Chapter Eight Developing an Effective Ethics Program

The responsibility of the corporation as a moral agent

The need for organizational ethics programs An effective ethics program An ethics program can help avoid legal

problems Codes of conduct Ethics officers Ethics training and communication Systems to monitor and enforce ethical

standards

Developing an Effective Ethics Program

Enron had a code of ethics and was a member of the Better Business Bureau. Discuss this statement?

Business ethics programs have the potential to help top managers establish an ethical culture and eliminate the opportunity for unethical conduct.

Developing an Effective Ethics Program

Do you view orgs only as a profit making entities? Or as a moral agents?

As moral agents, companies need to obey the laws and regulations that define acceptable business conduct.

Companies are not human. That is why laws and regulations are necessary to provide formal structural restraints and guidance on ethical issues. See figure 8-1 and read.

The responsibility of the corporation as a moral agent

Doctor’s excuse And read the list on page 355. Ethics programs are required? Why? Yes they are to help sensitize employees to

the potential legal and ethical issues within their work environments. Some time you might not know that speaking to a friend about how you make the product is unethical. That is why creating ethics program is important to know and recognize ethical issues from non ethical.

The need for organizational ethics program

Would you terminate unethical person? Consider the bad apple analogy.

The need for organizational ethics program

A company must have an effective program to ensure that all employees understand its values and comply with the policies and code of conduct that create its ethical culture.

People are coming to work from different cultures and different backgrounds, that is why they need to have a program of consistent ethical standards of what is right and what is not.

An effective ethics program

Using “carrot and stick” approach internally before used on the company externally.

Governments and governmental agencies may use the above approach on companies. Like the Sarbanes –Oxley Act in the US.

Again the value orientation vs the compliance orientation.

An ethics program can help avoid legal problems

Code of conduct: formal statements that describe what an org expects of its employees

Forms of such statements are:1- code of ethics: most comprehensive and

consists of general statements, some times inspirational statements but usually specifies acceptable or unacceptable types of behavior.

Codes of Conduct

2-code of conduct: regulatory in nature and entails less debate.

Problems with code of ethicsa. Not promoted and employees don’t read.b. Not easily accessiblec. Not understandable by average employees

(legal terminologies). d. Vague and does not provide clear direction.e. Top management never refer to the code in

spirit.

3- statement of values: it serves the general public and stakeholders.

These terms are used interchangeably.Code of ethics reflect what???It reflects top management’s desire for

compliance with the values, rules, and policies that support an ethical culture.

Code of ethics care about 6 values:1. Trustworthiness2. Respect3. Responsibility4. Fairness5. Caring6. CitizenshipSuch values require distribution, training, and

support by top mgt.

Codes of conduct will not resolve every ethical issue encountered in daily operations. But they help employees and managers deal with ethical dilemmas by prescribing specific activities.

How would you promote your code of conduct or code of ethics?

Code of ethics specifies that employees must act with zero tolerance toward bribery, fraud, and corruption in all areas and functions.

Codes of conduct do not have to be so detailed that they take into account every situation but they should provide guidelines that are capable of helping employees achieve organizational ethical objectives and addressing risks in an accepted way.

Recognition by national awards like Business Ethics “100 Best Corporate Citizens” as a list.

Do you want to be in the list so you need to create and nurture programs in such direction

Fortune list of America’s most admired companies. Texas Instruments ranked number one for 3 years.

High ranking persons to enforce business ethics and code of ethics programs, those known to respect ethics, values and principles.

What are their responsibilities?

Ethics officers

Training objectives Training methods To inform To educate And to get feedback and understanding of

the purpose or purposes behind the ethical program and training

Employee participation and involvement

Ethics training and communication

Observing employees Internal audits Surveys Reporting systems-hotline Investigations External auditing Disciplinary actions

Systems to monitor and enforce ethical standards

Continuous improvement of the ethics program

Misunderstanding the goals and objectives of the program.

Leadership is not a role model Unrealistic goals No leadership support and ownership of the

program Unable to address employees’ needs and

problems Unable to recognize cross cultural

differences Impractical programs

Common mistakes

The existence and enforcement of company rules and procedures limit unethical practices in the organization.

What is communication means here? Change must start from the top and by the top. Systems to monitor and enforce ethical standardsContinuous improvement Common mistakes in designing and implementing an

ethics program. Review the chapter and say in a paragraph; what would

you do as a manager to create an effective ethics program.

Ethics training and communication