Strategic Approaches to Improving Ethical Behavior CHAPTER 6 Strategic Approaches to Improving Ethical Behavior

Chapter Objectives To provide an overview of the need for an organizational ethics program To consider crucial keys to development of an effective ethics program To examine effective implementation of an ethics program

The Need for Organizational Ethics Programs Organizations are held accountable for the conduct of their employees. Organizations can create unethical corporate cultures. Stakeholders demand greater ethical and social responsibility.

Codes of Conduct Formal statements that describe what an organization expects of its employees

Developing and Implementing a Code of Ethics Consider areas of risk and state values as well as necessary conduct. Identify values that specifically address current ethical issues. Consider values that link the organization to a stakeholder orientation. Make the code understandable by providing examples that reflect values. Communicate the code frequently in language employees can understand. Revise the code each year.

Ethics Officers Assess organizational needs and risks Develop and distribute the code of ethics Conduct ethics training programs Establish and maintain a confidential system to respond to ethics questions Make certain the company is in compliance with government regulation Monitor and audit ethics conduct Take action when there is a code violation Review and update the code

Ethics Training and Communication Educates employees about the firm’s policies, expectations, relevant laws and regulations, and general social standards Makes employees aware of available resources, support systems, and personnel who can assist with ethics and legal advice Can empower employees

Training and Communication Initiatives Should reflect the unique characteristics of an organization Must operate with a strong foundation Are more effective if employees engage in exercises that involve solving ethical dilemmas that relate to their job

Establishing Systems to Monitor and Enforce Ethical Standards Help or assistance lines Observation and feedback Whistle-blowing

Questions to Ask Before Engaging in External Whistle-blowing Have I exhausted internal anonymous reporting opportunities within the organization? Have I examined company policies and codes that outline acceptable behavior and violations of standards? Is this a personal issue that should be resolved through other means? Can I manage the stress that may evolve from exposing potential wrongdoing in the organization? Can I deal with the consequences of resolving an ethical or legal conflict within the organization?

Continuous Improvement of the Ethics Program Putting strategies into action Translating a plan of action into operational terms and monitoring, controlling, and improving organizational performance

Implementing Organizational Ethics Programs Role of leadership Transformational leaders Transactional leaders

Leaders influence Corporate Culture Organizational leaders use their power and influence to shape corporate culture. Power refers to the influence that leaders have over the behavior and decisions of subordinates.

Five Power Bases Reward power Coercive power Legitimate power Expert power Referent power

Variation in Employee Conduct Because people are culturally diverse and have different values, they interpret situations differently and will vary in the ethical decisions they make on the same ethical issue.