Ethical Issues in Professional Life: Codes and Conflicts of Interest

Blog No. 2011-01 (October 1, 2011)

What’s My Domain?  Everything Else

Welcome again to the ethics blog, this time from your journalist on “professional life” issues.  Compared to research or teaching, it may be more difficult to define this sphere of ethical issues.

For me, research evokes a process of reading, analyses, writing, presenting, submitting to editors (and in my case, often re-submitting after editorial rejection) and publishing pieces for a variety of outlets: journals, books, book chapters, working papers, policy reports, case studies and other scholarly purposes.  The ethical issues this process raises are myriad, but the process has an intuition that many can grasp pretty easily.

Likewise with teaching.  Even before we became academics, we “knew” what teaching entailed.  We saw it played out over years of primary and secondary education followed by years of university undergraduate and graduate school training.  Again, ethical issues related to teaching are wide ranging, but teaching activities themselves seem, at least at first glance, to be relatively easy to get our arms around.  They are what we do help students learn in the classroom, during office hours and elsewhere on campus.

That leaves professional life, which I describe as the sphere of “everything else.”  I divide this sphere into two hemispheres:  academic institution life issues, and professional organization life issues.  Activities giving rise to ethical issues in our respective departments, colleges and universities include activities such as: committee work, recruiting, running departments and institutes, meeting and voting on curriculum and promotion issues, and speaking to members of the broader university and surrounding communities.  Then there are ethical issues linked to activities in various professional organizations like the Academy of Management, Strategic Management Society: committee work (again); attending/organizing/participating in conferences and meetings where members present papers, debate and recruit; and – when in leadership roles – making decisions crucial to the maintenance and growth of these organizations and the profession more generally.  These are big –really big—hemispheres.  So with little fear of running out of ethical issues in either hemisphere, let’s get started.

COIs:  So What?

This month I’ll work in the professional organization hemisphere.  There, I think an important and sometimes under-studied ethical issue relates to how we deal with the potential conflicts of interest that professional organization leaders occasionally face.  Leadership of a professional organization entails responsibility for deciding how money gets spent, people contribute and get recognized, and how important events unfold.  The largest professional organization in the business academy, the Academy of Management (AOM), highlights this point.  AOM has a multi-million dollar budget, lists nearly 20,000 members from 105 countries, gives out 60 annual awards to members for various achievements, and runs each August the single biggest annual meeting somewhere in North America –and perhaps one year soon outside of North America.  There are more than 700 AOM members listed in the “Leadership Directory” with a 14-person Board of Governors at the top (http://www.aomonline.org/aom.asp?ID=2).  AOM may be the biggest organization in our field, but many other professional organizations in the business academy have similarly distributed organizational structures and leadership.

Which is where conflicts of interest can arise.  Leaders make decisions in the best interests of the organization.  They are fiduciaries holding a position of trust.  A conflict of interest (COI) occurs when that trust might conflict with the leader’s personal interest.  A leader responsible for allocating funds between two members for two organizational projects might allocate more money to a member based on a personal relationship rather than based on criteria set down in organizational by-laws.  That is an actual COI.  The same leader may allocate more to the same member based on criteria in the organizational by-laws, but others know that the leader also has a personal relationship.  That is a perceived COI.

Both matter.  An actual COI disserves the best interests of the organization and undermines the legitimacy of other leaders in the organization trying to do the “right thing” for members.  An apparent COI can still end up with the leader serving the organization’s best interests, yet still undermine the legitimacy of other leaders.  Without action by the leader in question and his or her colleagues to deal with the apparent COI, members might very well view the decision selectively and cynically.

What Can We Do?  Disclosure +

What is a leader of a professional organization to do?  One response is simply to disclose prior to making a decision.  Tell fellow leaders and members what the COI is.  But perhaps, too, we need to do more than merely disclose.  A “disclosure +” response may be as simple as adding an assurance that the decision is still based on criteria set down by the organization.  Disclosure + could also entail disclosure and then delegation of the problematic decision to another authorized leader without a real or apparent COI.  Or the response could be disclosure followed by giving others at the decision-making table the opportunity to exclude you from the decision-making process altogether.  There are many responses that meet a disclosure + standard, all with the aim of showing that leaders have a fiduciary commitment to the organization.  As the amount of money, the number of people and the scale of events increase, so too does the importance of some “disclosure +” response when COIs arise.

