Code of Ethics for Managers in Acquisition

Introduction
Corruption takes many forms, and can have a devastating impact on economies, and on the effectiveness of government. For that reason, it is best practice to have a code of ethics for managers who are involved in acquisitions, purchasing and contracts. Ethical lapses contribute to a wide array of issues, including waste, a decline in confidence in the institution of government, and underperformance because the wrong vendors were selected. Larezos (2008) notes that when evidence of corruption arises, governments may need to recompete contracts, projects can be delayed or go way over budget, and there can be increased cost to taxpayers as well. If chronic weak governance leaves a populace disenchanted with government, then the political fallout can be severe as well. In essence, corruption represents the trade-off between the personal gain for the government officials in question versus the overall government or economy.
Combatting corruption is a complex task, but one of the elements of this task is to develop an effective code of ethics to govern acquisitions. Managers who are involved in acquisitions would then need to adhere to this code of ethics, and their performance could be weighed against it. Yet, there is little research that has been conducted to define the elements of an effective code of ethics for managers in acquisition. This research paper will examine this topic, and seek to identify some of the key elements of an effective code of ethics that governments can implement in order to improve their acquisitions and thereby improve the variety of political, social and economic outcomes that go along with acquisitions.
Edelstein and Clegg (2016) provide some important context for the role of a code of ethics in organizations, and these lessons apply well to managers of contracts in acquisition. They note that the code of ethics “can be used to define organizational interests ostentatiously by stipulating norms of employee ethics.” They also note, however, that codes of ethics also serve an insurance function, and often serve as much to protect management as they do to guide organizational behavior. However, understanding the flaws in codes of ethics has a valuable purpose – to highlight areas of potential improvement, and strengthen future codes of ethics.
Case-Based Training
One of the challenges for a code of ethics is to tie it to the training that managers must undergo. Harkrider et al (2012) note that case-based ethics training is one of the most common forms of ethical training. In order to have effective case-based training, however, it is necessary that the training be aligned with some existing standard of ethics. The code of ethics, therefore, serves as the basis for the training. The authors note that case-based training is most effective when combined with codes of ethics. Codes of ethics on their own are often fairly short, and may be written in language that is unclear once applied to real world conditions. This is by necessity, as codes of ethics need to be written in language that is sufficiently broad so as to capture a wide variety of different scenarios. But this broadness of language can also turn into vagueness when a manager is confronted with a situation that lies outside of the boundaries of their normal experience, or what might have been documented in the code.
Ultimately, the code of ethics is a set of guidelines, and as with any set of instructions, there needs to be sufficient training on how to apply them, if best results are to be achieved. There are many different variants of ethics, even within the Western canon, much less other schools of thought, and in many cases there is significant room for interpretation. Thus, the code of ethics has to be simple enough that it can be understood when confronted with a moral dilemma, but general enough so as to be applied to situations that fall well outside the norm. It is not, after all, an ethical dilemma when there is a clear cut rule.
The fact that a code of ethics is more effective when combined with case based training rooted in that code has specific implications for the content of the code. Openness of the language used is important, but there does need to be specificity that covers the more common situations. If one is engaged in case-based training, that would be something that is illegal (like bribery), where there is no ethical ambiguity, and therefore it can be written specifically and clearly that accepting bribes is not allowed.
But there are many situations that are ambiguous even in their legality, let alone their ethics. An effective code of ethics must be able to provide guidance for such ambiguous situations, because at this point the ethical standards of the organization go well beyond the laws of the land.
Training has been shown effective for the simple reason that what is clear to some is not clear to all – a code of ethics may not be as obvious as its authors think it is. Neu, Everett & Rahaman (2015) showed that, in particular, when practice and the code differ considerably, it is important to combine the code. The training puts the managers in a position where they can role play, and ask questions, and receive clarification before they are faced with the pressure of real life situations. Such preparation, the authors note, is essential to “shaping the ethics and moral behaviors of organizational actors,” creating disciplined, ethical subjects.
Does the Code of Ethics Need a Clear Ethical Framework?
Because there are multiple schools of thought with respect to ethics – virtue ethics, deontological ethics and consequentialist ethics in Western thought, and others in other cultures – it is important that the code of ethics has a consistent approach to developing ethical parameters. An ethical dilemma arises when there is no clear cut ethically correct answer, and the person is therefore faced with a dilemma in whatever decision they are making at the time (McConnell, 2018).
