Chapter 8

Developing an
Effective Ethics
Program

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Learning Objectives
 Understand the responsibility of the corporation to
stakeholders
 Understand why businesses need ethics programs
 List the minimum requirements for an ethics
program

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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

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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Requirements for Ethics and Compliance
Programs
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Values versus Compliance Programs

Compliance
Values orientation
orientation

●
Requires employees to ●
Focuses on developing
identify with and commit to
abstract and shared values
specific required conduct
such as accountability and
●
Uses legal terms, statutes,
commitment
and contracts

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Table 8.4 - Developing and Implementing
a Code of Ethics

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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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Table 8.5 - Key Goals of Successful Ethics
Training Programs

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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

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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.