1/2/2024
Topic 9
Developing an
Effective Ethics
Program
• Re-emphasize the responsibility of the corporation to
stakeholders
• Understand why businesses need ethics programs
• List the minimum requirements for an ethics
Learning program
• Describe the role of codes of ethics in identifying key
Objectives corporate risk areas
• Identify factors in successful ethics training, program
types, and goals
• Examine the ways ethical standards are monitored,
audited, and enforced
1
1/2/2024
Ethics Programs
• Designed to encourage ethical decision
making in business
• Hiring good employees are not
effective
• Ethical behaviors are not naturally
emerging in businesses
• Have to be systemically designed to prevent
major misconduct
• Ethical cultures start with concrete policies
and procedures guiding ethical behaviors
Responsibility of the
Corporation to
Stakeholders
• Corporations (i.e., its management,
teams, and employees) are viewed as
moral agents that are accountable to
stakeholders
• Coverage of specific issues concerned by
key stakeholders 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
• BUT they cannot think.
• Ethical program is needed.
2
1/2/2024
Need for Organizational Ethics Programs
• Helps eliminate unethical employees through screening techniques
• Sensitizes employees about the potential legal and ethical issues within the work
environment
• Promotes legal and ethical conduct by establishing, communicating, and monitoring
ethical values and legal requirements
• Ensures proper controls are in place to detect conflict of interest that impacts
consumer well-being
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 behaviors
3
1/2/2024
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
Values versus Compliance Programs
Compliance orientation Values orientation
Requires employees to identify with and commit Focuses on developing abstract and shared
to specific required conduct values such as accountability and commitment
Uses legal terms, statutes, and contracts create culture, raise employees awareness
system of rule and regulation law promote, encourage ethical behaviour within
we create to guide behaviour of the org
employees foster employees commitment
8
written document
clear
8
4
1/2/2024
Codes of Conduct turn principle into actions
• 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
10
10
5
1/2/2024
Developing
and
Implementing
a Code of
Ethics
11
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
• Ensure the company is in compliance with government
regulation
• Take action on possible violations of the company’s code
• Monitor and audit ethical conduct
• Review and update the code
12
12
6
1/2/2024
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
13
13
Key Goals of
Successful Ethics
Training Programs
14
14
7
1/2/2024
• External audit or review of company activities
Systems to • Role-playing exercises and questionnaires
Monitor and • Providing awareness about an internal system
that allows employees to report misconduct
Enforce Ethical • Case-management services and software
Standards • Consistent enforcement of standards and
taking necessary disciplinary action
15
15
• Failure to understand ethics-related objectives
while designing programs
Mistakes in • Setting unrealistic goals. Goals need to be
S.M.A.R.T
Designing and • Senior management’s failure in taking
ownership of the ethics program
Implementing an • Developing ethical program material that does
Ethics Program not help the average employee
• Converting a country-specific program into a
firm’s global operation
16
16
8
1/2/2024
Thank you!
17
17