and feedback When you have satisfied yourself that all requirements have been fulfilled, then you are in a position to advise the candidates of the outcome of the selection process A member of the panel should be designated to give feedback to candidates after the selection process if they request it.

ETHICS OF RECRUITING AND SELECTION

Executives are often surprised to discover how many ethical dimensions exist in recruiting, probably because selection is typically viewed as a practical, rather than philosophical, decision-support system. Our experience has demonstrated that personal and corporate ethics influence not only who is selected, but how jobs are defined and who becomes a candidate. In the pages that follow, we will explore the implications of those (often subtle) ethical issues that impact every employment decision. We will highlight our belief that there is a moral imperative attached to the recruitment and selection process which can be stated as arriving at a decision which -- within the constraints of time, economics and the law -places the future of the candidate and that of the employer in the least possible jeopardy. It is epitomized by choosing a candidate who will be challenged while succeeding and whcontributes to the organization's goal attainment by adding uniquely to its fabric of talents. Making an ethical personnel selection involves gathering and carefully analyzing all relevant data so that the decision is wisely drawn, balancing the short and long-term benefits -- as well as the liabilities -- which could accrue to the organization and the individual. To achieve such an optimal result requires thoughtful vigilance throughout the planning, sourcing, interviewing and referencing process.

INHERENT ETHICAL PROBLEMS

A variety of ethical dilemmas are inherent in every recruitment or selection decision. Others are unique to the relationship between an executive recruiter and his or her client. We will explore these issues with the belief that striving to act in the most ethical manner will best serve the organization and the individual and will result in sound management decisions as a natural by-product. The first section discusses those ethical issues which affect all recruiting and selection situations -- without regard to whether candidates are internally or externally generated. The second section will evaluate the ethics of recruiter/client relationships. The Starting Point Ethical behavior begins with the definition of position requirements. If it is unethical to place someone in a role where they will fail, thereby harming their career or jeopardizthe results of the organization, failing to adequately define the job and its requirements can be a breach of ethical behavior. If the requirements for success and the expectations for performance have been inadequately analyzed, the chances for an improper selection decision and moral injustice are heightened. This reinforces the practical concern recruiters have for thorough review of position requirements, credential parameters, organizational climate and its effect on the participants.

From a moral perspective, defining relevant experience is critical. Unnecessarily stringent requirements -- which exclude otherwise qualified individuals -- are clearly as defective on an ethical basis as those that are too broad or unspecific. Such unrealistic experience requirements were responsible for much of the federal legislation that now requires cumbersome statistical reporting of hiring practices. Candidate Generation Regardless of the method used to generate candidates -- through advertising, direct sourcing, or other means -- ethical boundaries clearly exist, particularly in how the organization and position are presented to the prospect. Any misrepresentation of the scope, difficulty, reward structure or other key elements is unfair and will tend to protract the recruiting process. Candidates will withdraw when they sense an untruth, or become turnover statistics if the misrepresentations become known after employment. If an employer is using the direct sourcing process, there are additional ethical concerns involving misrepresentation. First among these is the potential for the individual making the sourcing call to misrepresent him or her self in an effort to gather data that would otherwise be withheld for competitive purposes. Posing as a member of the press, a directory publisher, or any comparable ruse is generally not necessary to gather needed data and, though perhaps a benign practice, certainly casts a cloud over the general ethical behavior of a firm employing such methods. Another area of concern is the potential elimination of prospects due to age, sex, race or other prejudicial biases of the person doing the sourcing. Interviewing There are critical ethical considerations attached to the interviewing process as well. By far, the most significant breach of trust between the professional interviewer and the hiring official is not doing the interviewing job well. Failure to pursue all relevant aspects of interview investigation can result in placing a candidate in a role in which he or she will not succeed. This violates the primary ethical consideration of the employment process -protecting the individual and the organization from predictable failure. All dimensions of a candidates skills, abilities, credentials and experience need to be carefully explored through appropriate lines of questioning in a setting conducive to a free exchange of information. Failure to allow adequate time for an interview can do harm to both parties if an unqualified individual is placed in a role beyond his or her ability. Another problem with an inappropriately structured or overly abbreviated interview is that it may not allow a candidate adequate opportunity to demonstrate his or her qualifications for the position and unfairly eliminate them from consideration. Once a conclusive opinion has been formed about a candidate's capabilities, an ethical position will communicate both strengths and weaknesses to the hiring official. To recommend an apparently qualified candidate whom the interviewer believes incapable of

