1. Chapter 8:
Developing an Effective
Ethics Program
Part Four:
Implementing Business Ethics in
a Global Economy
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2. Corporations as Moral Agents
Corporations increasingly are viewed as
moral agents accountable to stakeholders
 Companies cannot think through ethical issues
like people do–laws and regulations are
necessary to provide formal structural
restraints and guidance on ethical issues
 Individuals have a responsibility as moral agents
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3. Root Causes of Misconduct
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4. The Need for Organizational Ethics
Programs
It can be nearly impossible to know all laws
related to ethics
 Becoming sensitized to ethical issues can help
 Organizations can become bad barrels
 Opportunities for misconduct
Understanding factors that influence ethical decision making
can help companies encourage ethical behavior
• Employees are not legal experts and need guidance
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5. The Need for Corporate Ethics
Programs
Organizations should develop an
organizational ethics program by establishing,
communicating, and monitoring uniform
ethical values and legal requirements
 A strong ethics program includes
 Written code of conduct
 Ethics officer to oversee the program
 Care in the delegation of authority
 Formal ethics training
 Auditing, monitoring, enforcement, and revision of
program standards
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6. An Effective Ethics Program
Misconduct leads to low employee trust
and high turnover
 Ethics programs help employees to understand
organizational values and comply with policies
and codes of conduct
 Cannot assume that employees will know how to
behave in an organization
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7. An Ethics Program Can Help Avoid
Legal Problems
The FSGO encourages companies to assess
key risks and create programs to address
them
 An ethics program can help a firm avoid civil
liability
 The company bears the burden of proving that it
has an effective ethics program
A program developed in the absence of
misconduct will be more effective than one
imposed as a reaction to scandal
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8. Minimum Requirements for Ethics and
Compliance Programs
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9. Percentage of Boards Concerned About Personal
Liability for Fraud, Bribery, and Corruption
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10. Compliance Versus Values
Orientation
 Compliance orientation
 Requires that employees identify with and commit
to specified conduct
 Uses legal terms, statutes, and contracts to teach
employees the rules and penalties for
noncompliance
 Values orientation
 Focuses more on abstract ideals, such as respect
and responsibility
 Is most effective at creating ethical reasoning–
employees learn to make values-based decisions
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11. Codes of Conduct
Formal statements that describe what an
organization expects of its employees
 Codes of ethics
 Most comprehensive
 General statements that serve as principles and the
basis for the rules of conduct
 Statement of values
 Serves the general public and addresses
stakeholder interests
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12. Benefits of Having an Ethics Code
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13. Developing and Implementing a Code of
Ethics/Conduct
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14. Corporate Codes of Ethics
Often contain six core values
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
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15. Ethics Officers
Are responsible for oversight of the
ethics/compliance program
 Assess needs and risks
 Develop and distribute the code
 Conduct training programs for employees
 Establish audits and control systems to ensure
government compliance
 Review and modify the program to improve
effectiveness
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16. Ethics Training and
Communication
Must start with a theoretical foundation, code
of ethics, procedure for airing ethical concerns,
line and staff involvements, and executive
priorities on ethics
 Ethics training can
 Educate employees about policies and
expectations, laws and regulations, and general
standards
 Make employees aware of resources, support
systems, and personnel
 Empower employees
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17. Goals of Successful Ethics Training Programs
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18. Systems to Monitor and Enforce
Ethical Standards
Employee input helps to monitor training
effectiveness
 An effective ethics program uses many resources to
monitor ethical conduct and measure program
effectiveness
 Observing employees
 Internal audits
 Surveys
 Reporting systems
 Investigations
 Independent audits
Employees do not report misconduct when they
fear retaliation or think they will not make a
difference
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19. Continuous Improvement
Implementation requires designing
activities to achieve organizational
objectives using available resources and
existing constraints
 Translates a plan for action into operational
terms
 Establishes a means for monitoring,
controlling, and improving the program
Depends partly on how an organization structures
resources and activities to achieve ethical objectives
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20. Employees Reporting That Their Company
Has a Comprehensive Ethics Program
(According to Organizational Size)
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21. Common Mistakes in
Designing/Implementing an Ethics
Program
 Not understanding the goals of the program
 Not setting realistic and measurable program
objectives
 Senior management’s failure to take ownership
of the program
 Developing program materials that do not
address average employee needs
 Designing a program without interactive
components
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