ayn rand and business ethics

Brad Hillwig BA 631

Business Environment Analysis November 25, 2008

[email protected]

Table of Contents Introduction…………………………………………………………………………………………………………………………2 A statement of purpose and objectives On Business Ethics……………………….………………………………………………………………………………………3 An introduction to the fundamental necessity of business ethics Who is Ayn Rand?..................................................................................................................5 An introduction to the originator of the Philosophy of Objectivism What is Objectivism?.............................................................................................................7 A brief overview of the Philosophy of Objectivism Figure 1.1…………………………………………………………………………………………………………………………..10 A diagram of the Objectivist virtues applied to our Code of Ethics From Here to There: Objectivism and our Code of Ethics…..………………………………………………11 An analysis of how the Objectivist virtues shaped our Code of Ethics On Corporate Social Responsibility………………….…………………………………………………………………25 An introduction to and analysis of our approach to Social Responsibility Appendix I: Code of Ethics………………………………..………………………………………………………………..29 Appendix II: Ethics Test #1 : Weyco’s Smoking Ban..…………………………………………………………..31 Appendix III: Ethics Test #2: Buzz Marketing…..………………………………………………………………….34 Bibliography……………………………………………………………………………………………………………………...36

Business Ethics & Social Responsibility Brad Hillwig 2

Introduction What, then, are the right goals for man to pursue? What are the values his survival requires? That is the question to be answered by the science of ethics. And this is why man needs a code

of ethics. Ayn Rand: The Virtue of Selfishness, 1961

The purpose of this report is to explore the importance of ethical behavior as it relates

to our enterprise and to establish a fully formed Code of Ethics by which we will conduct

business. Before we can accomplish this important task, we must understand why applied

ethics are necessary, define what constitutes ethical behavior and understand the scope of

ethics as they pertain to individuals and organizations. This essential endeavor holds such

significance to our enterprise that we must first look for precedence in the form of an

established, fundamental system of ethics that will serve as a model for our organizational

code. For this we turn to Ayn Rand’s philosophy of Objectivism, a model of thinking that

celebrates the individual’s right to survival and free will while it concurrently puts forth a strict

moral and ethical code with which to secure these primary imperatives. The philosophy of

Objectivism is, at once, a dogmatic approach to life on earth for an individual and also a set of

values that can be applied to an organizational framework within a free market system.

Businesses, like individuals, operate within a world of incongruence and change and therefore

must have guidance and standards. Our aim is to put forth a system of applied ethics designed

to provide a foundation of legality, stability and success. In the following pages, we will

establish the importance of business ethics and illustrate how the basic tenets of Objectivism

illuminate a path for our company’s pursuit of ethical behavior. We will also explore the issue of

Corporate Social Responsibility and attempt to more clearly understand and define our role

within the community in which we conduct business.


On Business Ethics

Ethics is not a mystic fantasy—nor a social convention—nor a dispensable, subjective luxury, to be switched or discarded in any emergency. Ethics is an objective, metaphysical necessity of

man’s survival. Ayn Rand: The Virtue of Selfishness, 1961

Ethics can be defined as “a discipline involving inquiry into the moral judgments people

make and the rules and principles upon which such judgments are based” (Almeder, Humber &

Snoeyenbos, p. 15). Applied ethics is a behavioral system which attempts to answer the

questions of “What is good?” and “How should I act?” Ethical systems are necessary to some

extent in all facets of life; they serve as guidelines and conventions that provide the tacit

foundation upon which individuals and groups coexist. In business, clearly defined ethics are

critical for success, and conflicting ethical systems—the fact that not everyone has the same

ethical principles—regularly provide the type of dilemmas that challenge an entity’s values,

fortitude and will. Consider the following issues that help drive the fundamental need for a

system of ethics within a business framework:

• The law serves as a guide to what is legal, not necessarily what is right: That is to say

that a business can operate just within the law and still be unethical in its dealings, either through dishonesty, disloyalty or abuse of power, etc… Therefore, a business is required to be lawful but not forced to be ethical; rather it must choose on its own to do so.

• A business must create value: A business may create value through unethical practices and profit in the short run, but history has shown that legal and social systems do not tolerate the unethical creation of value in the long run (e.g. bribery, external diseconomies, profiteering, etc…) Therefore, a business must ethically create value.

• A business is often formed because an investor risked his or her own money: Principals often make decisions using other people’s money, with limited liability. As a result, the decision making power comes with an implied and necessary responsibility to ethically manage investor interests. If this implied trust—which must, in many cases, exceed contractual obligation—does not exist, then such relationships may struggle to materialize. This implied trust comes from reputation, honesty, experience, future value and proven ethical behavior.


• An enterprise must create and maintain relationships with clients and employees: No business can survive over the long haul if it consistently mismanages or takes advantage of its clients and employees. This simple truth establishes the basic imperative need for a fair and equitable system of ethics, or, that which guides individual and organizational relationships and forms a platform of rules that dictate proper conduct.

These issues illuminate some key themes that apply to almost any ethical system:

honesty, accountability and the conscious choice to do what is right. A company needs a code

of applied ethics in order to guide disparate individuals, achieve a unified purpose, outline a

method of operation and ensure compliance to legal and social standards. A sterling record of

ethical behavior can often be a competitive advantage and a well‐built system of ethics can be

the difference between success and failure. The subsequent pages of this report will attempt to

determine the proper ethical guidance regarding common business issues, and draw a

functional Code of Ethics based upon Ayn Rand’s Philosophy of Objectivism. However, such an

undertaking cannot begin without a proper understanding of Ayn Rand and her Philosophy of

Objectivism, as the two are intrinsically connected and one finds little separation between this

distinctive philosophy and the life of its creator.

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Who is Ayn Rand?

This is John Galt Speaking. Ayn Rand: Atlas Shrugged, 1957

Alisa Zinovievna Rosenbaum was born on February 2, 1905 in St. Petersburg Russia. A

precocious and intelligent young woman, she taught herself to read at an early age and began

writing novels and screenplays at the age of eight. The Rosenbaum family was affluent and

independent and Alisa’s father Zinovy was a successful chemist who owned a pharmacy. Early

on, young Alisa opposed Russia’s spirit of collectivism and in 1917 she watched her family’s life

crumble amid the Bolshevik Revolution. Zinovy’s pharmacy was seized by the Red Army and the

Rosenbaum’s were forced to flee to Crimea amid Russia’s violent civil war. By the age of 16

Alisa had begun contributing to the family income by teaching Red soldiers to read and write

and she had already declared herself an atheist and an ardent champion of individualism.

