MGMT 452 Corporate Social Responsibility Zeynep Gürhan-Canlı Strategic Approaches to Improving Ethical Behavior Chapter 6 March 10, 2010

The Need for Organizational Ethics Programs Organizations are held accountable for the conduct of their employees. Without such programs, employees may not understand acceptable behavior. Organizations can create unethical corporate cultures. Pressure to succeed Rewarding the wrong behavior Stakeholders demand greater ethical and social responsibility.

Root Causes of Misconduct

Codes of Conduct Formal statements that describe what an organization expects of its employees. Reflect the board of directors and senior management’s desire for organizational compliance. Policies and procedures. Government law and regulation. Relationships with customers, suppliers,and competitors. Acceptance of gifts, travel, and entertainment. Political contributions. Expense reporting. Conflicts of interest. Business payments.

Texas Instruments: Ethics Quick Test Is the action legal? Does it comply with our values? If you do it, will you feel bad? How will it look in the newspaper? If you know it’s wrong, don’t do it! If you’re not sure, ask. Keep asking until you get an answer.

Ethics Officers Assesses organizational needs and risks Develops and distributes the code of ethics Conducts ethics training programs Establishes and maintains a confidential system to respond to ethics questions Makes certain the company is in compliance with government regulation Monitors and audits ethics conduct Takes action when there is a code violation Reviews and updates the code

Ethics Training and Communication Educates employees about the firm’s policies, expectations, relevant laws and regulations, and general social standards. Makes employees aware of available resources, support systems, and personnel who can assist with ethics and legal advice. Can empower employees.

Factors Crucial to Ethics Training Identify the key ethical risk areas Relate ethical decisions to the organizations values and culture Communicate company codes, policies, and procedures regarding ethical business conduct Provide leadership training to model desired behavior Engage in regular training events using a variety of educational tools Establish manuals, websites, and other communication to reinforce ethics training Evaluate and use feedback to improve training

Establishing Systems to Monitor and Enforce Ethical Standards Help or assistance lines Report and request assistance with ethical concerns Observation and feedback Determine level of adequacy in handling ethical issues Whistle-blowing Exposing an employer’s wrongdoing to outsiders, such as the media or government agencies Protection for accurate exposures

Questions to Ask Before Engaging in External Whistle-blowing Have I exhausted internal anonymous reporting opportunities within the organization? Have I examined company policies and codes that outline acceptable behavior and violations of standards? Is this a personal issue that should be resolved through other means? Can I manage the stress that may evolve from exposing potential wrongdoing in the organization? Can I deal with the consequences of resolving an ethical or legal conflict within the organization?

Implementing Organizational Ethics Programs Role of leadership Transformational leaders Communicate a sense of mission, stimulate new ways of thinking, and enhance as well as generate new learning experiences. Consider employee and organizational needs. Transactional leaders Make certain that the required conduct and procedures are implemented. Employees achieve a negotiated level of required ethical performance.

Leaders influence Corporate Culture Organizational leaders use their power and influence to shape corporate culture. Power refers to the influence that leaders have over the behavior and decisions of subordinates. Exerting power is one way to influence the ethical decision-making framework.

Five Power Bases There are five power bases from which one person may influence another: Reward power Coercive power Legitimate power Expert power Referent power

The Role of an Ethical Corporate Culture Top management provides a plan for the corporate culture If executives and CEOs do not explicitly address issues, a culture may emerge where unethical behavior is sanctioned and rewarded. To be successful, ethical standards and expected behaviors should be integrated throughout every organizational process from hiring, training, compensating, and rewarding to firing.

Variation in Employee Conduct Because people are culturally diverse and have different values, they interpret situations differently and will vary in the ethical decisions they make on the same ethical issue.

Variation in Employee Conduct