performing in the role for whatever purposes -- be they political or formed from expediency -- is a gross a breach of ethical behavior. Another purpose of the interview (in addition to assessing the candidate's capabilities) is to share information regarding the position and its context with the candidate. In the same fashion that it is unethical to gloss over the shortcomings of the candidate in discussing a recommendation of that candidate, it is not right to disguise the shortcomings of a position or the department, division or company in which it is situated. An appropriate match of challenge and capability is achieved when the candidate and the employer are fully knowledgeable of each other's realities. Sharing of compensation information also contains an ethical dimension. Where a pay range exists, it is acceptable to state the range or that part of the range that is the target at the time of employment. Using only the top end of the range as a method of luring candidates (when the offer may be less than the top of the range) is a misleading and unethical practice. So, too, is exaggerating the top end earnings potential. Finally, a word about stress interviews and related tactics: An interview -- particularly one which will determine whether an individual will be employed or promoted -- is perhaps one of the most inherently stressful situations people experience in their work-related lives. From this perspective, it might be said that there's no such thing as a non-stress interview. The point, however, is that creating a situation which artificially heightens the tension level serves only to impede the flow of data and is probably unfair to a candidate. While it is true that some jobs require the ability to work under pressure, those abilities can be more accurately verified through referencing than they can be estimated from an unnecessarily stressful interview. Referencing The most frequently committed sin of omission in recruiting is the failure to do references. Given the vast amounts of first-hand data that can be gathered through referencing, it is unfair to both candidate and employer not to take full advantage of the information that exists. In conducting references with the people for whom and with whom the candidate has worked, the veracity of interview data can be confirmed and professional credentials verified. Out of fairness to all parties, it is important that references be representative of all the candidate's relationships and should not be restricted only to those people suggested by the candidate, then a "halo effect" will in all probability occur. In those situations where the candidate is currently employed, permission must be obtained in checking all references so that the candidate shares in the risk decision process. Where a candidate is not presently employed, specific permission need not be obtained for each person contacted. However, it is a professional courtesy to inform the candidate that a variety of people will be called.

Candidates whose educational, professional or experiential credentials are misrepresented should be withdrawn from consideration. The second significant abuse of the reference process relates to negative information uncovered and not communicated to the decision maker. The temptation is great -- once a recruiting effort has gone through all the preliminary stages -- to rationalize "not complicating" the final decision by excluding negative reference data. Shielding such data is a clear breach of ethical recruiting behavior. Mature managers recognize that every candidate has relative strengths and weaknesses and that both will play a role in how the person performs and how they need to be managed. Having all the data available will yield superior decisions. Perhaps the most difficult moral dilemma arising from the referencing process is hearsay regarding health limitations, alcoholism, drug use, romancing on the payroll, expense account padding, and so on. Equally as difficult are those situations where extraordinary office politics have more to do with the perceptions of a candidates behavior than actual skills and contributions. These are areas that will test the skill of the individual conducting the references and will require multiple conversations and in-depth questioning to get beyond generalizations and search for observations of actual data. Seeing an otherwise good candidate damned by hearsay is a very unfortunate situation but, where the allusions are frequent and apparently supported with factual data, the information must be communicated. If the comments appear to be spurious, a judgment may be reached to withhold the information. Confronting a candidate may lead to a resolution of these issues, however, it may also precipitate a lawsuit if handled incorrectly. Nowhere in the employment process do ethics and financial liability become quite so intertwined.