Alisa’s studies introduced her to American history and she soon came to view America as the

epitome of freedom (Greiner & Kinni, 2001).

By 1924, as the Communists established control and imposed societal restrictions on

those who dared to criticize communism, Alisa became convinced that she should journey to

America. In the fall of 1926, Alisa arranged to visit relatives in Chicago and left Leningrad with

three‐hundred dollars, a Remmington‐Rand typewriter and no intention of returning to Russia.

She would later say that “I would no more have thought of returning than of jumping off a

building” (Greiner & Kinni, p. 7).

Once in America, Alisa changed her name to Ayn Rand—Ayn, reportedly because it

rhymes with mine, and Rand based the brand of her typewriter—and embarked on a career as

a screenwriter and novelist (Greiner & Kinni, p. 8). By now she had developed the foundational


elements of her philosophical views, which stood in direct opposition to the tenets of

Communism and were based on a strict adherence to rational individualism.

Rand experienced only marginal success as an author until her novel, The Fountainhead,

became a best‐seller two years after it was published in 1943. Rand was celebrated as a

champion of individualism, and in American’s she found an audience hungry for the rugged

ideals of self‐reliance. The Fountainhead’s protagonist, Howard Roark was an activist who was

characterized by a rational egoism that not only illustrated Rand’s philosophical views, but also

began to define her concept of the ideal man (Greiner & Kinni, p.###). With The Fountainhead

Rand’s literary voice was now firmly established, but her most important work was yet to come.

In 1943 Rand had a conversation with a friend in which the question was posed: “What

would happen if all of the creative minds of the world went on strike?” This question became

the platform from which Rand launched her most complete work, Atlas Shrugged (Greiner &

Kinni, p. 16). This novel attempted to answer that original question and also offered Rand’s

vision of how life should be lived in protagonist John Galt’s 60‐page radio speech, which began

with the ethereal words echoing throughout a broken society: “This is John Galt speaking”

(Rand, p. 923). In Galt’s speech, Rand offers her most comprehensive outline of the Philosophy

of Objectivism, a belief system rooted in rational self‐interest, which Rand characterized as “a

philosophy for the living”.

Rand’s strong views on individualism and her rejection of faith and organized religion

made her a controversial figure with a loyal cult following. After Atlas Shrugged, Rand

continued to write and lecture on Objectivism, compiling a volume of some six books detailing

Objectivism’s cultural applications. Rand died on March 6th of 1982. (www.aynrand.org)


What Is Objectivism?

Man has been called a rational being, but rationality is a matter of choice—and the alternative his nature offers him is: rational being or suicidal animal. Man has to be man—by choice; he has to hold his life as a value—by choice; he has to learn to sustain it—by choice; he has to discover

the values it requires and practice his virtues—by choice. Ayn Rand: Atlas Shrugged, 1957

Defining the philosophy of Objectivism is not a task equipped with brevity. Nevertheless,

Rand was able to chisel down this complex set of values to its most basic elements:

• Metaphysics: Objective reality • Epistemology: Reason • Ethics: Self‐interest • Politics: Laissez‐faire Capitalism

For the purpose of this exercise we will focus on Metaphysics, Epistemology and Ethics which

form the basis for all Objectivist actions. According to Objectivist thought, Metaphysics states

that existence exists, reality is real and the universe and all of its components are not

something that we dreamed up (Greiner & Kinni, p. 34). Each element has its own

unchangeable identity (A is A, a table is a table, etc…), irregardless of our wishes, hopes and

dreams. Reality exists outside of our consciousness, which also exists; therefore Objectivists

must be rationalists, capable of perceiving a knowable universe. Epistemology is how man

understands the universe, primarily, Rand states, through sensory perception and reason. Our

senses are how we perceive objective reality and reason is how we process that knowledge.

Objectivism states that our ability to think, or reason, is our principal means of survival and a

rational perpetuation of one’s own life should be the chief goal of reason. Ethics guide our

actions and dictate how we generate values, form goals and attempt to fulfill them. Objectivism

states that humans must choose their own ethical values, which form the basis of morality, and

each individual has a moral imperative to place his or her own life, or survival, as a top priority.


Rand’s ethics focus on three life values: Reason, Purpose and Self‐esteem, which together form

the primary edict of Objectivist thought, that a logical man must live a life rooted in rational

self‐interest (Rand, 1961, p. 25). Objectivism rejects any philosophy that subjugates the

individual to that of a larger group as illogical, immoral and fundamentally wrong. Therefore,

Objectivism contends that individuals must hold themselves as their own highest entity,

because if they do not first nourish their own life they must rely on someone to do it for them,

thus sacrificing their natural claim to freedom.

Within the Objectivist Ethics, Rand contends that our code of ethics must be the guiding

principal behind our actions, thus she developed seven virtues designed to guide the ideal

Objectivist life (Rand, 1961, p. 25‐27). They are as follows:

Objectivist Virtues Reason

• Rationality: Thinking is the foundational element of life; reason is one’s only source of knowledge, judge of value and guide to action.

• Independence: An individual must be independent in thought and action, free from influence, guidance and control from others.

• Integrity: The connection between our beliefs and our actions; an individual must externalize his/her internal convictions and never sacrifice his/her convictions to the opinions or wishes of another.

• Honesty: Honesty is the acceptance of reality as it is, one must never falsify reality in any way.

• Justice: We must rationally and objectively judge others based on merits and value. One must never seek or grant the unearned.

Purpose • Productiveness: The central purpose of life is productive work.

Self‐Esteem • Pride: Moral ambitiousness. One must earn the right to hold oneself as one’s highest

value by striving for moral perfection. Objectivism dictates that if individuals accept these virtues and pursue them as goals,

then they are acting out of rational self‐interest and in accord with the tenets of Objectivism.

Objectivism is not a utilitarian approach to life; rather it is profoundly non‐violent and invariably


holds the means as significant as the ends. The seven virtues of Objectivist Ethics are the

foundation from which we have developed our Business Code of Ethics. They have been

modified to apply to a business framework and redefined based upon the correlation between

the actionable values of an individual and that of an organization. Figure 1.1 on page ten, and

the subsequent analysis, demonstrates the manner in which these correlations were derived

and configured.

