Developing an EffectiveEthics Program
C H A P T E R 8
Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell
CHAPTER 8
Chapter Objectives
•To understand the responsibility of the corporation tobe a moral agent
•To understand why businesses need to developethics programs
•To list the minimum requirements for an ethicsprogram
•To describe the role of codes of ethics in identifyingkey risk areas for the organization
Chapter Objectives (cont.)
•To identify the keys to successful ethics training,including program types and goals
•To examine the ways that ethical standards aremonitored, audited, and enforced and to understandthe need for continuous improvement
Chapter Outline
•The Responsibility of the Corporation as a MoralAgent
•The Need for Organizational Ethics Programs
•An Effective Ethics Program
•Codes of Conduct
•Ethics Officers
•Ethics Training and Communication
•Systems to Monitor and Enforce Ethical Standards
Corporations as Moral Agents
•Corporations are increasingly viewed as moralagents that are accountable for their conduct tostakeholders
•Laws and regulations are necessary to provideformal structural restraints and guidance on ethicalissues
The Need for Corporate EthicsPrograms
•Scandals in corporate America have reduced trust inbusinesses
•Understanding the factors that influence ethicaldecision-making can help companies encourageethical behavior
•Employees are not legal experts and need guidance
•Organizations should develop an organizationalethics program by establishing, communicating, andmonitoring uniform ethical values and legalrequirements
An Ethics Program Can Help AvoidLegal Problems
•The FSGO encourage companies to assess keyrisks and create a program to address them
•A program developed in the absence ofmisconduct will be more effective than oneimposed as a reaction to scandal
•The Sarbanes-Oxley Act of 2002 established newrequirements for corporate governance to preventfraudulent behavior in business
Corporate Codes of Ethics
Often contain six core values
1.Trustworthiness
2.Respect
3.Responsibility
4.Fairness
5.Caring
6.Citizenship
Ethics Officers
•Ethics officers or committees are responsible foroversight of the ethics/compliance program
–Assess the needs and risks that an ethics programmust address
–Develop, revise, and disseminate the code
–Conduct training programs for employees
–Develop effective communication
–Establish audits and control systems
–Review and modify the program to improveeffectiveness
Ethics Training and Communication
•Must start with a foundation, a code of ethics, aprocedure for airing ethical concerns, andexecutive priorities on ethics
Systems to Monitor and EnforceEthical Standards
•An effective ethics program employs manyresources to monitor ethical conduct andmeasure the program’s effectiveness
–Observing employees
–Internal audits
–Surveys
–Reporting systems
–Investigations
–Independent audits