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UNIVERSITY OF

TECHNOLOGY
Business Ethics
Module 6 Managing
Ethics and Legal
Compliance
Business Ethics- Yanike Harrison

Elements for Structuring Ethics


Many businesses are allocating significant resources to
formal ethics and legal compliance programs. The
increasing attention to formal ethics management
programs has come about partially because of media
attention to scandals in American business and
managements awareness of the U.S. Sentencing
Guidelines because for a number of years, organizations
such as the Conference Board have held business ethics
conferences at which formal ethics management systems
are encouraged; and because some corporate leaders are
simply committed to the importance of ethics in their
organizations. Perhaps nothing, however, has influenced
corporate ethics programs in the United States more than
the U.S. Sentencing Guidelines, which took effect in the
early 1990s.
Business Ethics- Yanike Harrison

Elements for Structuring Ethics


Seven Requirements for Due Diligence and an Effective Compliance
Program
1. Establishing compliance standards reasonably capable of preventing criminal
conduct
2. Assigning specific high-level individuals with responsibility to oversee those
compliance standards
3. Exercising due care to ensure that discretionary authority is not delegated to
individuals with a propensity to engage in illegality
4. Taking necessary steps to communicate compliance standards and procedures to all
employees, with a special emphasis on training and the dissemination of manuals
5. Taking reasonable steps to achieve compliance with written standards through
monitoring, auditing, and other systems designed to detect criminal conduct, including a
reporting system free of retribution to employees who report criminal conduct
6. Consistently enforcing the organizations written standards through appropriate
disciplinary mechanism, including, as appropriate, discipline of individuals responsible for
failure to detect an offense
7. After an offense is detected, taking all reasonable steps to respond and to prevent
future similar conduct
These requirements are from the U.S. Sentencing Guidelines of 1991

Business Ethics- Yanike Harrison

Communicating Ethics
Within the ethics infrastructure, good communicationdownward, upward, and
two-way is essential if an organization is to have a strong, aligned ethics culture.
The organization must evaluate the current state of ethics communication and
initiatives.
It must communicate its values, standards, and policies in a variety of formal
and informal ways that meet its employees needs. These communication efforts
should:
Be synergistic,
Be clear
Be consistent
Be credible.
They also need to be executed in a variety of media, because people learn
things in different ways. In general, the old advice to speechwriters still holds.
Tell em what youre going to tell em, then tell em, then tell em what you told
em. In addition to receiving downward communication from management,
employees must also have opportunities to communicate their ethical concerns
upward. Finally, an open communication environment must be created that says
its okay to ask questions, and its okay to talk about ethics.

Business Ethics- Yanike Harrison

Communicating Ethics
Basic Communications Principles
ALIGN THE FORMAL AND INFORMAL COMMUNICATION SYSTEMS : When most people think of a
corporate communication system, they think of the obvious
the company newspaper, website, and annual report. However, like culture, a corporate
communication system consists of formal and informal components. Formal
communications include all formal written and electronic communicationnewspapers,
magazines, memos, recruiting literature, policy manuals, annual reports, websites,
and advertisingas well as formalized oral communication such as meetings
and speeches. But perhaps the most powerful component in a corporations communication
system is an informal one known as the grapevine.
The grapevinea continual stream of information among employees about
whats really going onexists in every organization. It contains news, rumours,
impressions, and perceptions. Surprisingly, research has shown that from 70 to 90
percent of the information that passes through the grapevine is accurate. In survey
after survey of employees in numerous and varied businesses, the grapevine is where
they said they received most of their information about their employer.

Business Ethics- Yanike Harrison

Communicating Ethics
Basic Communications Principles
1) ANALYZE THE AUDIENCE
The first thing to do when designing a communication program is to analyze the
needs of your audience. Consider what employees already know, what they
need to know, what biases and abilities they have, what the desired and
required behaviours look like, when they should be asking questions, and
where they can go to report their concerns and to ask for help. When
designing ethics communication for a typical employee population,
organizations need to consider three kinds of people. Because the terms are
easy to visualize and remember, we use military jargon to describe the three
types.
Good Soldiers Group I includes the good soldiers. These people understand
and follow the rules and policies of the organization, and they have good
ethical compasses. They have the judgment or experience required to discern
the difference between right and wrong, and they have the moral grounding to
do the right thing.
Be careful to note that these arent just soldiers who follow orders, right or
wrong.

Business Ethics- Yanike Harrison

Communicating Ethics
Basic Communications Principles
Loose Cannons In Group II are the loose cannonsthese people may have
good ethical compasses, but they dont know their corporations policies. They may
not even be familiar with general ethical standards in business. Loose cannons may
be inexperienced; or they may have transferred from another, unrelated industry
with
very different norms; or they may never have read a policy manual. Whatever the
reason, loose cannons may be well meaning, but theyre naive. Without guidance
loose cannons may not even consider ethics in the business environment.

Grenades People in Group III are grenades, and theyre neither ignorant nor
benign. These employees may or may not know the rules, but they dont care
either
way. They have their own agenda, and they lack any company or professional
loyalty. We call them grenades because their activities can blow up suddenly and
severely damage the organization.

Business Ethics- Yanike Harrison

Communicating Ethics
Basic Communications Principles
Although the communication needs of the three groups
overlap, the emphasis for each specific group is clear. Good
soldiers need support because good people often feel
pressured to compromise in order to fit in. Good soldiers
need to know that their instincts are right and their
behaviour is not the exception; in fact, it represents the
organizational model. Loose cannons need to be educated;
they need to know and understand basic norms of ethical
conduct and specific company policy and standards.
Grenades need to know unequivocally that ethical lapses
will not be tolerated. They need to see good behaviour
rewarded and ethical lapses dealt with swiftly, consistently,
and firmly.

Business Ethics- Yanike Harrison

Communicating Ethics
Basic Communications Principles
2) Evaluating the Current State of Ethics Communications
Before beginning the actual design of an ethics communication program, its
essential to conduct an evaluation that asks the following questions.
a) WHAT KINDS OF ETHICAL DILEMMAS ARE EMPLOYEES LIKELY TO
ENCOUNTER?
In addition to common ethical dilemmas faced by employees everywhere,
organizations need to identify the kinds of issues and dilemmas that might be
unique to their particular industry. For example, a chemical company needs to
pay special attention to environmental and safety dilemmas. A financial firm
should pay extremely close attention
to fiduciary, confidentiality, and conflict-of-interest issues.

b) WHAT DONT EMPLOYEES KNOW?


Is the company hiring numerous midcareer hires who may come from other
industries with different standards of conduct?

Business Ethics- Yanike Harrison