********

Mission Statement Our mission is to ethically perpetuate and improve our company by creating and providing increased value and quality service for our customers and clients. In doing so, we recognize that our most important tools are empowered individu‐als, constant innovation, effective production and a commitment to creativity, organizational learning, honesty in action,

and pride in our efforts.

Rationality Independence Integrity Honesty Justice

Responsibility Each member of our organization must be

accountable and responsi‐ble for his/her decisions, actions and judgments as they relate to the tasks of

our enterprise.

Independence We must never allow outside influence to corrupt our decisions, thoughts and actions.

Integrity It is our duty to lawfully and honestly carry out our organizational tasks without impeding an‐other’s ability do to the same. We must intend to choose right over wrong.

Honesty We must strive to

accurately interpret and

represent reality.

Justice & Professionalism We judge one another on the

merits of performance not personal standards.

Productiveness, Value & Communication Productive work is how we accomplish our mission. Each individual and the organization as a whole must seek to offer productive value at each stage of our operation. We must facilitate the open exchange of ideas and maintain an environment that allows

individuals to voice their ideas without intimidation or undue influence.

Pride Pride comes from the knowledge that we have achieved excellence, therefore we must always strive to earn the pride we take in our efforts.

From Here to There: The Philosophy of Objectivism and our Code of Ethics

That which [man’s] survival requires is set by his nature and is not open to his choice. What is open to his choice is only whether he will discover it or not, whether he will choose the right goals and values or not. He is free to make the wrong choice, but not free to succeed with it.

Ayn Rand: The Virtue of Selfishness, 1961

According to Objectivism, ethics is a matter of survival. We cannot control the

environment in which we operate, but we can control the manner in which we operate within

that environment. A fully formed system of applied ethical behavior is intended to guide our

actions in a world of uncertainty and change; it must be the steady hand that provides

constancy and it must hold strong even when we witness others gain temporary advantage by

sacrificing what is right in favor of what is profitable. It is easy to talk about ethics in sweeping,

glittering generalities but, in reality, the true test often comes in small packages, as ethical

dilemmas tend to mask their importance by seeming insignificant, minor and with little future

consequence. However, our commitment must be so thorough that we resist our temptations

and adhere so strictly to the Code of Ethics that it becomes intrinsically entwined with our day‐

to‐day tasks. We believe in this imperative with such conviction that we have prepared a

thorough analysis of the reasoning behind our Code of Ethics as it relates to our guiding source,

Ayn Rand’s Philosophy of Objectivism. We believe that knowledge and communication are

central to success and each member of our organization is expected to read and understand the

applications of our Code of Ethics (Article I). The following analysis details the reasoning behind

our system of ethics, examines the virtues of Objectivism and attempts to demonstrate how

they shaped our Code of Ethics and how they may be applied to a modern business framework.

Principle of Objectivism:

Rational Self‐Interest: Just as man cannot survive by any random means, but must discover and


practice the principles which his survival requires, so man’s self‐interest cannot be determined by blind desires or random whims, but must be discovered and achieved by the guidance of

rational principles. This is why the Objectivist ethics is a morality of rational self‐interest—or of rational selfishness.

Ayn Rand: The Virtue of Selfishness, 1961 Objectivism dictates that an individual’s first obligation is to fulfill his or her own survival

needs. Humans, Rand contends, are given the option to destroy themselves or nourish

themselves; to be a “rational being” or a “suicidal animal” and to sustain life requires a choice

to do so (Rand, 1957, p. 927). If we view our company as an individual entity, we can then apply

this edict to its system of ethics. Our first obligation is to ensure that we continue to exist. Just

as man must choose to sustain his own life through reason, logic and knowledge, so must an

enterprise; for if our company ceases to exist, all other issues related to it become irrelevant.

However, it is important not to misinterpret rational self‐interest as pure selfishness, behavior

requiring self‐interest to the exclusion of all others. Such conduct would likely qualify as

irrational self‐interest because it rejects the logic presented by reality. In our view, rational self‐

interest merely requires us to hold our own corporate wellbeing, and all elements that

contribute to it, as a value unto itself. We can fulfill this mission by ensuring that we create

value for clients, continuously innovate new products and services, maintain a healthy work

environment, build community relationships and adhere to our ethical principles. After all, we

would surely fail without customers, products/services, a healthy workforce, strategic

relationships and a standard of ethical behavior; therefore these elements must factor into our

definition of self‐interest. In practice, this edict of rational self‐interest requires a conservative

approach to deal‐making and a careful eye for customer service and stakeholder management.

For example, it would not be in our best interest to partner with a company whose business


practices we deem as unethical (e.g. the poor use and treatment of labor, price gouging,

predatory lending, etc.) for concern that our association and integration with their unethical

choices may compromise the foundational beliefs of our enterprise. Nor would it be

appropriate to seek short term profits at the risk of long term survival. Likewise, just as a man

keen on survival would not purposefully poison himself, it would not be in our rational self‐

interest to mistreat our own employees, either through unfair compensation, a lack of medical

benefits or unreasonable working schedules. Rational self‐interest, in today’s business world,

requires us to effectively manage relationships and adhere to our ethical systems of corporate

governance in order to maintain our long term relevance. Additionally, there is a tangible need

to reconcile our employee’s notion of rational self‐interest with the company’s in order to build

a sense of shared goals and organizational culture. While we expect that each member of our

organization will not purposefully damage the company, we also understand that a system of

financial and personal incentives can build morale and instill a culture of common interest.

Therefore, we have established an equitable 401k retirement program, with a generous

company match, as well as a stock option plan so that employees have a vested interest in the

success of our organization.


