Chapter 8

Developing An Effective Ethics Program

 CHAPTER N0 8
Developing An Effective Ethics Programs

GROUP NO 6

IQRA FURQAN (BBAF19E050)

MUHAMMAD TALHA (BBAF19E047)
TOUSEEF HAIDER (BBAF19E045)
RANA UMAR IJAZ (BBAF19E052)
FAREEDA JAVAID (BBAF19E039)
The Responsibility Of The Corporation As
A Moral Agent
• A moral agent is a person who has the ability to discern right from wrong
and to be held accountable for his or her own actions.

• As moral agents, companies need to obey the laws and regulations that
define acceptable business conduct.

• Companies are not human. That’s why laws and regulations are necessary
to provide formal structure guidance on ethical issues.

• Corporations are viewed as moral agents that are accountable to

stakeholders including employees, investors, supplier and customers.
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• Coverage of specific issues in the media about a firm adds to its reputation
as a moral agent.

• Society holds companies accountable for employee conduct, their

consequences and their decisions.

• Laws and regulations are necessary to provide formal structural restraints

and guidance on ethical issues.

• A corporation can be considered a moral agent in society created to perform

specific social functions. It is therefore responsible to society for its actions.
The Need For Organizational Ethics
Programs
• Organizations should develop an organizational ethics program by
establishing, communicating and monitoring uniform ethical values
and legal requirements.

A strong ethics programs includes

• Written code of conduct.
• Ethics officer to oversee the program.
• Formal ethics training.
• Auditing, monitoring, and revision of program standards.
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• 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 technique.

• Promote legal and ethical conduct by establishing, communicating,

and monitoring ethical values and legal requirements.
An Effective Ethics Program
• A company must have an effective ethics program to ensures that all
employees understand the organization’s values and comply with the
policies and codes of conduct that creates its ethical climate.

• Developed as an organizational control system to help predict

employee behavior.

• An effective ethics program emphasizes your organization’s

commitment to high standard, gives employees a guidelines on how
to make ethical decisions and provide a protocol for reporting ethical
violation.
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• We Cannot assume that employees will know how to behave when

entering an organization.

• Employees take classes in ethics to help them understand how to

resolve ethical dilemmas in the workplace as well as receiving online
training to raise their awareness of ethical issues and assist them
maintaining an ethical organizational culture.

• An ethical program can also help to avoid legal problems

Three Tips On How To Implement A
Strong/Effective Ethics Program

Identify and renew company values.

Build ethics into mission and vision statement.

Secure visible commitment from senior managers

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An ethical program can also help to avoid legal problems
• The federal sentencing guidelines (FSGO) for organizations encourages companies
to assesses their key risks and customize a program to address these risks.

• An effective risk assessment involves not only examining legal issues but also
environmental, health and safety and other risk areas.

• The program must be communicated to all employees - providing a common

understanding of organizational values, policies and procedures

• FSGO encourages federal judges to increase fines for organizations that continually
tolerate misconduct and to reduce or eliminate fines for firm with extensive
compliance programs
Minimum Requirements for ethical
compliance programs
Standards and procedures, such as code of ethics that are reasonably capable of
detecting and preventing misconduct.

High level personnel who are responsible for an ethics and compliance program

Standards and procedures communicated effectively via ethics training programs

Systems to monitor, audit, and report misconduct

Continuous improvement of the ethics and compliance program

Values verses compliance programs
Compliance Orientation
1. Rule based
2. Uses legal terms, training
and contracts that teach
employees the rules and
penalties for noncompliance
Values Orientation
1. Ethically/morally based
2. Relies upon self-policing
and motivation rather then
being forced
Codes Of Conduct
• Codes of conduct: Formal statements that describe what an organization expects
from its employees.

• Code of conduct will not resolve every ethical issue encountered in daily
operations, but they help employees and managers deal with ethical dilemmas by
limiting specific activities.

• Many companies have a code of ethics but it is not communicated effectively.

• A code placed on a website or in a training manual is useless if it is not reinforced

every day.
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• By communicating to employees both what is expected of them and what
punishments they face if they violate the rules.

• Code of ethics:
Most comprehensive document,
Consists of general statements which serve as principles and as the basis for
rules of conduct.

• Statement of values: Serves the general public and addresses stakeholder

interests.
Corporate Code Of Ethics

Often contain six core

values
• Trustworthiness
• Respect
• Responsibility
• Fairness
• Caring
• Citizenship
Benefits Of Having An Ethics Code
Help the company
Guide employees in
communicate its
situations where the
expectations for its staff
ethical course of action
to suppliers, vendors
is not immediately
and customers.
obvious.

Enhance morale,
Build public trust and
employee pride, loyalty,
enhance business
and the recruitment of
reputation.
outstanding employees.
Ethics officers
• Organizational ethics programs must have oversight by high ranking
persons known to respect legal and ethical standards.

• These individuals_ often referred to as ethics officers.

Responsibilities of Ethics officers
• They are usually responsible for,

Assessing the needs and risks that an ethics program must address.
Developing and distributing a code of conduct or ethics.
Conducting training programs for employees.
Establishing and maintaining a confidential service to answer employees
questions about ethical issues
Making sure the company is in compliance with government regulation
Monitoring and auditing ethical conducts
Taking actions on possible violations of the companies code
Reviewing and updating code.