1. Ethics in Business and Information Technology

2. Ethics in the Business World
Risk is the product of multiplying the likelihood of a negative event happening by the impact of such an event happening.
If likelihood is high and potential negative impact is large, the risk is considered great.
Risks associated with inappropriate behavior have increased due to
Globalization
Heightened vigilance by
Employees
Shareholders
Regulatory agencies
GRC. ERM. ICRM.* The field of governance and risk management is an alphabet soup of acronyms. Yet, despite the variable terms, the basic definition remains consistent: Effectively mitigating the risks and maximizing the strategic opportunities of the enterprise, from the board of directors and executive team down through the rank and file.
Many factors have pushed governance and risk management to the front burner: Intense scrutiny of practices. The vast potential for losses. An increasingly complex global business environment. Spiraling costs. But done right, risk management can do more than cover your assets; it can also be a powerful value engine, helping companies take intelligent risks to enhance enterprise value and make better risk-based strategic and operational decisions.
GRC: Governance, Risk & Compliance; ERM: Enterprise Risk Management; ICRM: Integrated Compliance and Risk Management

3. Ethics in the Business World
Recent scandals in IT companies
WorldCom
Qwest Communications International Inc.
Adelphia Communications Corp.
Computer Associates (CA)

4. Increases in Risk of Unethical Behavior
Increased globalization of organizations has created a complex work environment that spans diverse societies and cultures making it difficult to apply standard principles and codes.
Employees, shareholders, and regulatory agencies are increasingly sensitive to issues such as violations of accounting standards, failures to disclose substantial changes in business conditions, etc

5. Fostering Good Business Ethics is Important
To protecting the organization and its employees from legal action
To creating an organization that operates consistently
To producing good business
To avoiding unfavorable publicity
To gaining the good will of the community

6. Protection
In 1991 the U.S. Justice Department published sentencing guidelines that suggested more lenient treatment for convicted corporate executives if their companies had established ethics programs

7. Bribery
Bribery involves providing money, property, favors, or anything else of value to someone in business or government in order to obtain a business advantage.

8. Foreign Corrupt Practices Act
FCPA - makes it a crime to bribe a foreign official, a foreign political party official, or a candidate for foreign political office
Applies to any U.S. citizen or company or to any company with shares listed on any U.S. stock exchange
Payment of a bribe is not a crime if it is lawful under the laws of the foreign county in which it was paid

9. Consistent Operation
Develop and abide by values that will create an organization that operates consistently and in a manner that meets the needs of its stakeholders
Operate with honesty and integrity
Operate according to established standards of ethical conduct

10. Produce Good Business Good ethics usually results in good business
Companies that produce safe and effective products avoid costly product recalls and lawsuits
Bad ethics can lead to bad business
When “caught in the middle” employees will act to save themselves
Produce safe and effective products
–Avoid costly recalls and lawsuits
•Provide excellent service
–Maintain customers
•Develop and maintain strong employee relations
–Suffer less turnover
–Enjoy better employee morale

11. Avoid Unfavorable Publicity
Public reputation of a company strongly influences the value assigned to its stock by shareholders, how consumers perceive the company, etc.

12. Gain the Goodwill of the Community
Companies also have social responsibilities that are often recognized and stated in the company’s formal statement of principles
This goodwill often makes it much easier for companies to conduct business

13. How to Improve Corporate Ethics
Appoint a corporate Ethics Officer
A senior-level manager responsible for improving the ethical behavior of the members of an organization
Ethical standards set by Board of Directors
Establish a corporate Code of Conduct
A guide that highlights an organization’s key ethical issues and identifies the overarching values and principles that are important to the organization

14. Conduct Social Audits
In a social audit companies identify ethical lapses committed in the past and take action to avoid similar instances in the future.

15. Employee Training
A company’s code of conduct must be promoted and continually communicated within the organization from top to bottom.
Employees should be presented examples of how the company’s code is applied in real life.

16. Tie Ethical Criteria to Employee Appraisals
In many companies a portion of an employee’s performance evaluation is based on treating others fairly and with respect, operating efficiently, accepting accountability, etc.
These factors are strongly considered when rewards are distributed.

17. Good Ethics and Short Term Losses
Loose the battle to win the war
Ethical operations do not always guarantee business success.
Bad ethics can lead to bad business results
Good ethics is when you run a business on long term goals and not short term gains.
It is never good ethics to rip off a client.
A company with high ethics will check its products before they leave the factory and make sure that it is of the highest quality so that clients will not be harmed or receive products with defects.
This can cause later big losses, just look at what happened to Perrier water in the USA.

18. Reasons for Unethical Behavior
Aggressive competition
Cut-throat suppliers
Unrealistic budgets
Minimum quotas
Tight deadlines
Bonus incentives
Encouragement to “do whatever it takes”