1. Copyright © Houghton Mifflin Company8-1 O.C. Ferrell University of New Mexico John Fraedrich University of Wyoming Linda Ferrell University of New Mexico Business Ethics Ethical Decision Making and Cases, Seventh Edition For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.

2. Copyright © Houghton Mifflin Company8-2 Chapter 8 Developing an Effective Ethics Program

3. Copyright © Houghton Mifflin Company8-3 The Responsibility of the Corporation as a Moral Agent Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents that are accountable for their conduct to their employees, investors, suppliers, and customers.

4. Copyright © Houghton Mifflin Company8-4 Why Do Companies Develop Ethics Programs? To allow employees and stakeholders to understand the values of the business To comply with policies and codes of conduct To create the ethical climate of the business To create TRUST

5. Copyright © Houghton Mifflin Company8-5 Building Trust and Confidence Make customers the top priority Assume personal responsibility and accountability Open and frequent communication Handle crises honestly Stick to your ethics code no matter what

6. Copyright © Houghton Mifflin Company8-6 Values or Compliance Programs? Compliance orientation –Legal terms, statutes, contracts, rules, and penalties Values orientation –Develop shared values –Focus on the abstract –Teach to aspire to ethical behavior instead of coercion

7. Copyright © Houghton Mifflin Company8-7 An Effective Ethics Program Code of ethics Ethics compliance program Monitor, audit, and report misconduct Training Enforcement Continuous improvement program

8. Copyright © Houghton Mifflin Company8-8 Code of Ethics and Conduct Formal statement of what an organization expects in the way of ethical behavior (what behaviors are acceptable or unacceptable) Reflects senior management’s organizational values, rules, and policies

9. Copyright © Houghton Mifflin Company8-9 Six Steps in Implementing a Code of Ethics Distribute internally and externally Assist employees in understanding Specify management’s role Make employees responsible for understanding the code Establish grievance procedures Provide a concluding statement

10. Copyright © Houghton Mifflin Company8-10 Role of an Ethics Officer Coordinate the program with top management Develop, revise, and disseminate the code of ethics Develop effective ethics training tools Establish audit and control systems Develop enforcement techniques Revise the program as needed

11. Copyright © Houghton Mifflin Company8-11 Common Mistakes in Designing and Implementing an Ethics Program Developing materials that do not address the average employee Implementing an “American” program to a firm’s international operations Designing an ethics program with a few lectures or cases Taking a legalistic approach

12. Copyright © Houghton Mifflin Company8-12 Common Mistakes in Designing and Implementing an Ethics Program Not recognizing the need for a program Not setting realistic and measurable program objectives Management’s failure to take ownership of the ethics program