1. Chapter 8 Developing an Effective Ethics Program

2. Learning Objectives
Understand the responsibility of the corporation to stakeholders
Understand why businesses need ethics programs
List the minimum requirements for an ethics program

3. Learning Objectives (continued)
Describe the role of codes of ethics in identifying key corporate risk areas
Identify factors in successful ethics training, program types, and goals
Examine the ways ethical standards are monitored, audited, and enforced

4. Ethics Programs
Designed to encourage ethical decision making in business
Have to be well-designed to prevent major misconduct

5. 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
Corporation is created in the society to perform specific social functions and is accountable to the society for its actions

6. Need for Organizational Ethics Programs
Sensitizes employees about the potential legal and ethical issues within the work environment
Ensures proper controls are in place to detect conflict of interest that impacts consumer well- being
Helps eliminate unethical employees through screening techniques
Promotes legal and ethical conduct by establishing, communicating, and monitoring ethical values and legal requirements

7. Effective Ethics Program
Ensures employees understand ethical values and comply with the policies and codes of conduct
Helps avoid legal problems
Developed as an organizational control system to help predict employee behavior

8. Requirements for Ethics and Compliance Programs
Standards and procedures, such as codes of ethics, that are reasonably capable of detecting and preventing misconduct
High-level personnel who are responsible for an ethics and compliance program
No substantial discretionary authority given to individuals with a propensity for misconduct
Standards and procedures communicated effectively via ethics training programs
Systems to monitor, audit, and report misconduct
Consistent enforcement of standards, codes, and punishment
Continuous improvement of the ethics and compliance program

9. Values versus Compliance Programs
Compliance orientation
Requires employees to identify with and commit to specific required conduct
Uses legal terms, statutes, and contracts
Values orientation
Focuses on developing abstract and shared values such as accountability and commitment

10. Codes of Conduct
Formal statements that describe what an organization expects of its employees
Code of ethics: Comprehensive set of general statements which serve as principles and as the basis for rules of conduct
Values - Trustworthiness, respect, responsibility, fairness, caring, and citizenship
Statement of values: Serves the general public and addresses distinct groups such as stakeholders

11. Table 8.4 - Developing and Implementing a Code of Ethics

12. Responsibilities of Ethics Officers
Assess the needs and risks of an organization-wide ethics program
Develop and distribute a code of conduct or ethics
Conduct training programs for employees
Establish and maintain a confidential service to answer employees’ questions about ethical issues

13. Responsibilities of Ethics Officers (continued)
Ensure the company is in compliance with government regulation
Monitor and audit ethical conduct
Take action on possible violations of the company’s code
Review and update the code

14. Ethics Training and Communication
Training programs educate employees about:
Firm’s policies and expectations
Relevant laws, regulations, and social standards
Available resources and social support systems
Empowers employees to ask tough questions and to make sound ethical decisions
Initiatives should reflect the organization’s size, culture, values, management style, and employee base

15. Table 8.5 - Key Goals of Successful Ethics Training Programs

16. Systems to Monitor and Enforce Ethical Standards
External audit or review of company activities
Role-playing exercises and questionnaires
Providing awareness about an internal system that allows employees to report misconduct
Case-management services and software
Consistent enforcement of standards and taking necessary disciplinary action

17. Mistakes in Designing and Implementing an Ethics Program
Failure to understand ethics-related objectives while designing programs
Setting unrealistic goals
Senior management’s failure in taking ownership of the ethics program
Developing ethical program material that does not help the average employee
Converting a country-specific program into a firm’s global operation