Business Ethics Chapter 8

Updated Foreign Corrupt Practices Act guidelines

•Recommend incorporating incentives into the firm's corporate culture to encourage ethical behavior.

Employee diversity

•Requires explicit communication and training (financial reporting, use of company resources, and intellectual property).

Six values that are desirable for codes of ethics

(1) trustworthiness (2) respect (3) responsibility (4) fairness (5) caring (6) citizenship

Ethics Officers Responsibilities

1.Assess needs/risks an organization-wide ethics program must address. 2.Develop/distribute the code of conduct or ethics. 3.Conduct training programs. 4.Establish/maintain confidential services to answer employees' ethical questions. 5.Make sure company is in compliance. 6.Monitor/audit ethical conduct. 7.Take action on code violations. 8.Review/update code

Common Mistakes in Designing and Implementing an Ethics Program

1.Failure to understand and appreciate goals. 2.Setting unrealistic and unmeasurable program objectives. 3.Senior management's failure to take ownership of the ethics program. 4.Developing program materials that do not address the needs of the average employee. 5.Transferring an "American" program to a firm's international operations. 6.Designing an ethics program that is little more than a series of lectures.

FSGO

A "carrot-and-stick" philosophy. Carrot = Avoid penalties should a violation occur. Stick = Possibility of being fined or put on probation if convicted of a crime. Encourages federal judges to increase fines for organizations that continually tolerate misconduct

Ethics Programs

Designed to encourage ethical decision making in business •Must be well-designed to prevent major misconduct.

Reasons codes fail

Not promoted so employees don't read it. Not easily accessible. Written too legalistically. Written vaguely, providing no accurate direction. Top management never refers to the code in body or spirit

Compliance orientation

Requires employees to identify with and commit to specific required conduct. Uses legal terms, statutes, and contracts to teach employees the rules and penalties for noncompliance

Research

When personal and organizational values are compatible with one another, it tends to positively influence workplace ethics

Statement of values

•Conceived by management, fully developed with input from all stakeholders.

Responsibility of the Corporation to Stakeholders

•Corporations are viewed as moral agents that are accountable to stakeholders. •Coverage of specific issues in the media about a firm adds to its reputation as a moral agent. •A corporation is created in society to perform specific social functions; accountable to the society for its actions.

Systems to Monitor and Enforce Ethical Standards

•How employees handle ethically charged situations. •Role-playing exercises. •Discussion regarding ethical issues and dilemmas. •Questionnaires. •Internal systems that allow employees to report misconduct. •Consultants. •Case-management services and software.

The Need for Organizational Ethics Programs

•Impossible to know and understand all laws. •To sensitize employees to potential legal/ethical issues in work environments. •Increase employees' ethical awareness, participation in ethical decision making, and ethical behavior. •Fostering ethical decision making requires terminating unethical employees and improving the firm's ethical standards. •Bad Apples (Employees) •Bad Barrel (Organization) •The more misconduct, the less trust employees feel toward the organization—and the greater the turnover. •Companies are vulnerable to ethical problems and legal violations if their employees do not know how to make the right decisions. •Develop a program by establishing, communicating, and monitoring the ethical value/legal requirements for corporate culture, industry, and country.

Code of conduct

•More like a regulatory set of rules. Tends to elicit less debate about specific actions.

Code of ethics

•Most comprehensive; consists of general statements, sometimes altruistic or inspirational, that serve as principles and as the basis for rules of conduct.

Values orientation

•Strive to develop shared values. Penalties are attached but the focus is on an abstract core of ideals (accountability and commitment). The foundation of an organizational ethical culture.

Organizational probation

•Use of on-site consultants to observe and monitor legal compliance efforts as well as to report the firm's progress toward avoiding misconduct to the U.S. Sentencing Commission.