Chapter 10

Making it Stick:
Doing What’s Right
in a Competitive
Market

McGraw-Hill Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 “As long as fallible human beings are in charge, we can
expect more businesses to get into big trouble. Generally
they’re going to fail through bad luck or bad business
judgment, but sometimes they’re going to fail through
negligence or active malfeasance or even active criminal
behavior. The challenge our society faces is to study these
events and to take lessons from them about ethical conduct
personally and ethical conduct as representatives of our
companies, and about public policy responses. I ask myself,
what should I do differently in my job… What should my
company do differently?”
James A. Baker, III
White House Chief of Staff for President Ronald Reagan,
and Secretary of State for President George H.W. Bush
10-2 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 A CEO’s Life…
• DEMANDING CUSTOMERS who want new and better products
and services at lower prices.
• IMPATIENT STOCKHOLDERS who want the stock price to rise
each and every quarter.
• AGGRESSIVE VENDORS who want to sell you more of
everything.
• DEMANDING FEDERAL, STATE, AND LOCAL OFFICIALS who
want to burden you with more rules and regulations while
encouraging you to hire more people and pay more taxes.
• DEMANDING CREDITORS who want their loan payments on
time.
• AGGRESSIVE COMPETITORS who want to steal your customers
from you.

10-3 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Making it Stick
1. Establish a Code of Ethics
2. Support the Code of Ethics with extensive training
for every member of the organization.
3. Hire an Ethics Officer
4. Celebrate and Reward the Ethical behavior
demonstrated by your employees.
5. Promote your organization’s commitment to ethical
behavior.
6. Continue to monitor the behavior as you grow.
10-4 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Establish a Code of Ethics
A well-written Code of Ethics can do
several things:
• It can capture what the organization understands
‘ethical behavior’ to mean – your Values Statement.
• It can establish a detailed guide to acceptable
behavior.
• It can state policies for behavior in specific situations.
• It can document punishments for violations of those
policies

10-5 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Establish a Code of Ethics
The Institute of Business Ethics
recommends:
– Find a champion
– Get endorsement from the Chairman and
the Board
– Find out what bothers people

10-6 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Establish a Code of Ethics
– Pick a well-tested model
– Produce a company code of conduct
– Try it out first
– Issue the code and make it known
– Make it work

10-7 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Support the Code With Extensive Training for Every
Member of the Organization
Since the Code can’t capture every possible example
of unethical behavior, each department of the
organization should take the Code and apply it to
examples that could arise in their area. In these
department or team meetings, employees can work
on:
• Recognizing the Ethical Issue
• Discussing options for an appropriate response
• Selecting the best option for the organization

10-8 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Hire an Ethics Officer
The Ethics and Compliance Officers Association documented the
chief responsibilities of their members in a survey, which
included some of the following:
89% Oversight of hotline/guideline/internal reporting
89% Preparation and delivery of internal presentations
88% Organization-wide communications
85% Senior management and/or board briefings/communications
84% Training Design
83% Assessing/reviewing vulnerabilities
83% Assessing/reviewing success/failure of initiatives
79% Overseeing investigations of wrongdoing
79% Management of program documentation
77% Direct handling of hotline/guideline/internal reporting
72% Preparation and delivery of external presentations
68% Establishing company policy and procedures
64% International program development
61% Training delivery
10-9 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Celebrate and Reward the Ethical Behavior
Demonstrated by Your Employees
• Celebrate examples of good ethical behavior in your
company newsletter
• Award prizes for ethical behavior – and let the
employee choose the reward
• Award prizes for new and creative ideas – and let the
employee choose the reward
• Recognize employees who represent the standard of
behavior to which you are committing.
• Declare an Ethics Day and allow every department to
share their successes

10-10 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Promote Your Organizations’ Commitment to Ethical
Behavior
• Offer a no-questions-asked refund like Lands’ End.
• Offer a 110% price-match guarantee like Home
Depot.
• If you overcharge a client by mistake, give them a
refund plus interest before their accounting
department figures out the error and asks for the
money.

10-11 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Promote Your Organizations’ Commitment to Ethical
Behavior
• Get your clients involved in the development of your
Ethics Policies – ask them to tell you what forms of
behavior or guarantees will make them feel
reassured that they are dealing with an ethical
company.
• Let your employees visit client sites to talk about
your Code of Ethics in person.
• Share your success stories with all of your
stakeholders, not just your employees.
• Invite your stakeholders to your Ethics Day
celebration.

10-12 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Continue to Monitor the Behavior
as You Grow
• Any organization’s commitment to ethical
performance must be watched constantly.
• It is easy for other business issues to take priority and
for the Code of Ethics to suddenly become ‘taken for
granted’.
• Also, the continued growth of technology will
present new situations for ethical dilemmas such as
policies on email monitoring and web surfing, so
your Code may need to be re-written on a regular
basis.

10-13 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.
 Becoming a Transparent Organization
• Reactive ethical policies – Policies that result when
organizations are driven by events and/or a fear of
future events

• Proactive ethical policies – Policies that result when

the company develops a clear sense of what they
stand for as an ethical organization

• Transparent organization – An organization that

maintains open and honest communications with all
stakeholders

10-14 Copyright © 2012 The McGraw-Hill Companies, Inc. All rights reserved.