It is difficult enough to resolve an ethical dilemma when there is a clear framework and guidance. Without those things, it may not be impossible to resolve one dilemma, but governments are not faced with only a single decision, and neither is a manager involved with acquisitions. Thus, in order that managers in acquisitions apply their ethical guidance consistently, the code of ethics should be written with a clear and consistent ethical underpinning. The easiest baseline is to use the laws of the land as a proxy for ethics, so that operating within the bounds of the law is the baseline level of acceptable behavior At that point, however, it is still necessary to use a consistent ethical framework throughout the code of ethics that goes beyond the law, in order that every manager is able to understand and apply the ethical standards consistently.
Content
The content of the code of ethics used by managers in acquisitions therefore needs to cover some basic ground. For example, the code should begin with clarity with respect to working within the bounds of the law. But the code should also go beyond that and specifically tackle common ethical dilemmas. For example, in some countries corruption is against the law, but is also everyday practice due to lack of legal enforcement. The content of a code of ethics for managers in acquisition needs to be clear about the bounds of acceptable behavior, in the event that the application of the law is not.
Further, the code should specify the most common situations. If bribery is a common situation, then the code should be clear about the types of gifts that can be accepted, the monetary value allowable, and other such similar guidance. The code should address any other common ethical dilemma, and therefore must incorporate the learnings of those who are experienced in the field, and can specifically identify the situations in which managers in acquisitions are most likely to face an ethical dilemma, or to have the code of ethics compromised.
Control
Rules without effective control mechanisms are not as effective as rules that come with specific control mechanisms. McCampbell and Rood (1997) undertook an important study on government procurement, and made an evaluation of enforcement mechanisms. The presence of enforcement mechanisms within the code of itself helps to clarify for managers in acquisition that there are consequences for ethical violations. Further, their presence in the code means provides other stakeholders with prescriptions for enforcement and punishment that can be applied to those who violate the code of ethics. The code itself is not only a form of organizational control in defining the bounds of acceptable behavior, but it is also a reference document for anybody either in an ethical dilemma or evaluating the actions of someone who’s faced a dilemma.
Thus, the code of conduct needs to have control built into it – specific consequences outlined for its violation, as in a code of law. The code of ethics should also outline, or at least reference, the process by which violations will be investigated. That will provide some context for managers, and again put them in the clear position of knowing where they stand.
Absence of Ambiguity
Probably the biggest problem that a code of ethics needs to avoid is that of ambiguity. The reason is simple: most ethical dilemmas arise from ambiguity and the role of the code of ethics is to remove as much ambiguity as possible in providing a reference for action, for a manager of acquisition. Thus, the code of ethics should use clear and strong language, avoiding ambiguity if it all possible. If a manager in acquisition seeks to reference the code for guidance, and finds that the code cannot unclear the muddy waters with which the manager is faced, it is less likely that the code will be referenced next time a similar dilemma arises.
Vetting
In order to write an effective code of ethics for managers in acquisition, it is necessary that the content of the code is vetted by many. First, it needs to be vetted for its high level concepts – logical consistency, ethical consistency, and using the right examples that will be able to provide guidance. Experienced acquisitions managers will also need to review the code, to ensure that it is understandable. The person or body writing the code should not assume that they are able to write the perfect code of ethics by themselves. It is important that the intended audience is able to provide feedback on the code of ethics before it is implemented. The reason is simple – if a sample of the audience struggles to understand the code, then the code needs further refinement.
The code of ethics is too important to leave its content to chance. For that matter, a legal or linguistics expert should also be involved. Terms that are clear to one person might be ambiguous to another, so in the interest of removing ambiguity – and thereby reducing the likelihood of ethical violations – it is important that language is subject to an unusually high level of scrutiny, to ensure that the clearest possible terms are used.
Culture
The code of ethics should have a clear set of objectives. These objectives should be established from the outset so that they are consistently applied. Furthermore, one of the objectives should be to create an ethical culture. Repeated studies have shown that codes of ethics, even combined with training, are less effective at governing ethical behavior than the overall culture of ethics within an organization. This makes intuitive sense – the ethical culture of the organization is governed in part by the actions of one’s peers. If a manager in acquisitions is faced with an ethical dilemma, they are as likely to turn to their peers for guidance – either directly or indirectly – as they are to turn anywhere else. Thus, a strong ethical culture is a necessary component of reducing ethical breaches.
While the code of ethics can certainly help to set the boundaries of that ethical culture, it also can be the document that defines the ethical culture. At the end of the day, the code of ethics is a tool, so how effective it is will be dependent on how it is used. Thus, the code of ethics has to enjoy leadership buy-in. It should be clear enough and concise enough that its guidance is easy for managers to remember, and even reference, so that they are willing to turn to the code and refer each other back to it. This is why it is imperative that the code of ethics for managers in acquisition has clarity, but retains enough broadness, and maps out clear, actionable guidelines and expectations, so that it can the foundation on the organization’s ethical culture.