What Can Our Organizations Do?

What can our organizations do to help leaders deal with COIs?  One organizational approach might be this one:  Do nothing and rely on the professionalism of the leadership.  Though smaller than the AOM, the Society for the Advancement of Socio-Economics (SASE) (http://www.sase.org/) boasts a broad range of academic members drawn from business as well as economics, political science, sociology, law and other fields.  SASE members come from more than 50 countries and meet annually around the world to promote many of the same academic research presentation, discussion, debate, recruiting and networking aims that the annual AOM meeting promotes.  Like AOM, SASE has a distributed leadership with a president and board largely drawn from academic ranks.  The money, people and events are there, so one would guess that COIs occasionally arise, too.

Yet, there is no written guideline for dealing with COIs at SASE.  To be sure, there are SASE by-laws (http://www.sase.org/about-sase/by-laws_fr_21.html) that include, for example, processes to remove SASE officers for “serious violation of the rules or norms set forth within these by-laws.” (Article VII, Number 1 of SASE By-Laws).  But there are no explicit guides for, say, disclosing and remedying COIs.  Presumably, the obligation to deal with COIs is implied as a matter of any SASE leader’s professionalism and fiduciary commitment to the organization.

The AOM does have a written code of ethics for members and the code does address COIs (http://www.aomonline.org/aom.asp?ID=257&page_ID=240).  Members are urged to avoid taking on roles within the AOM where their “interests or relationships could reasonably be expected to: (1) impair their objectivity, competence, or effectiveness; or (2) expose the persons or organizations with whom the relationships exist to harm or exploitation.”  Members need to disclose information that would otherwise give rise to the appearance of a COI.  They also need to reflect on the potential for bias when decisions might affect others with whom the decision-maker has “strong conflicts or disagreements” (AOM Code of Ethics, Section 1.5).

Yet another professional organization in the business academy, the Academy of International Business (AIB), sits somewhere between SASE and AOM in number of members, countries represented, initiatives supported, annual events run, and distributed governance practices (http://aib.msu.edu/).  And again, there are leadership decisions involving money, people and events that can give rise to COIs.  The AIB has recently developed a new code of ethics with quite detailed guidance for leaders dealing with COIs.  The new code provides a detailed definition of COIs with examples related to personal, research and other professional ties that could give rise to COIs for AIB Officers.  There are different gradations of COIs based on whether the COI is “visible” or “invisible” to others, as well as to its “minor” or “major.”  At the “bottom” of the COI scale, a minor and invisible COI might arise when an AIB Officer shares research interest with someone who is up for a vote to be appointed to some committee.  At the “top” of the COI scale, a major and visible COI arises when that same AIB Officer is married to the possible appointee.  The AIB code lays out various responses involving disclosure and remedies ranging from recording the disclosure to disqualification of the officer from further involvement in a problematic decision (AIB Code of Ethics, Section III).

What’s Right for You and Your Organization?

I am reluctant to endorse any one individual or organizational approach to deal with COIs.  On the other hand, I will disclose that I helped write the detailed AIB code for dealing with COIs.  Perhaps that puts me in the “more is better” camp on this issue:  disclose + and + and maybe more +; provide more written guidance on dealing with COIs under different circumstances.  Such guidance is probably more important as the organization gets bigger, more diverse and the leadership more distributed.

I tell my business school undergraduate students that they are going to be in leadership positions within a firm sooner than they think.  So it is with business academics who join professional organizations very early in their careers –often as graduate students—and find their way into leadership positions sooner than most thought when they first joined.  The good news is that we almost all bring to our work energy, good will and good sense that the organization’s interest matter first and last.  The bad news is that many of us bring little previous experience in dealing with COIs.  Professionalism as well as professional codes can help bridge the experience gap and help us do our work for professional organizations more effectively and enjoyably.

Please address your comments to:

Paul M. Vaaler

Department of Strategic Management

Carlson School of Management

University of Minnesota

3-424 CarlSMgmt

321 19th Avenue South

Minneapolis, MN 55455

Tel (612) 625-4951

Fax (612) 626-1316

E-mail: vaal0001@umn.edu

Author: Paul Vaaler

Professional Life