A comparison study on ethical standards of two leading business professional organizations and its application to teaching

Timothy J. Kloppenborg

And

Lifang Wu

WilliamsCollege of Business

XavierUniversity

Cincinnati, OH45207

In this study, we will investigate the commonalities and differences between the ethical standards of two leading business professional organizations: Project Management Institute (PMI) and Institute of Supply Management™ (ISM). PMI is the pioneering professional organization in the field of project management with more than 212,000 professionals from over 150 countries and virtually every major industry. The PMI Member Code of Ethics, first developed in 1969 and updated several times since, defines and clarifies the ethical responsibilities for present and future PMI members. On the other hand, ISM is the largest supply management association in the world with its membership base including more than 40,000 supply management professionals with a network of domestic and international affiliated associations. ISM's Principles and Standards of Ethical Supply Management Conduct, first adopted in 1923, remains one of the outstanding ethical statements in modern business.

Our study compares the ethical codes of these two leading business professional organizations, and relevant managerial insights are also derived. We chose these two organizations since project management and supply chain management represent dynamic niches within our broad field of operations management. Our ultimate goal is to encourage faculty in a variety of business disciplines to understand the intent of the ethical standards used by practitioners in the fields in which their students will eventually work. We also encourage the faculty members to incorporate this pragmatic understanding of career-field specific ethical applications into their teaching. We will include specific examples of how we incorporate the insights we have derived from the ethical standards of PMI and ISM into our teaching.

PMI’s Code of Professional Conduct (available in PDF format at PMI.org) is summarized here.

  • Responsibilities to the Profession
  • compliance with organizational rules and policies (mostly truthful, full, and prompt disclosure of important information),
  • professional practice (truthful representation of qualifications and experience, and performing in an honest manner), and
  • advancement of the profession (respect for intellectual property and for advancing the PMP credential).
  • Responsibilities to customers and the public
  • qualifications and performance (accurate estimates of expected costs and results, sincere efforts to accomplish agreed upon work, and respect for confidentiality) and
  • conflicts of interest (ensuring a conflict does not compromise legitimate interests of client and obligation to refrain from accepting anything inappropriate).

In short, while some of the specifics sound like they may particularly apply to a project environment, many of the ideas should be common business practice in an ethical organization. The same can probably be said for codes of professional conduct from many professional organizations.

The principles and standards of ethical supply management conduct are summarized as follows (available on

  • Loyalty to your organization
  • Avoid the intent and appearance of unethical or compromising practice in relationships, actions and communications.
  • Demonstrate loyalty to the employer by diligently following the lawful instructions of the employer, using reasonable care and granted authority.
  • Avoid any personal business or professional activity that would create a conflict between personal interests and the interests of the employer.
  • Justice to those with whom you deal
  • Avoid soliciting or accepting money, loans, credits or preferential discounts and the acceptance of gifts, entertainment, favors or services from present or potential suppliers that might influence, or appear to influence, supply management decisions.
  • Handle confidential or proprietary information with due care and proper consideration of ethical and legal ramifications and governmental regulations.
  • Promote positive supplier relationships through courtesy and impartiality.
  • Avoid improper reciprocal agreements.
  • Faith in your profession
  • Know and obey the letter and spirit of laws applicable to supply management.
  • Encourage support for socially diverse practices.
  • Develop and maintain professional competence.
  • Enhance the stature of the supply management profession.

Again, while many ideas are appropriate for many business professions, some are specific in supply chain management area. For example, information sharing among companies is effective in mitigating effects such as bullwhip. How to conduct information sharing ethically is actually a rather complicated issue. On the other hand, driven by cost reduction incentive, companies are pouring into China for manufacturing various products, from shoes to laptops. The ethical issue concerning the pollution problem created by business offshoring however receives little attention in the past.