CLIENT RELATIONS
There is a second set of ethical considerations that should regulate the relationship of third party recruiting firms and their clients. The issues discussed previously can be applied equally to internal recruiting, while those that follow relate primarily to an employer using an outside recruiter. A strong case can be made that ethical recruiting means doing the job at the highest of professional standards. As a result, clients should ascertain the ethical position of their executive recruiting support organizations. Since the tone of a business relationship is normally set by the behaviors exhibited in the selling encounter, the following sections will explore both the ethics of selling executive recruiting services and the ethics that should control the client relationship once a firm has been retained. Ethics of Selling The primary goal in evaluating an executive recruiter is determining the recruiter's ability to carry out the client assignment. A significant part of this decision is based upon the

clients perception of the recruiters professionalism. A second major consideration relates to the nature of the other clients the recruiter's firm serves. Recruiter Credentials- The actual experience of the firm and the individual recruiter should be fully disclosed so that the client can evaluate their competence to do the work. Any misrepresentation of recruiter credentials, market or industry experience or the technical background of the recruiter is a significant breach of ethics. Such a deceit may be an indication that engagement performance might be similarly flawed under ethical analysis. Another misrepresentation can occur at the point of sale when a senior member of the firm is present at the sales encounter and, without the client's prior knowledge, delegates the work to a junior member of the staff. It is later learned that the senior practitioner never intended to dedicate personal time to the conduct of the search. This situation is clearly misleading, unethical -- and maddening -- to clients. Firm Off-Limits Constraints- Hiding off-limits blockages is perhaps the most significant violation of ethics which exists in selling executive recruitment. This relates to a basic executive search tenet wherein each firm maintains an off-limits status for a specified period of time (normally two to three years) for the companies that retain the firm. Simply stated, this means the recruiting firm will not solicit candidates from client organizations for a period of years following the conclusion of the last engagement for that client. This has dramatic impact in those recruitment situations where candidates can only be obtained from a limited number of competing organizations. When a recruiting firm has a significant number of those companies as its clients, it will be unable to generate a complete field of candidates because of its off-limits blockages. It is incumbent on recruiters to fully disclose their relevant client list to a potential client -- and it has become necessary for the client to demand such data so that they may make a sound decision to employ a recruiter. A significant controversy has precipitated due to some executive search firms pushing for a re-definition of the off-limits rule. Traditional policy applies to the total client organization and its legally related operations. Therefore, if a recruiting firm were to work for a subsidiary of a company, the parent company would also be protected from use as a source of candidates for other clients. Similarly, if the recruiter worked for the parent company, all of its divisions and subsidiaries would be held as off-limits. Several of the large recruiting firms are attempting to move the industry standard to a subcomponent level of definition such that -- if there is no business relationship between the parent company and the recruiter, but there is a business relationship within one of the

subsidiaries -- the recruiting firm can feel justified in actively soliciting candidates from the parent company for its other clients. This has become an issue because larger recruiters are running low on target organizations as their client lists have grown. Some are also lowering the off-limits timetable to one year instead of two or three. Clients tend to be resisting the new definition, believing it to be unethical -- while the recruiting firms point out that the client's other subsidiaries or divisions employ recruiters other than themselves. They feel no particular economic reason to hold an entire worldwide organization as off-limits if they deal with only one business unit. This may be an ethical dispute or it may simply be a matter of major clients trying to protect their executives from accessing the marketplace through some recruiters and the large recruiters trying to provide a reasonable level of service to their other clients. Whether the issue is moral or practical, it needs to be explored at the time a recruiter is selected. Refusing Assignments- The recruiter also has ethical responsibilities when accepting a client assignment. Three situations exist in which an assignment should be refused. The first of these would be where the client is asking that the recruiter engage in illegal activity such as using the search process as a vehicle for conduct of industrial espionage into technical areas or government contracts. Other illegal requests would be to violate federal age discrimination or related employment legislation. Clearly, such an assignment must be refused. A second circumstance where work should not be accepted occurs when the recruiter cannot allocate adequate staff time for assignment completion. Virtually every search has a critical time dimension. This occurs because the opening was created through an unexpected resignation, a reorganization, health or disability occurrence or other situation which mandates that action commence immediately. Accepting an assignment when appropriate turnaround cannot be reasonably attained is unethical on the recruiters part.