Rationality: Rationality is the recognition that existence exists, that nothing can alter the truth and nothing can take precedence over that act of perceiving it, which is thinking—that the mind is one’s only judge of values and one’s only guide of action—that reason is an absolute that

permits no compromise… Ayn Rand: Atlas Shrugged, 1957

Objectivism’s principle of Rationality holds highest the individual’s ability to make the

rational choice to think and reason. This powerful capacity, Rand states, is what separates



humans from all other living organisms (Rand, 1957 p. 927). In the context of our company, we

value the power of the human mind and all of its capabilities; therefore we encourage

individual innovation, the open exchange of ideas and an entrepreneurial spirit. In an ethical

sense, we acknowledge, as does Rand, that an individual’s ability to think and reason is, in a

sense, an obligation to do so. Individuals, and the company at large, must use logic and reason

as a guide for actions and decisions rather than emotion, whim and influence—which are not

driven by conscious thought. Individuals at all levels of the company must agree to be

responsible and accountable for their actions and decisions as they relate to the tasks of our

operation. This edict requires that we think before we act and that we use our conscious

judgment to formulate rational policies, procedures and decisions. For example, it would not be

reasonable to chase a competitor into a new market without adequately understanding the

feasibility of this new endeavor in regards to our interests. To blindly chase the competition

requires little more than whimsical action, which subverts our own understanding of our

capabilities and risks the long term efficacy of our enterprise. An individual employee who

chooses to behave erratically or with blind emotion (e.g. with colleagues, inconsistent job

performance, making poorly vetted decisions, etc…) must be responsible and accountable for

the outcomes. It is important to note, however, that it is not the result that justifies the means,

rather the principle of rationality dictates that we arrive at the result through our commitment

to reason and thought. Thus, the employee who arrives at the right result but with ill means is

not held higher than the employee that follows our ethical standards, but falls a little short. The

latter is far more acceptable than the former, for, in our view an individual who uses the proper

means will find success more often than not in the long run. A manager who uses emotional

intimidation and social engineering to accomplish a task may have short term success, but in

the long term will struggle to earn respect and commitment from colleagues. In summary, we

correlate rationality—the imperative of reason and thought—with responsibility and

accountability, and hold true to the maxim that a company built on the principles of applied

personal and corporate responsibility increases its ability to survive, thrive and nurture an

ethical workforce.


Independence: Independence is the recognition of the fact that yours is the responsibility of judgment and nothing can help you escape it…that the vilest form of self‐abasement and self‐destruction is the subordination of your mind to the mind of another, the acceptance of an

authority over your brain, the acceptance of his assertions as facts, his say‐so as truth, his edicts as middle‐man between your consciousness and your existence.

Ayn Rand: Atlas Shrugged, 1957

Rand’s principle of Independence takes Rationality one step further and necessitates

that an individual not only has an obligation to use reason and thought to guide actions, but

must do so without undue influence from others (Rand, 1957, p. 932). In the context of our

enterprise, this principle applies directly to corporate operations as well as individual conduct.

Conflicts of interest—which we define as competing professional and personal interests—and

social intimidation, or, attempting to persuade an individual with force or undue influence

rather than the merits of an issue, are unacceptable business practices in our organization. A

conflict of interest may come in the form of nepotism or perhaps an issue relating to private

stock ownership and deal‐making that results in personal gain. An executive that funnels

significant amounts of contract work to a family member, resulting in that family member’s

personal gain, may be adjudged to have a conflict of interest. Similarly, an executive charged

with deciding whether or not to pursue a business relationship with a company in which he or



she owns stock may also qualify as a conflict of interest. Certain conflicts of interest are bound

to arise in the business world and it is the individual’s responsibility to fully disclose the nature

of the conflict to a panel of superiors, who will then decide if the conflict warrants removal

from a particular project or issue. Conflicts of interest have significant legal implications and

must be treated with openness and honesty so that we are able to maintain a business

environment free from undue influence. The principle of Independence also applies on an

interpersonal level as social intimidation and undue pressure happen in workplaces

everywhere. We must respect each other’s right to independent thoughts, beliefs, opinions and

decisions; therefore, it is not appropriate to attempt to subjugate the will of another to your

own through physical force or undue pressure. We shall instead defer personal disagreements

to superiors and professional disputes to the democratic process of majority rule—a practice

that preserves each individual’s right to independent thought and action. We must also keep

the principle of Independence in mind when dealing with clients and business partners. Using

improper associations, conflicts of interest or undue influence to gain an advantage on behalf

of the company is a clear violation of the Code of Ethics. It is important to note that we include

bribery and excessive gift giving under the umbrella of undue influence. In business there are

times in which communicative scenarios require somewhat persuasive actions, such as sales

situations and when working with federal, state and local governments on pertinent issues.

While we should never shortchange the communication of our position on an issue related to

our business, it is very important that we do so within legal and ethical boundaries. A small

gesture such as buying a prospective client a reasonably priced lunch is an acceptable social

convention in a professional sales situation; however, large gifts—given to secure a contract—

and deceptive promises are clear violations of our Code of Ethics. Furthermore, while we

condone the use of government lobbyists to represent our positions on certain issues, we must

be aware that even the appearance of impropriety or bribery may compromise our reputation

and impede the will of the elected official. Therefore, our lobbyists must be thoroughly vetted

and given explicit instructions as to our expectations regarding ethical lobbying practices.

Ultimately, we do not tolerate people or entities infringing on our right to independence and

we will not initiate any infractions upon the independence of another.


Integrity: Integrity is the recognition that you cannot fake your consciousness…that man is an indivisible entity, an integrated unit of two attributes: matter and consciousness, and that he may permit no breach between body and mind, between action and thought, between his life

and his convictions. Ayn Rand: Atlas Shrugged, 1957

Rand’s principle of Integrity contends that there is no separation between an

individual’s body and mind—that one has a moral obligation to act in accordance with his or

her intrinsic beliefs, and to do otherwise would be tantamount to the subjugation of one’s will

to another (Rand, 1957, p. 932). An individual who recognizes the moral imperatives of reason,

independence and conscious thought but chooses not to act according to his or her convictions

no more deserves survival than one who chooses not to exercise thought at all. In other words,

