2 Business Ethics Process (KPMG) Program/ Practices/ SystemsDesigned to motivate, measure, and monitor an organization’s ethical performance
3 Business Ethics and Business Reputation Strong link between business ethics and business reputationTV RuleManagement needs to take an active role in ‘managing’ ethics
4 Role of ManagementTop Management is responsible for establishing, developing, and enforcing a code of ethical conductShows all employees top management’s commitment to ethical behavior
5 Development of Code of Ethics Ensures employees and the company can’t be challenged on their ethical integrity.Establishes course of action for unethical behavior by employeesNeed to establish a procedure for reporting unethical behavior
6 Educating EmployeesTexas Instruments established a Quick Test for educating employees about what is right or wrong:Is the action legal?Does it comply with our values?If you do it, will you feel bad?How does it look in the newspaper?If you know it is wrong, don’t do it.If you aren’t sure, ask.Keep asking until you get an answer.
7 Lockheed Martin established a quick quiz…When in doubt, ask yourself: Are my actions legal?Am I being fair and honest?Will my action stand the test of time?How will I feel about myself afterwards?How will it look in the newspaper?Will I sleep soundly tonight?What would I tell my children to do?How would I feel if my family, friends, and neighbors knew what I was doing?
8 Developing a Code of Ethics Need to incorporate individual and corporate values when facing ethical dilemmasNortel states this clearly to all employees in their Ethical Business Practices document:You have a personal responsibility to make sure that all your words and actions live up to these statementsYou have a responsibility to ask questions when you have doubts about the ethical implications of any given situation or proposed course of action.You have a responsibility to report any concerns about business practices within the corporation that may violate this code of business conduct.
9 Cost of Managing Ethics Estimated $100 billion is spent each year for companies in North American to deal with ethical problems (KPMG)investigating and resolving ethical dilemmasestablishing mechanisms to ensure the problem doesn’t happen againFederal Sentencing Guidelines (est 1991)fines from $5K to 72.5K for violation of ethical actionsTotal penalties for a single company could approach $290 million
10 Federal Sentencing Guidelines - Minimum Requirements for Effective Ethics Compliance Program 1. Establish compliance standards and procedures2. Assign top level management overall responsibility for compliance3. Don’t delegate responsibility to employees who are not trustworthy4. Communicate standards and procedures to all employees5. Monitoring and audit systems used to detect unethical activities6. Enforce ethical standards through appropriate disciplinary mechanisms7. Make adjustment to ethical process if unethical behavior has occurred
11 Comprehensive Ethics Program May Include: 1. Codes of conduct2. Mission statement3. Training and awareness program4. Town meeting5. Ethics officers6. Compliance hotlines7. Ethics offices
12 Ethics and Information Technology 1. Property Rights and Obligations2. Policies Pertaining to Customer Information3. Employee Privacy4. Workplace Monitoring
13 The Ten Commandments of Computer Ethics (Computer Ethics Institute) 1. Thou shalt not use a computer to harm other people.2. Thou shalt not interfere with other people’s computer work.3. Thou shalt not snoop around in other people’s computer files.4. Thou shalt not use a computer to steal.5. Thou shalt not use a computer to bear false witness.6. Thou shalt not copy or use proprietary software for which you have not paid.7. Thou shalt not use other people’s computer resources without authorization or proper compensation.8. Thou shalt not appropriate other people’s intellectual output.9. Thou shalt think about the social consequences of the program you are writing or the system you are designing.10. Thou shalt always use a computer in ways that insure consideration and respect for your fellow humans.
14 Developing Policies to Address IT Issues 1. Understanding Privacy LawsFederal Privacy Act of 1974Fair Credit Reporting Act of 1970Right to Financial Privacy Act of 1978Privacy Protection Act of 1980Cable Communications Policy Act of 1984Electronic Communications Privacy Act of 19862. Establishing a Privacy Code3. Policy Content
15 Policy Content should include: Technology equipment owned by the company gives the company exclusive rights to control and monitorPrivate databases and s developed using the company’s equipment can be reviewedDeletion of a file/ does not guarantee that it has been permanently destroyed
16 Policy Content should include: Guidelines on what is appropriate and inappropriate materialGuidelines for using s for solicitation of employeesViolation of ethics policy will result in disciplinary actionDescription of ethical treatment of information from external sources including customers
17 Policy Content should include: Summary of types of disciplinary actions should be included in the written policyEmployees need to acknowledge content of policy by signing a written agreement
18 Using Ethical Policies for a Competitive Advantage Internally:help motivation of employees -- they know what behavior is expected of themreduce company costs by reducing disciplinary actions including dismissal and reducing fines for ethical violations
20 Lockheed Martin Ethical Policy: “While maintaining sensitivity to the diverse social and cultural settings in which we conduct our business, Lockheed Martin aims to set the standard for ethical conduct at all of our locations throughout the world. We will achieve this through behavior in accordance with six virtues: Honesty, Integrity, Respect, Trust, Responsibility, and Citizenship.”
21 You’re on Ethical Thin Ice When You Hear (Lockheed Martin): Well, maybe just this once…No one will ever know…It doesn’t matter how it gets done as long as it gets done.It sounds too good to be true.Everyone does it.Shred that document.We can hide it.No one will get hurtWhat’s in it for me?This will destroy the competition.We didn’t have this conversation.