The third situation occurs when the recruiter is concerned that the credentials and experience being demanded by the client are not achievable in the marketplace or are not achievable at the intended compensation level. The ethical time to address that problem is at the time of sale. To accept the assignment and "educate the client later" is unfair to the client, who will endure a process which will be unduly long and frustrating -- and certainly unfair to the candidates who will invest time in a process which will be equally frustrating and without reward for them. Fees- Finally, a word about fees and ethics. A debate is currently raging in the marketplace concerning "appropriate" fees for executive search services. This is partially caused by the realization that the fee structure does not necessarily parallel the difficulty level of an assignment. Since so many subjective variables are embedded in the process,

there is no way to adequately reduce the fee calculation to a formula related to assignment difficulty. While a number of fee structures exist, most will continue to be pegged to the candidate's income as a percentage of first year cash compensation. A second element in the current fee debate is the desire for administrative cost control on the part of client organizations. The third is, no doubt, significantly more emotional in content and attempts to rationalize the perceived pay equity of third party recruiters and corporate employees. In a free market economy, it is a vendor decision to determine what prices to charge and a buyer decision to determine what they are willing to pay. Ethics only come into play in the arena of fee discounting, where clients may be charged different rates for similar work. For example, to do a single assignment for one client at 33 1/3 percent and an identical assignment for another client for 25 percent seems clearly inequitable to the first client. An exception frequently made is the conduct of work for charitable organizations that cannot afford to buy recruiting services because of limited budgets. Performing this work at a deep discount or on a pro bono basis is perceived to be acceptable as long as it does not detract from the level of service being provided to retained clients. A more important distinction is the use of contingent fees. Contingent fees are a legitimate form of compensation for recruiting services that collect and disseminate resumes concerning interested job applicants. However, without professionally conducted interviews and references, the representation of any qualitative data about those candidates may be highly suspect and, if so, considered unethical. Because the economics of the contingent fee business tend to minimize those very things, careful research, interviewing and referencing -- which build quality into the process, running a business which charges contingent fees to some clients and non-contingent, retainer fees to others could reduce quality levels and be a disservice to the retainer clients. Ethical Behavior in On-Going Relationships Living up to the agreement achieved prior to the onset of an assignment is a moral obligation for both parties. For the recruiter, this means generating candidates of stated credentials and experience levels on a timely basis and within the limits of a recruiter's ability, producing the most qualified candidates obtainable within the target income parameters. It also means giving the client high quality service until the position is filled -not just a solid effort at the onset. In return, a client has an obligation to handle the financial aspects of the assignment in accordance with the agreement and to provide suitable, timely performance feedback to the recruiter concerning the assignment's progress. Candidate Relations- Both the recruiter and the client bear a moral responsibility to the individuals presented as candidates, most of whom will be gainfully employed and inactive in the job market at the time they become candidates. They deserve courteous, respectful treatment and fully protected confidential participation in the process until an employment offer is structured. This makes it a breach of ethical behavior for clients to check informal

references without prior approval because it jeopardizes the confidentiality of the candidate's involvement. It is clearly unfair -- and somewhat devious in any event -- to use stalking horse" candidates, "comparison" candidates, or to otherwise mislead people into thinking they are serious contenders for a position in which they will never be employed. This is akin to the practice of "floating resumes," (introducing candidates when another firm has been retained) an unethical practice sometimes observed in the recruiting industry. Presenting the same individual simultaneously to more than one client is another practice that creates an ethical dilemma. When two clients decide to employ the same candidate, it guarantees that one client will be disappointed and the recruiter becomes the culprit of the disappointment. Recruiters who use candidates in a "bait and switch" scenario are equally culpable. Sourcing Issues- Two aspects of the sourcing process deserve mention. First, there appears to be nothing unethical about conducting sourcing calls at client organizations. This is true as long as it is made abundantly clear to those being soured that they are not being solicited personally as candidates and are being asked only for their advice about others in their function or industry. Another current ethical issue in the recruiting industry is who "owns" the research documentation developed during sourcing. Most recruiters and some clients contend that the recruiters who gather the data "own" it, while some company executives (who pay the recruiter to do the research) feel they should "own" the information accumulated during the search process. The critical ethical dimension is the implicit trust granted to a third party recruiter that allows the source to share more information than they would with a direct competitor. Detailed information about the industry, the people for whom they work and the people who work for them is volunteered under the belief that information is going to be held as confidential from everyone save the recruiter. To share this information is a breach of the trust established between the recruiter and his or her contact. Therefore, while there seems to be no other overwhelming reason not to pass detailed research information to the client, this ethical consideration mandates that the recruiter maintain control of the research documentation, sharing only those portions not granted in confidence.