Integrity is the externalization of our internal beliefs and the two elements—conviction and

action—must work in tandem. Integrity is, of course, a fundamentally important virtue in a

business environment. We apply this principle to our system of ethics with the basic

assumption that we are all imbued with the internal conviction that obeying the law is

appropriate and necessary behavior. It is our intention to only employ individuals who choose

to live by this code; therefore, we expect employees to continue externalizing fundamental



lawfulness. Individuals who break the law on behalf of the company or on company time will be

punished accordingly, up to and including termination. However, consider the following ethical

dilemma: One weekend, on his own time, an exemplary mid‐level employee gets arrested for

driving under the influence (DUI). What do we do? How does this behavior align with our Code

of Ethics? We recognize that this is, in some ways, out of our jurisdiction since it is a private

matter—thus, direct punishment may not be appropriate—however, we do feel a sense of

responsibility to counsel this employee, facilitate his rehabilitation and encourage him to

properly pay his debt to society. Our role in such a matter should be to encourage proper

conduct and build the individual’s sense of Integrity rather than assist its destruction. It is worth

noting, however, that if the employee was a high‐level executive we may be compelled to take

more robust action. High‐level executives are expected to be leaders and serve as the

consummate models of integrity and ethical behavior. Our Code of Ethics also dictates that

employees know the difference between right and wrong and always intend to choose the

former rather than the latter. Because we acknowledge the vagaries of this statement—indeed,

the line between right and wrong can be rife with uncertainty—we have placed an emphasis on

the individual’s intent, further proof that we value the means as well as the ends. Should

questions of right or wrong materialize, individuals will be referred to our system of guidance

which dictates that ethical questions be referred to superiors or to our Ethics Officer, whose

directive is to provide guidance with appropriate confidentiality. In summary, we hold the

principle of Integrity to be of great consequence to our organization and we seek to promote it

in our actions and systems and also to practice it on a corporate level by following our stated

mission and ethical convictions.


Honesty: Honesty is the recognition of the fact that the unreal is unreal and can have no value, that neither love nor fame nor cash is a value if obtained by fraud—that an attempt to gain a value by deceiving the mind of others is an act of raising your victims to a position higher than

reality. Ayn Rand: Atlas Shrugged, 1957

Rand’s virtue of Honesty is based upon the principle that reality is objective and any

attempt to subvert this truth devalues one’s claim to rational self‐interest. Rand’s perspective

on this virtue is clear as she states that “honesty is not a social duty, not a sacrifice for the sake

of others, but the most profoundly selfish virtue man can practice: his refusal to sacrifice the

reality of his own existence to the deluded consciousness of others” (1957, p.933). Objectivism

views Honesty as a moral imperative that prevents the individual from undermining his or her

own allegiance to objective reality. Furthermore, Objectivism explicitly states that one should

never lie to obtain unearned value or gain a higher position. The principle of Honesty has broad

applications in the business world and our organization values this virtue within the following

contextual applications: Basic Function, Corporate Communication, and Valuation. Basic

Function can be defined as the tasks and interactions involved in the daily operation of our

enterprise. In this context, individuals are expected to be truthful with one another and

thorough in interpersonal communications related to business operations. We must encourage

the open exchange of ideas and seek to minimize the asymmetries of information that often

result in negative social cultures within organizations. In our Corporate Communication’s—

which include any contact with individuals or groups outside of the organization, such as annual

reports, quarterly filings, accounting practices, marketing, interpersonal contact and customer

service—we must commit to being thorough, accurate and honest in our interpretations of

reality. It is not ethical to willfully deceive investors, suppliers or customers either through


fraud or lies of omission; therefore we must comply with all laws regulating corporate

communication and commit to a positive, proactive approach on corresponding with

stakeholders. Finally, Valuation reflects the need for accurate representation regarding our

compensation strategy. Our organization is committed to offering competitive salaries that are

based upon an individual’s value to the organization and job promotions will be assessed in the

same manner. While we understand the objective reality of a fluctuating and competitive job

market our commitment to honesty in action dictates that we never subvert reality to inflate

our own or another’s value. Honesty is critical to success and in our view it is rooted in the need

to properly interpret reality with thorough, accurate communications at all levels of corporate

operations.


Justice: Justice is the recognition of the fact that you cannot fake the character of men as you cannot fake the character of nature, that you must judge all men as conscientiously as you

judge inanimate objects, with the same respect for truth, with the same incorruptible vision, by as pure and as rational a process of identification—that every man must be judged for what he

is and treated accordingly. Ayn Rand: Atlas Shrugged, 1957

Rand acknowledges that people are predisposed to judgments, stating that man must

draw conclusions from his observations in order to form a contextual framework from which to

understand the world around him. Objectivism’s concept of Justice underscores the need for

objectivity when forming such judgments. Rand contends that individuals have a moral

obligation to base personal judgments on known facts rather than on subjective preconceived

notions, conjecture or hearsay. In short, individuals must form independent, rational opinions

about one another (Rand, 1957 p. 933). By its nature, this edict renounces the damaging effects


of stereotyping based upon sex, race, age, ethnicity, religious affiliation, political persuasion,

etc. Our organization applies the principle of Justice in our hiring practices and in our ethical

mission to judge one another based upon professional merits rather than personal differences.

Our commitment to Justice ensures that our policies are rooted in the equal treatment of

individuals, and focused on assessing value based upon proven professional credentials.

Discrimination, sexual harassment, stereotyping and profiling are prohibited not only by our

Code of Ethics, but by guiding policies designed to promote and maintain a threat‐free work

environment. Additionally, in the event of any violation of these principles, management is

empowered with the ability to impose penalties such as suspension, demotion and termination.

The company is structured hierarchically and, as such, each member including the CEO is

accountable to a higher authority. This structured authority comes with the responsibility of

promoting ethical behavior and dutifully addressing infringements. Superiors must be cognizant

of impropriety and never willfully abuse their power. Violations of the Justice principle can be

severely damaging to individuals and to the company at large, thus we must support strict

adherence to this ethical principle. While our system of Justice finds its roots in our Code of

Ethics, it is enforced by stated policies, a hierarchical system of accountability and a broadly

promoted pledge to base judgments and valuations on known facts and professional merits.


Productiveness: Productiveness is your acceptance of morality, your recognition of the fact that you choose to live—that productive work is the process by which man’s consciousness controls

his existence, a constant process of acquiring knowledge and shaping matter to fit one’s purpose.