So, how do we use this code in our teaching? Two primary ways are in detail in our elective courses on project management and at a more cursory level in a required management course all business majors must take. If thinking in terms of time, maybe a professor would spend 20 to 40 minutes of time in an elective on a specific breakout and discussion related to a code of professional conduct, but might only spend 5 to 10 minutes integrating the code into a required course. However, since a required course might have multiple professional organizations to draw from, a professor may spend a few minutes integrating some unique aspect of each into the course.

We have used the code of conduct in our classes in different manners. With undergraduates, we have given a brief overview of the code with a handout to the students and have asked them to compare the code to a framework we have used in the class. One framework was a table that categorizes different types of tasks project leaders need to perform at different points in the life of a project. This table has seven types of leadership tasks and four stages in a project, for a total of 28 specific tasks as shown below. We ask the students, in teams, to determine several of the specific sections of the code of conduct that apply to specific cells in the table and to describe for the class, with examples, how to use principles from the code to accomplish the leadership tasks.

Project Leadership Stage Specific Tasks

Leadership Task Type / Initiating / Planning / Executing / Closing
Priorities / Align project w. parent org / Understand customer / Authorize work / Audit project
Details / Perform risk analysis / Oversee detailed plan / Monitor & control / Terminate project
Integration / Justify & select project / Integrate project plans / Coordinate work / Capture & share lessons
Human Resources / Select key participants / Select other participants / Supervise work / Reassign workers
Human Relations / Determine team operating means / Develop communications / Lead teams / Reward & recognize
Promotion / Develop top mgt support / Motivate all participants / Maintain morale / Celebrate completion
Commitment / Commit to project / Secure key customer approval / Secure customer acceptance / Oversee admin closure

Adapted from Project Leadership, Management Concepts: Vienna, VA, 2003

Based on the content of each particular course, we also plan to include information sharing and interest conflict as the discussion topics for our MBA supply chain class. For the core Operations Management class, we intend to include more coverage on general outsourcing and pollution issues.

Another way we have used the code is to compare it to a summary of ethics from notes we took at an ethics seminar at Xavier. We have again asked the undergraduate students to select items from the code of conduct that they believe illustrate one of the specific ideas on the summary of ethics and describe it with an example. This workshop could also be used for a core class since the ethics summary is not specific to any one discipline. The ethics summary follows.

Ethics Workshop Summary

XavierUniversity May 13-14, 2003

In business we need to speak three languages: politics (power), money (the bottom line) and ethics (what is right).

Codes of ethics from around the world include acceptance of five goals: respect, honesty, responsibility, fairness, and compassion.

Right versus wrong tests include: legal, stench, front page, and Mom.

Right versus right conflicts include: truth vs. loyalty, individual vs. community, short term vs. long term, and justice vs. mercy.

Resolution methods include: ends based (greatest good for greatest number), rule based (act as if under universal law), and care based (the Golden Rule).

Graduate students can be more independent and we give greater latitude in incorporating a code of conduct into the class. We will refer to the code and briefly show it in the course introduction. We will use bits and pieces of the code throughout the term. However, the main place we use it is near the end of the term. We tell the students they will need to bring all of their materials for a class exercise the class before the final exam. In that class we pass out copies of the code and ask the students, again in teams, to compare the code to all of their course materials, brainstorm quite a large number of places where the code applies, select the three most important places, and defend why they feel those are the most important. The MBA students often come up with interesting reasons why they feel a particular element from the code of conduct is vital to ethical behavior.

We are in the early stages of using ISM's Principles and Standards of Ethical Supply Management Conduct since we have not taught those classes for as long of time. We anticipate using that code in a similar manner.

Far more important than the specifics from a code of conduct from a given industry group, is the idea of connecting ethical conduct to our course material. Our students will (and in many cases already do) work in the practitioner world and they should be prepared both in the knowledge and skills needed to succeed there and also in the ethical understanding of how they should act. It is our responsibility to help them develop in each of these ways. Fortunately, integrating ethical behavior into our classes is both easy and enjoyable if we take advantage of materials developed by the professional organizations of our disciplines.