1. Managing Business Ethics
Chapter 6
Treviño & Nelson – 5th Edition

2. Chapter 6 Overview Introduction Structuring Ethics Management
Communicating Ethics
Using the Reward System to Reinforce the Ethics Message
Evaluating the Ethics Program
Values or Compliance Approaches
Globalizing and Ethics Program
Conlusion

3. Structuring Ethics Management
Corporate Ethics Office
Ethics Officers
Insiders vs. Outsiders
Ethics Officer Background
Ethics Infrastructure
Corporate Ethics Committee

4. U.S. Sentencing Guidelines
Established in 1991 for companies being sentenced or reaching settlements
Apply to all companies
Can be triggered by the activities of one employee
Give judges latitude to impose additional fines
Death Penalty is also an option: government forces company to divest all assets and be liquidated
Do not apply to Equal Employment Opportunity Commission (EEOC) violations
Such as discrimination, sexual harassment, etc.
EEOC has its own penalties

5. U.S. Sentencing Commission Guidelines - 1991
Companies must “self-report” wrong-doing
Companies must cooperate with any investigation
Companies must have an “effective” ethics program in place
Defined, well-communicated policy
Specific executive named to manage ethics and compliance
Care taken re: hiring and promotions
Ethics training and communications for all employees and agents
Compliance & whistle-blowing systems
Care taken re: future offenses
Consistent discipline

6. Communicating Ethics Basic Communication Principles
Evaluating the Current State of Ethics Communication
Multiple Communication Channels
Novel Approach to Ethics Communication at USAA
Mission or Values Statements
Policy Manuals
Codes of Conduct
Communicating Senior Management Commitment to Ethics
Ethics training programs
Training new recruits
Training existing employees
Formal Reporting Systems

7. Know Your Audience Characteristics Needs Good Soldier Loose Canons
Good compass
Know rules
Encouragement
Reinforcement
Loose Canons
Don’t know rules
Training
Heightened supervision
Grenades
No compass
Personal agenda
May or may not know rules
Senior management example
Swift discipline

8. Compliance vs. Values-Based Approaches
Compliance-Based
Rooted in law & regulations
Reactive
Limited senior mgmt involvement
Obvious penalties
“Signatures required”
Values-Based
Rooted in culture & driven by values
Proactive and aspirational
Commitment from senior mgmt
Aligned with performance measures

9. Compliance vs. Values-Based Approachesv
Employees more likely to:
seek advice inside
be willing to report
be committed
support decisions
be aware of ethical & legal issues
Less likely to be unethical
Compliance-Based
Employees more likely to:
think company is protecting itself
seek advice outside
be cynical
Less likely to:
report bad news
be committed

10. What’s wrong with this picture?
You're a management consultant who has been asked by Green Company to help design an ethics communication and training program for all Green Co. employees. Your meetings to date have been with the head of human resources, and your contract with the company has been negotiated with him. Once the papers have been signed, you begin your research and are quickly stymied by Green's corporate counsel. He says that you will not be allowed to ask employees about ethical dilemmas that have occurred at Green. He specifically asks that you get your information from other sources such as press accounts of problems in the industry, or from other organizations with which you've worked. In addition, the head of human resources has told you that you'll be unable to meet the three most senior executives because they're busy negotiating a large acquisition. You will have access to other high-level managers who can tell you what they think the seniors want. You're instructed to write a code of conduct for the company, a mission statement, and prepare presentations for the seniors to give to employees sometime next month on corporate expectations and values.