‐‐Ayn Rand, Atlas Shrugged



Objectivism states that man’s life purpose is to be productive. This creed does not

propose to define a life bound by the rigors of labor, nor one chained by any implied debt to

society, rather it is a mode of empowerment in which man actualizes his own destiny and

shapes the world according to his values. The goal of productive work is to exercise the full

potential of one’s mind, employing creativity, assertiveness and ambition in the process—

which, in turn, promotes personal growth and development (Rand, 1961, p. 25). Our enterprise

sincerely views this principle as an ethical matter and interprets its application in two key ways:

how we define our jobs and what we expect from employees. Regarding the former, we hold

significant the value of a job to both the employer and the employee; therefore, we view it as

our obligation to make each position as meaningful as possible, properly compensated and

accompanied by effective medical benefits. A job has the ability to empower an individual,

contribute to the totality of his or her identity, support personal growth and facilitate the

creation of a healthy family and a stable community. Our role as an employer is to make sure

that every job we create has implicit value and offers opportunities for personal growth. Our

organization must maintain a culture of learning and growth by establishing a sensible training

and mentoring network and also making a reasonable effort to promote from within, so that

we may offer motivated individual’s ever‐increasing opportunities. Additionally, it is our

intention to offer specific positions the opportunity to spend a small percentage of time to

work on individual innovations. In turn, we have certain expectations for each employee. We

are committed to hiring qualified individuals of legal working age who have demonstrated an

aptitude in a given field and who value productiveness. Our goal is not to command employees

to work hard; rather it is to place motivated individuals in an organizational framework that

promotes empowerment, creativity, accountability and personal development. Labor laws

dictate that we follow certain guidelines regarding the amount of time an employee is expected

to work. To be sure, some positions may require more than a forty‐hour workweek and some

may require extensive travel. However, our compensation strategy acknowledges an

individual’s right to a reasonable work/life balance and such positions will include increased

compensation incentives in the form of time or money. We recognize the importance of a

worker’s personal life—indeed it is a critical aspect of maintaining a productive workforce—

thus our company will not require employee’s to work on major holidays. Additionally,

employees will accrue an amount of vacation time, sick time, and flex time commensurate with

their wage rank. In summary, productiveness is an ethic that requires both the employee and

the employer to acknowledge the implicit value of productive work and jointly create an

environment that promotes effort, innovation, creativity and personal development.


Pride: Pride is the recognition of the fact that you are your own highest value and, like all of man’s values, it has to be earned—that of any achievements open to you, the one that makes all

others possible is the creation of your own character. Ayn Rand: Atlas Shrugged, 1957

To Rand, Pride is a celebration one earns by following all of the previous virtues. It

comes from the implicit understanding that man must create his own character by choice and

must have the self‐belief required to actualize rational self‐interest in a world full of distractions

(Rand, 1961. p. 27). Pride and self‐esteem are the result of adhering to a chosen ethical system

so stringently that one never fears to question his or her actions and never feels the subversive

threat of a competing system of ethics, which seeks to destroy his or her character. Our

organization must seek to promote both ethical behavior and organizational pride. Company‐

wide ethical behavior can be encouraged by effectively promoting our Code of Ethics and firmly



implanting the aforementioned system of resolution to ethical issues. Organizational Pride can

be promoted by a strong internal communication system that consistently recognizes individual

and company accomplishments, including successful efforts, awards, promotion, growth and

innovation. It is important to have positive progress reports that have a historical perspective

and recognize the efforts of individuals, departments and the company at large. Company social

events are also important in promoting a sense of connectivity and teamwork, a way of creating

a cohesive unit inclined to feel a sense of collective effervescence held together by

commonalities. Company pride is a crucial ingredient for success and senior managers must be

ethical leaders that live the edicts they preach and believe strongly in the company mission. An

employee with pride in his or her organization is a far greater asset than one without it. Pride is

an ethic that must be earned by striving to fulfill all other ethical principles, and it must be

promoted organically throughout the organization, not commanded from the top.

*********


On Corporate Social Responsibility

Society is a large number of men who live together in the same country, and who deal with one another. Ayn Rand: The Ayn Rand Column

On the surface, the driving force behind our ethical system, Objectivism, seems to be

the antithesis of Corporate Social Responsibility. Not only does Objectivism reject the notion

that such a thing as a collective society exists, but it rejects the idea that man has any duty

other than to himself (Rand, p.####)—indeed there is no place for Emmanuel Kant’s categorical

imperative in an Objectivist world . Instead, Objectivism replaces individual duty with personal

choice and strictly labels motivation as rational self‐interest. So then, the questions facing us

are: How do we approach the issue of Corporate Social Responsibility? And, How does our Code

of Ethics provide us with guidance regarding this organizational objective?

Our corporate mission dictates that our first priority is to perpetuate the existence of

our organization since we reason that all other organizational issues are irrelevant if we cease

to exist. This is the actualization of rational self‐interest; therefore our economic mission is, in a

sense, our only true moral obligation. However, we cannot effectively execute our economic

mission in a vacuum, nor can we succeed without the legal and social benefits of a community

that supports stability and seeks to empower motivated individuals. Thus, we must make

certain choices designed to encourage and promote the environment which permits our

success. Firstly, we must choose to ethically operate our organization and determine that our

end products will seek to have a positive value for the end users. In essence, our company will

maintain a tacit promise to not do harm to society. However, we must choose to go a bit

further in order to promote the continuance of a positive community environment. It is

important to highlight the fact that we must not view this mission as a responsibility or an


obligation, rather our strategy must be to effectively support and manage the aspects of society

that shape the foundation of our success—to us, it is not a Corporate Social Responsibility,

rather it is a Social Strategy we make by choice. In turn, these choices must have mutual and

tangible benefits. We cannot blindly throw money at charitable organizations in order to get

our name on a banner, to do so would be ethically disingenuous at minimum. Therefore, we

must assert a more calculated approach.

One important end result of an effective society is that it produces educated individuals

that tend to be well‐rounded, creative, innovative and adept at functioning within an

organizational system. Society’s educational system benefits us by generating a large volume of

these individuals, whose efforts are ultimately crucial to our success since we thrive on value‐

creation and innovation. Therefore, our Social Strategy must include an emphasis on

strengthening and enhancing this important element of society. We must seek to partner with

educational institutions and innovate new ways in which we can use our resources to create

value for them. Importantly, our role here should not be to further our brand or cultivate a

young market, but rather to contribute value to a sector of society that contributes to our

success. We can do this in several ways. Firstly, our founders and executives should be

prepared to speak to high school and college classes about business, ethical and organizational

matters. Through the formation of local partnerships, this outreach must be done with some

regularity and designed to contribute specialized value to the educational process.

