Chapter Eight

1. Chapter Eight Developing an Effective Ethics Program

2. 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

3. 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.

4. The responsibility of the corporation as a moral agent • 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.

5. The need for organizational ethics program • 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.

6. The need for organizational ethics program • Would you terminate unethical person? • Consider the bad apple analogy.

7. An effective 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.

8. An ethics program can help avoid legal problems • 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.

9. Codes of Conduct • 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.

10. 2-code of conduct: regulatory in nature and entails less debate. Problems with code of ethics • Not promoted and employees don’t read. • Not easily accessible • Not understandable by average employees (legal terminologies). • Vague and does not provide clear direction. • Top management never refer to the code in spirit.

11. 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.

12. Code of ethics care about 6 values: • Trustworthiness • Respect • Responsibility • Fairness • Caring • Citizenship Such values require distribution, training, and support by top mgt.

13. 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.

14. 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.

15. 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.

16. Ethics officers • High ranking persons to enforce business ethics and code of ethics programs, those known to respect ethics, values and principles. • What are their responsibilities?

17. Ethics training and communication • 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

18. Systems to monitor and enforce ethical standards • Observing employees • Internal audits • Surveys • Reporting systems-hotline • Investigations • External auditing • Disciplinary actions

19. Continuous improvement of the ethics program

20. Common mistakes • 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

21. Ethics training and communication • 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 standards Continuous 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.