Insurance
As noted by Adelstein and Clegg (2016), codes of ethics often serve more of an insurance purpose for management than anything else. That view might be a bit cynical and only reflect on poorly-crafted codes of ethics, but the view has some validity nonetheless. If that is the main purpose of a code of ethics for contract managers in acquisitions, then the code should be built around what will protect management from unethical behavior. Some of the above content recommendations are clearly important here – stating adherence to the laws, explaining when the code of ethics goes beyond the laws, and containing specific common examples.
By building these things into the code of ethics, it is reasonable that the managers will be asked to comply and probably to sign the code of ethics as a term of their employment. In such situations, the insulating effect of the code of ethics is apparent, but that does not necessarily mean that the code is cosmetic. It is not recommended that the code of ethics is superficial; indeed it is recommended that the document is sincere, and meaningful.
Cross-Cultural Ethics
One of the most important aspects of the code of ethics is that it can be applied consistently across the company. Managers may come from very different cultural backgrounds, with different behavioral norms. Furthermore, it is quite common that a contract manager in acquisitions might be interacting with a counterparty from another country or culture, one with very different ethical norms from our own. The code of ethics should offer clarity with respect to the degree that a contract manager can or should meet the counterparty halfway. If there is a difference in ethical norms between different parties, and both insist on working with their ethical norms, it might be difficult to come to an agreement, and for that reason the content and structure of a contract could either be standardized, or the contract manager could have considerable flexibility. The code should specify the bounds of this flexibility, so that the contract manager is better equipped to deal with any potentially tricky cross-cultural ethical situations. This should be a specific section within the code of ethics for contract managers in acquisition.
Alignment with Organizational Ethics
Each role or unit within an organization might have entirely different functions and even organizational cultures. If there is a code of ethics that is specific to contract managers in acquisitions, for example, the value is that such a specific code will provide the necessary guidance for them to do their jobs, because the code has built in examples that are unique to their roles.
That said, it is also important that there is an overarching organizational code of ethics, and that these two codes are consistent and aligned. After all, if there is conflict between the two codes, then the manager might be left with insufficient guidance for governing his or her behavior. Therefore, it is important that the overall code of ethics is taken into consideration, so that there is clear consistency between the two codes. The overall code should be the basis for the code of ethics for contract managers in acquisition.
Conclusions
A code of ethics for contract managers in acquisition can play a number of different roles, and to ensure that the code of ethics is at its most effective requires an acute understanding of these roles. The code sets the bounds of acceptable behavior, establishes a clear ethical framework, and should also provide examples that are clear and actionable to the intended audience. It should be written in line with the code of ethics for the organization as a whole, so that there is internal consistency of ethical standards within the organization. Furthermore, it should be useful in terms of providing actionable guidance for specific common situations and a set of clear principles for managers to turn to for any other situation.
Beyond that the code of ethics for contract managers in acquisition needs to be written with training in mind, so that the managers can be trained on how to use the code of ethics, how to apply it to different situations. This is because at the end of the day, the code of ethics is a tool, and the managers need to be trained on how to use this tool, in order for it to be effective. In particular, attention should be paid to the types of ethical dilemmas that might not be common, but which could arise – if the code fails to provide guidance when reference, it will cease to be a valuable resource to which managers will turn.
Specific sections should focus on issues like cross-cultural ethics, as this can be a particularly tricky area, and control Discussion of control helps contract managers to contextualize the code – they understand what happens if they violate it, and what that process looks like and the punishments. That context helps to make the code real, especially when combined with senior leadership buy-in.
While some might take a cynical view that a code of ethics exists mainly to insulate leadership – and that might partially be true – an effective and well-written code can set the ethical tone for the organization, or in this case for the role in question. Because of its potential to have a lasting influence on the organization, and improve governmental and societal outcomes across the board, it is important to take the role and influence potential of the code of ethics for contract managers in acquisition seriously.
References
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Lazeros, M. (2008) Leaders can learn from Druyun’s ethical lapses and their consequences. USAWC Research Project. Retrieved October 25, 2019 from https://apps.dtic.mil/dtic/tr/fulltext/u2/a479019.pdf
McConnnell, A. & Rood, T. (1997) Ethics in government: A survey of misuse of position for personal gain and its implications for developing acquisition strategy. Journal of Business Ethics. Vol. 16 (1997) 1107-1116.
McConnell, T. (2018). Moral dilemmas. Stanford Encyclopedia of Philosophy Retrieved October 25, 2019 from https://plato.stanford.edu/entries/moral-dilemmas/
Neu, D., Everett, J. & Rahaman, A. (2015) Preventing corruption within government procurement: Constructing the disciplined and ethical subject. Critical Perspectives on Accounting. Vol. 28 (2015) 49-61.