Furthermore, we can use our financial resources to make donations to educational institutions

and seek ways to fund infrastructure projects that enhance the educational experience. Art

work, playground equipment, school furniture and university buildings are some areas in which

our financial resources can promote effective educational systems. Furthermore, we must seek


to develop and fund scholarship programs for private secondary schools and universities, aimed

at making quality education available to motivated individuals of all socio‐economic

backgrounds. Our institutional beliefs are based upon individual rights and empowerment, and

our Social Strategy should be no different.

Another way in which society permits our success is by maintaining law and order. We

simply could not exist in a society with no rules, conventions or system of criminal justice. Our

Social Strategy should seek avenues in which we can promote lawful conduct and disavow

criminal behavior. We can do this by supporting community groups that promote positive

personal development for at‐risk individuals, particularly young people. After school programs,

youth sports, youth homeless shelters and activity institutions such as the YMCA require

significant financial and human capital and we have the capacity to offer both. Our strategy in

this area should mimic the approach we take toward education and include mentorship,

donations and the promotion of infrastructure projects. Additionally, we must seek to lend our

support to organizations that promote clean, healthy living such as hospitals and non‐profit

medical research groups. Our ultimate goals should be to support the institutions and programs

that promote the development of healthy individuals and fight the social ills that lead to a life

of criminal conduct.

Our Social Strategy must also seek to promote a lively, engaging community. In our

view, a society that offers viable cultural and entertainment attractions promotes a sense of

community and increases one’s local pride. We should seek opportunities support local

attractions such as parks and open spaces, theatres, museums, cultural centers and institutions

that preserve local history. These important elements of a community often live and die by

corporate donations and they warrant our serious consideration.


To be sure, we cannot accomplish all of these initiatives at once. Our Social Strategy will

be to set aside a small percentage of revenue each year for such projects, to be evaluated on a

case‐by‐case basis. However, our organization can consistently offer employee’s the

opportunity to engage in community projects. Through strategic partnerships, our company can

offer each employee the opportunity to work up to 40 paid hours per year at educational or

community institutions. Additionally, we support the development of corporate initiatives that

give our employees the opportunity to connect with the community, such as Habitat for

Humanity, a trash pick‐up event or park maintenance, etc. Employees are encouraged to

develop such events and create self‐managed teams with a positive community mission.

Giving back to the community is not an obligation, rather it is a choice we make based

upon rational self‐interest and our commitment to our Code of Ethics. Our principles of

Integrity and Pride dictate that we seek to externalize our convictions, perpetuate our values

and believe in our efforts. An effective Social Strategy can empower employees to believe more

strongly in our company, strengthen our stakeholder relationships and enhance the society in

which we operate—all of which are can only serve to perpetuate the health of our organization.

********

Appendix I Business Code of Ethics

Mission Statement Our mission is to ethically perpetuate and improve our company by creating and providing

increased value and quality service for our customers and clients. In doing so, we recognize that our most important tools are empowered individuals, constant innovation, effective production and a commitment to creativity, organizational learning, honesty in action, and pride in our

efforts.

Responsibility Each member of our organization must be accountable and responsible for his/her decisions,

actions and judgments as they relate to the tasks of our enterprise. Our actions make a difference, logic and reason should guide our decisions. Each member of our organization must base decisions and actions on facts and reason rather than emotion or influence and seek to

fulfill our mission at each stage.

Independence Outside influence must never corrupt our decisions, thoughts and actions. There is no place in

our organization for conflicts of interest, which we define as competing personal and professional interests. Instead, we must be independent in our thoughts, ideas and the pursuit

of our mission and we must respect each individual’s right to rational self‐interest.

Integrity It is our duty to lawfully and honestly carry out our organizational tasks without impeding

another’s ability do to the same. We must have the fundamental ethical understanding that our actions have consequences. Integrity dictates that we know what is right and always intend to

choose to act accordingly. The difference between right and wrong can often determine success or failure; we must always intend to choose to do what is right and seek council when

in doubt.

Honesty We must always strive to accurately represent and interpret reality. We must strive for truth and accuracy in our research, information and client interactions. Our decisions, solutions and

actions must be based on facts, logic and rational judgment. We must never, under any circumstances, lie to obtain unearned value or improve our position.

Justice and Professionalism

Race, sex, age, ethnicity, religious affiliation, political persuasion and other personal standards are not acceptable criteria by which to judge colleagues or potential colleagues. Rather, we must base our judgments upon what we know of each individual’s merits, skills, abilities and experience. It is important that we act with professionalism at all times, treat one another respectfully and accept personal differences. Disagreements are inevitable in business and

should be handled with rational professionalism, not emotional, personal or physical attacks.



Productiveness, Value & Communication Productive work is how we accomplish our mission. Each individual and the organization as a whole must seek to offer productive value at each stage of our operation. We must facilitate the open exchange of ideas and maintain an environment that allows individuals to voice their ideas without intimidation or undue influence. Individual innovation is a critical component of value creation and we must each contribute to an environment in which individual’s have the

freedom to use his/her intelligence, skills and creativity to enhance our company.

Pride Pride comes from the knowledge that we have achieved excellence; therefore we must always strive to earn the pride we take in our efforts. Continued pride is a great indicator of success;

therefore all of our actions must have this goal in mind.

This document contains the entire Code of Ethics for our enterprise: The Code of Ethics applies to each member of our organization and serves as a guide to how the individual employee is expected to operate within the organization, and it serves as a code of conduct for the organization at large. Ethical disputes, doubts or questions: Procedure dictates that ethical dilemmas or disputes must first be judged against the Code of Ethics, then taken to a direct supervisor or manager and, if necessary, taken to the organization’s appointed Ethics Officer. The penalties for ethical violations: Should an employee be adjudged to have violated our stated Code of Ethics, he or she may risk demotion, suspension or termination as determined by the appropriate managers, with consultation from the Ethics Officer.

