This glossary is provided as convenient, quick reference when using eInsight.  It was written by the staff of the Hill Center, with significant contributions from the SAIP Institute, and reflects the perspectives of the Hill Center.  It is not intended to be a complete or authoritative definitions of these terms.   Please feel free to submit comments or questions.

Business Ethics: A broad area of practice and study that includes the moral dimensions of economic systems and structures, as well as concerns for what a specific business or individual ought to do to from an ethical perspective.  See also, Corporate Ethics, Ethics

Code of Conduct: A documented set of standards outlining rights, responsibilities, and corresponding standards of conduct for organizations or individuals.  Codes of Conduct are created for established professions such as medicine or law and for other emerging professions or practices such as underwriting or the collection of competitive intelligence.  They may or may not be associated with licensure or sanctions for violations.   Individual firms sometimes create codes of conduct to govern the actions of associates.  These company documents are also referred to as Codes of Ethics.  See also Code of Ethics.

Code of Ethics: A company's Code of Ethics contains the ethical standards to which it commits itself and its employees. A Code of Ethics typically has two components, a Values Statement and a Code of Conduct.

A Values Statement is a short, aspirational document. It lists and defines a company's core ideals. These values usually are both ethical and operational in nature. A values statement lays out the critical guideposts that a company aspires to observe in the course of its business dealings, and provides some insight into how it integrates ethical and operational concerns.

A Code of Conduct is a longer document, which states or summarizes a company's ethics policies or practices. Codes of conduct normally address such issues as privacy of information; use of company resources; use of information technology; travel, entertainment and gifts; conflicts of interest; political contributions; and relationships with suppliers and competitors. A code of conduct illustrates how a company's values translate into concrete policies and procedures. Where appropriate, a code of conduct will refer to more technical or comprehensive documents for guidance.

Compliance: Compliance usually refers to an organization's conformance with the laws and regulations relevant to its activities. That is, a company is said to be “in compliance” if it follows the laws and regulations which are applicable to its operations and employees. Compliance also may refer to a company's conformance with its ethical policies and practices.

Corporate Ethics: Corporate Ethics is one of several general terms which refer to the ethics of commercial organizations, and the moral adequacy of the decisions and activities of their employees and agents. These terms – business ethics , corporate ethics , and corporate social responsibility – are frequently used interchangeably. As a result, there is some ambiguity concerning their meaning. However, each one points to a distinct segment of the range of ethical questions associated with economic enterprises.

Business ethics is the broadest of the three terms. It addresses the morality of both economic systems (e.g., the free market, socialism, communism) and the conduct of the organizations found within these systems (e.g., corporations in a free market system).

Corporate ethics may be viewed as a subset of business ethics. Corporate ethics focuses specifically on issues of morality associated with business enterprises. These include relations internal to the organization (e.g., treatment of employees, dealings with shareholders, questions concerning product quality and customer service, etc.) as well as external relations (e.g., interactions with government, specific communities, society as a whole, the impact of corporate activities on the natural environment, etc.).

Corporate social responsibility, in turn, is a subset of corporate ethics. Its focus is the firm's economic, social, and environmental impact upon the broader community of which it is a part, and the nature of the company's responsibilities to the society in which it participates.
Corporate Social Responsibility: See Corporate Ethics .

Ethical Reasoning: The process of weighing facts (relevant data or findings) and moral considerations (ethical values, standards, and obligations) to reach a considered conclusion about what one ought to do, or what is right, good or fair, either in a specific situation or as a general rule.

Ethical Values: Core aspirations which are embedded in ethical standards for human conduct. For example, the value of honesty leads to the principle of truth-telling, i.e., the moral obligation to not lie or mislead.

Ethics is the study of morality. Ethics critically reflects on such issues as the nature of moral obligation and moral value – that is, on the concepts and understandings which guide decisions about what we should (or should not) do. Ethics seeks to answer such questions as: What do (or should) we mean by “good” and “bad,” or “right” and “wrong” ? What actions are we obliged to take or avoid? What traits or habits (virtues) should we develop, to enable us to consistently do the right thing?  Ethics and morality frequently are treated as synonyms in everyday conversation. While these terms are closely related, they are distinct.   (See also, Morality)

External Audit: An assessment of a company's ethics or legal compliance program conducted by an external party – for example, a legal firm, an accounting firm, a non-governmental organization (NGO), an academic institution, or a private party.

Morality is part of practice. Specifically, morality is human action which is aligned with standards of moral obligation or moral value. Thus, an act is said to be moral if it is consistent with judgments about our moral duties (e.g., “keep your promises,” “don't lie,” etc.), or judgments of moral value (e.g., “always honor human dignity,” “support the common good”).

Self Assessment and Improvement Process (SAIP): A strategic assessment that uses techniques adapted from the Malcolm Baldridge Quality Awards process to understand the degree to which an organization’s practices and processes are in alignment with established ethical principles and the corresponding strength of that organization’s relationships with key stakeholders.

Social Entrepreneur: One who uses entrepreneurial business practices and principles to solve social problems or bring about social good.  The term is used, generally favorably, to describe nonprofit organizations that prosper and pursue their mission, funded at least in part through products or services (rather than from philanthropic or charitable contributions alone).  Optimally, the social entrepreneur’s commercial and mission work are aligned and mutually beneficial.  While the term is relatively new, the concept, of course is not.

Stakeholder: A stakeholder is any group or individual which can affect or is affected by an organization's decisions and activities. This term may be interpreted narrowly or widely. In the former case, a company's stakeholders are said to include customers, employees, employees, shareholders, suppliers and communities. An expanded interpretation also might identify as stakeholders such groups as financiers, competitors, unions, the media, government, political organizations, and activist groups.

US Federal Sentencing Guidelines for Organizations (FSGO): In 1991, the FSGO were promulgated within the United States in 1991 to help standardize penalties for corporate crimes. The guidelines set forth seven components of an effective legal compliance program. These components include:

1. Designating high-level personnel to oversee compliance activities;
2. Preventing the delegation of discretionary authority to individuals who are likely to act unlawfully (e.g., an employee with a criminal record);
3. Effectively communicating the company's behavioral expectations and compliance procedures to employees through training and/or publications;
4. Taking reasonable steps to assure legal compliance through audits, monitoring processes, as well as systems which permit employees to report criminal misconduct without fear of retribution;
5. Consistently enforcing standards through appropriate disciplinary measures;
6. Responding appropriately when offenses are detected; and
7. Taking reasonable steps to prevent the occurrence of similar offenses in the future.