SUMMARY
Honesty makes relationships strong. Most potential breaches of ethics arc essentially shortcuts to bad decisions -- decisions which can be ill afforded when analyzing the impact a senior executive has within an organization. Dealing ethically with candidates and clients at each step of the recruiting process focuses the recruiter on highly professional conduct, which in turn, enhances the clients selection decision as well as the future contributions of the person selected.

The relation of ethics and recruiting performance has been recognized by each of the professional recruiting organizations that have set forth codes of ethics. These include the Association of Executive Search Consultants and the International Association of Corporate and Professional Recruiters. Our firms code of ethics, which follows, encompasses all of these ethical positions and extends beyond the organizations codes in many qualitative areas. We do this in the belief that our clients will be best served by our pursuit of the most stringent and professional ethical standards.

CODE OF PROFESSIONAL AND ETHICAL CONDUCT

We will present our individual and firm qualifications openly, clearly and without embellishment, to all those with whom we intend to do business. We will communicate to every client all recruiting blockages that bear any relevance to the work they intend to have us perform. We will accept only work that can be undertaken immediately, or explain clearly when such new work can be moved into active fulfillment. We will set clear definitions of exactly how our off-limits policy applies to the client organization, its affiliates, subsidiaries and parent structure. We will clearly designate which consultant will have primary responsibility for the conduct of the assignment. That person will be present at the meeting where the assignment is defined and commissioned and will attend every client meeting throughout the course of the assignment. We will undertake only assignments where, in our professional judgment, the recruitment can be concluded within the definitions and compensation range originally proposed by the client. We will undertake an assignment only after holding a personal meeting with the client and documenting in writing the engagement strategy and objectives for the client's review and modification. We will accept only retainer fee engagements and will charge all of our clients standard fees. An exception may be made for pro bono work conducted for a charitable cause and would be undertaken only in those circumstances where performing such services would not jeopardize the fulfillment of our retained work. We will research the client organization and the specific situation thoroughly and communicate the facts of the client situation accurately to the candidates. We will conduct thorough and vigorous telephone research campaigns and will never misrepresent ourselves in devious ways to obtain information, nor will we

misrepresent a client situation or betray any trust or confidence granted during the research process. We will recommend any qualified individual as an active candidate regardless of their gender, age, ethnic heritage, religious or racial background. We will disclose any business or personal relationship with a candidate prior to their presentation so the client can review the objectivity of the referral. We will conduct thorough, face-to-face interviews with every candidate presented to a client in a carefully planned meeting where all relevant content and process variables known to be important to the client will be explored in detail. We will prepare a dossier for each candidate that outlines the stated achievements of the candidate; details his or her personal background; and assesses the candidacy by highlighting strengths and shortcomings. In no case will there be known overstatements or omissions, which might mislead the client in their subsequent employment decision. We will not allow a candidate to be presented if, in our professional view, that individual cannot be successful in the intended role. We will present a candidate to only one client for consideration and not refer that candidate's credentials to another client unless and until the first client removes the candidate from consideration. We will conduct thorough reference evaluations on every candidate who is to receive an offer of employment. They will be analyzed and presented to the client, focusing on all relevant aspects of the individual and his or her past performance as an indication of ability to succeed in the new role. All relevant data will be discussed with the client and if the data so suggests, a recommendation to withdraw the candidate from consideration will be made. We will resign from any account where we believe a breach of ethics has precipitated by the client in terms of their obligations to deal fairly with candidates and with us in both interactive and financial roles.