********

Appendix II—Ethics Test # 1 The Weyco Smoking Ban

In 2003 Weyco Corp instituted a strict anti‐smoking policy. The company stopped hiring smokers, began a voluntary smoking cessation program and charged employees monthly fees

if they continued to smoke without attempting to quit. By 2005, Weyco had banned employees from smoking on their property or at home. Compliance was assured through a breathalyzer test that each employee was required to take. Four employees who refused the test were fired. How would your Code of Ethics address this scenario? (Kolb & Osland, p. 128) A driving force behind our organization’s Code of Ethics is rational self‐interest, the

notion that we must consistently seek to perpetuate the existence of our organization. When

viewed independently a corporate philosophy of this sort may seem to lend itself to a

totalitarian approach to management; one that institutes strict rules and imposes authority

designed to accomplish a common goal. However, our Code of Ethics insists that we must

“respect each individual’s right to rational self‐interest”. Weyco’s smoking ban was designed to

increase the health of employees and minimize insurance costs and, although legal, the root

issue seems to be the questionable ethical infringement on personal rights. Although smoking

has a proven negative effect on an individual’s health, our system of ethics precludes us from

subverting an individual’s freedom of choice on his or her own personal time. Our principle of

Justice dictates that we judge individuals based upon “merits, skills, abilities and experience”

rather than personal standards. This principle would prevent us from denying a qualified

candidate employment because he or she is a smoker. Furthermore, unless smoking at home

has a direct, measurable negative effect on job performance, we could no more fire a person

for smoking at home than we could for being of a particular age or race.

On the contrary, our pledged focus on the ethical perpetuation of our company’s



existence dictates that we have every right to ban smoking inside our offices and on our

property in order to preserve our workspaces and maintain a healthy environment that is

inviting to clients and employees. This is in the company’s best interest because it permits us to

effectively accomplish our economic mission which, theoretically, benefits our employees. If

the negative health effects of private smoking habits became a burden on our workforce, our

course of action would likely be quite different from Weyco’s. As established, our Code of Ethics

precludes us from dictating what our employees do on their own personal time unless it results

in a direct, measurable negative impact on job performance. For example, if an employee

regularly gets overly intoxicated each night and begins to show up to work late, disheveled and

with compromised cognitive abilities, then there is likely grounds for reprimand. However, this

negative effect on job performance probably would not be an issue with smoking. Of course,

the long term effects of smoking may cause health problems which could negatively impact our

company by increasing medical costs and forcing employees to miss work. Still, it would be

against our Code of Ethics to fire these employees, simply because we are committed to

empowering individual rights which, to be blunt, includes one’s right to self‐destruction. That

said, just as Weyco instituted a cessation program, our company’s system of ethics would favor

some voluntary mechanism of promoting individual health such as smoking education, a

workout facility, subsidizing a portion of an employee’s outside gym membership or

encouraging an active lifestyle. Therefore any employee who has worked at our company for

long enough to be affected by a life of smoking would have certainly received clear incentives

to have changed his or her behavior. One might contend that health issues stemming from

smoking are the result of poor choices; yet, while this may be true, our Code of Ethics dictates


that we treat employees as rational and independent individuals and our approach would be to

make health education available rather than commanding acquiescence regarding this issue.

*******

Appendix III—Ethics Test # 2

“Buzz Marketing” is a marketing technique designed to stimulate word‐of‐mouth interest. Uses of Buzz Marketing have pushed ethical boundaries as companies attempt to market

products using paid individuals that pose as “regular” folks rather than professional marketers. For example, a company may hire a paid actor to sit in a coffee shop using a

particularly advanced computer, thus attracting interest from passersby and slyly doling out purchasing information without ever disclosing that he is a paid marketer. Also, companies

have hired workers to enter online chat rooms and assume the identity of their target audience to promote the benefits of a particular product or service—again, not disclosing that they are paid professionals. Buzz Marketing reaches an important audience but often uses

questionable methods to do so, how would your Code of Ethics address this issue? Our Code of Ethics specifically states that “we must always strive to accurately

represent and interpret reality. Therefore, we must strive for truth and accuracy in our

research, information and client interactions”. While there is no mention of full disclosure

regarding marketing activities, it is important to note that we are committed to accurately

representing reality. This edict requires that we do not falsify the true nature of things, thus our

Code of Ethics would not permit us to hire an actor to be embedded in a public place without

disclosing that he or she is a paid professional. Also, our system of ethics would not permit our

marketers to assume a false online identity in order to penetrate targeted chat rooms. In our

view, these techniques would represent a deception designed to gain an unearned value. It

would also appear to be a violation of our Integrity principle, which implies that we externalize

our internal values and requires that we always seek to lawfully and honestly execute our

organizational tasks. This principle would prevent us from withholding information from a

prospective client with the intention of gaining his or her business.

We do, however, acknowledge the importance of generating word‐of‐mouth marketing,

but we would only employ Buzz Marketing techniques under certain ethical guidelines. When



working on behalf of the company it is important that the marketing agent discloses his or her

employment. In a social scenario, a representative may choose to verbally disclose

employment, wear a company tee‐shirt or conduct his or her marketing activity within close

proximity of a banner displaying the company name and logo—as long as it is clearly evident to

passersby that the marketing activity is an official company act. However, if a company

employee wishes to extol the benefits of our products and services in a social situation on his or

her own time, not acting as an official company representative, there is no explicit need for

disclosure of employment. Furthermore, our online marketers are held to the same standards

of disclosure, as they are bound to accurately represent reality when acting on behalf of the

company. We certainly understand the value of one‐to‐one marketing in social situations and in

online communities, but our Code of Ethics mandates that we do so by accurately representing

reality and by clearly disclosing that we are marketing a product or service directly on behalf of

our company.

*******

Bibliography Almeder, Robert & Humber, James & Snoeyenbos, Milton (Eds.). (2001) Business Ethics (3rd ed.). New York: Prometheus Books. Freeman, Edward R. & Harrison, Jeffery S. & Wicks, Andrew C. (2007). Managing for Stakeholders Survival, Reputation, and Success. United State: Caravan Books Greiner, Donna & Kinni, Theodore B. (2001). Ayn Rand and Business. New York: TEXERE Kolb, David A. & Osland, Joyce S. (2007) Organizational Behavior, An Experiential Approach (8th ed.). New Jersey: Prentice Hall Rand, Ayn. (1957). Atlas Shrugged. New York: Penguin Group. Rand, Ayn. (1961) The Virtue of Selfishness. United States: New American Library. Schwartz, Peter (Ed.) (1998) The Ayn Rand Column: Written for the Los Angeles Times (2nd Ed.). The United States: Second Renaissance Books. Online Resources The Ayn Rand Institute: www.aynrand.org


http://www.aynrand.org/

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