CHAPTER N0 8

Developing An Effective Ethics Programs

GROUP NO 6

IQRA FURQAN (BBAF19E050)

MUHAMMAD TALHA (BBAF19E047)
TOUSEEF HAIDER (BBAF19E045)
FAREEDA JAVAID (BBAF19E039)
RANA UMAR IJAZ (BBAF19E052)
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.

• Corporations are viewed as moral agents that are accountable to

stakeholders including employees, investors, supplier and customers.

Society holds companies accountable for employee conduct, their

consequences and their decisions.
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• Coverage of specific issues in the media about a firm adds to its
reputation as a moral agent.

• 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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• 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.

• Employees are not legal experts and need guidance.

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

• The federal sentencing guidelines (FSGO) for organizations encourages companies

to assess their key risks and customize a program to address them.

• 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.
Ethics Training And Communication
• Must start with a foundation, a code of ethics, a procedure for airing
ethical concerns, and executive priorities on ethics.

Can educate employees about firms policies and expectations,

laws and regulations and general social standards.
Can make employees aware of resources, support systems and
personnel who can assist them with ethical advice.
Can empower employees.
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• Ethics training can impact all three types of influence.
Full awareness of a company's philosophy of management ,
 Rules and procedures can strengthen both the corporate culture,
 The ethical stance of peers and supervisors.

• Training and communication initiatives should reflect the unique

characteristics of an organization it's size, culture, values,
management style and employee base.
Systems To Monitor And Enforce Ethical
Standards
• An effective ethics program employs many resources to
monitor ethical conduct and measure the program’s
effectiveness
Observing employees
Internal audits
Surveys
Reporting systems
Investigations
Independent audits
Forms of Reported Retaliation Experienced as a Result of
Reported Misconduct
Continuous Improvement
• Implementation requires designing activities to achieve organizational
objectives using available resources and existing constraints
• Depends in part on how an
organization structures
resources and activities to
achieve its ethical objectives
Common Mistakes in
Designing/Implementing an Ethics
Program
• Not having a clear understanding of the goals of the program from
the beginning
• Not setting realistic and measurable program objectives
• Senior management’s failure to take ownership of the ethics program
• Developing program materials that do not address the needs of the
average employee
• Transferring a domestic program internationally
• Designing a program as a series of lectures