Codes of Ethics

responsive

companies that begin to evolve cultures that contain values other than productivity, legality, and profitability. codes of ethics become more important and reflect societal rather than internal focus

emerging ethical

companies who actively seek to balance between ethics and profits. overt efforts to manage the organization's culture to produce an ethical atmosphere. codes of conduct are externally focused and are more than lists of rules

Equifax

company that collects credit info. credit scoring agencies like FICO obtain information from them

amoral

organization that has culture characterized by "winning at any cost" attitudes. productivity and profitability are key concerns. concerns for ethics occur on an after the face basis when the org has been caught doing something unethical/illegal

legalistic

organization that has culture that is characterized by compliance with letter of law rather than its spirit. legalistic organization do what they must do rather than what they should do

FTC (federal trade commission), consumer finance protection bureau (CFPB)

overseeing agencies of Equifax. first agency has limited oversight, second put into place in 201 with Dodd Frank act (Congress thinking of eliminating)

compliance with university laws

1st standard in TCU code of ethics

1. CEO accepted blame and reported incident immediately 2. CEO pulled all forms of Tylenol off shelves and took back every existing bottle of Tylenol in exchange for coupon for any painkiller

2 main highlights that CEO did right in Tylenol case by following code of ethics

reporting violations (no retaliation, how to report, reporting process)

2nd standard in TCU code of ethics

employment process, renting, insurance companies

3 areas where your FICO score is used and thus goes back to Equifax

what to report (conflicts of interest, gift policy, confidentiality)

3rd standard in TCU code of ethics

1. meet regulatory requirements 2. help develop an ethical culture 3. establishes expectations by management, employees, owners, community, customers, suppliers and distributors, other stakeholders 4. send signals to employees, customers, vendors, and the community as to the organization's expectations for its own behavior and the behavior of others

4 reasons for having a code of ethics (purpose of having)

1. inspire employees to understand the standards of business 2. communicate to customers and other outsiders about the standards of the business 3. set out the "rules of the road" for employees for appropriate behavior within the firm 4. clarify appropriate legal standards or regulatory policy compliance standards 5. outline the process by which the code will be communicated and updated

5 goals the code of ethics should accomplish

1) amoral 2) legalistic 3) responsive 4) emerging ethical 5) ethical

5 stages of corporate moral development

1. guidelines 2. organization 3. workers and management 4. conduct 5. actions 6. primary values

6 main components w/in definition of code of ethics

1. many codes old and tired and never updated 2. lack of training 3. lack of consistent reinforcement 4. failure to use to justify employment or customer-related action 5. failure to update to reflect changes in industry and business environment 6. confusion of employees and others who are covered by the code 7. if everything in code is ethical judgment, are there room for differences of opinion

7 problems with codes of ethics

1. refer to it frequently 2. set the tone at the top 3. make sure it applies across all levels of the hierarchy 4. update it 5. make sure it is relevant 6. make sure everyone is familiar with it and understands how to use it 7. make sure that a balance between legal compliance, internal policy compliance, and ethical aspirations is maintained

7 ways to use an ethical code to its fullest

known, situation

answer of what is supposed to be done is __________, but the _________ may make the decision difficult

compliance

based on TCU's code of ethics, what would you assume is TCU's primary value

ethical

behavior of companies is characterized by an organization-wide acceptance of a common set of ethical values that permeates the organization's culture. planning system must include strategic and ethical concerns. strong sense of moral obligation and duty combined with moral courage to pursue unpopular or less profitable paths

codes of ethics

codes of conduct that act as standards of business and studying how they drive behavior

foot in the door

encompasses having action outside of normal business (favors) influencing behavior more than anticipated. familiarity and relationships drive sales. start of fraud usually. reason for companies' gift policy. common tactic with pharmaceutical reps

Johnson and Johnson with Tylenol case

example of company with good code of ethics and case where the effect of following it was positive

Union Carbide scandal/Bhoplar disaster

example of poor code of ethics leading to tragedy

code of ethics

important document for any business or non-profit also known as codes of conduct, business principles, mission and values statements, etc.

codes of ethics

in every business scenario must translate how the ___________ applies

6-8 week gap between discovery and informing, 5 top management members sold off all stock, plan to help consumers that took away customers' right to sue and forced them to pay

main ethical problems in Equifax scandal

1. did not slow production with decreasing demand and had build-up stores of MIC 2. 3 safety systems were not functioning in plant that could have mitigated disaster 3. did not address reported problem until after tea break 4. public warning alarm sounded briefly then silenced

main problems (negligence) in Union Carbide scandal/Bhoplar disaster

create innovation for stakeholders (profit-centered)

mission of Dow/Union Carbide in Code of Ethics

fraud

often starts occurring with small acts then builds (favor and likelihood to do something escalates at the same time)

didn't follow code of ethics

reason CEO stated he did not follow legal's advice to only pull off tampered form of Tylenol and instead pulled off all forms

first responsibility to immediate consumers, last responsibility was to stock holders (making profit) and profits viewed as residual coming after offering esteemed product and service

reason CEO took all forms of Tylenol off of shelf instead of just tampered with form although legal advised only taking tampered to minimize financial damages

straying from Code of Ethics

reason Johnson and Johnson cites for the ethical problems (fraud) that have recently arisen

no response over weekend, 1st response gave $3M for immediate expense with no right to sue or further compensation

response of Union Carbide following Bhoplar disaster

1. who it applies to 2. definition of what's being discussed 3. standards

structure of TCU's code of ethics

maximize long-term value per share by being most valuable and respected science company

vision of Dow/Union Carbide in Code of Ethics

moral statement (what you should be doing)

what TCU highlights its code of ethics to be

profit and dominance, community

what Union Carbide's code of ethics emphasized, what it failed to mention

codes of ethics

what comparison between Tylenol disaster and Union Carbide/Bhoplar disaster is (not comparison of good vs. evil)

Equifax breach

what happened where 143 M citizens' information (social security, mother's maiden name, personal information) was compromised

improve security

what multiple statements signed by Equifax has promised in last few years

self-interest

what people usually base their decisions of what to do on

people who work or volunteer for TCU

who the TCU code of ethics applies to

Union Carbide Scandal/Bhoplar Disaster

worst industrial accident in world history

codes of ethics

written set of guidelines issued by an organization to its workers and management to help them conduct their action in accordance with its primary values and ethical standards