1. Development of an Effective Ethics Program
Chapter 8
Development of an Effective Ethics Program

2. Effective Ethical Compliance Programs...
should reduce the possibilities of penalties & negative public reaction to misconduct
must be communicated to all employees-common understanding of organizational values, policies & procedures
companies that act to prevent organizational misconduct may receive a ‘carrot’ and avoid organizational penalties
those that do not may receive a ‘stick’-fines & penalties

3. The Sentencing of Organizations Under the FSGO is Governed by 4 Considerations
the organization must remedy the harm
fines may be set sufficiently high to divest the organization of all assets if it is found to be criminal purpose
fines levied against the organization are based on the seriousness of the offense & the culpability of the organization
probation is deemed appropriate when the organization will work to prevent further misconduct

4. Effective Ethical Compliance Programs...
must deal effectively with the risk associated with a particular business & has to become part of the corporate culture
can help avoid civil litigation
must exhibit due diligence to prevent misconduct

5. Codes of Ethics...
are formal statements of what an organization expects in the way of ethical behavior
will not solve every dilemma
provide rules & guidelines
reflects senior management’s desire for compliance with values, rules & policies in support of an ethical climate
should be specific enough to be reasonably capable of preventing misconduct

6. Manley’s Six Steps to Implement a Code of Ethics
distribute the code comprehensively: employees, subsidiaries, & associated companies
assist in interpretation & understanding
specify management’s role in implementation
make employees responsible for understanding
establish grievance procedures
provide a conclusion or closing statement

7. High Level Oversight
ethics officers or committees are responsible for oversight of the ethics/compliance program
coordinates program with top management
develops, revises & disseminates the code
develops effective communication
establishes audits & control systems
provides consistent enforcement of standards
reviews & modifies the program to improve effectiveness

8. Effective Communication of Ethical Standards...
provides guidance for ethical standards & activities that integrate the functional areas of business
helps employees identify ethical issues & provides a means to address & resolve
can help reduce criminal, civil & administrative consequences including:
fines, penalties, judgements, etc.

9. Ethics Training Programs Should...
reflect organizational size, culture, values, management style & employee base
improve employee understanding of ethical issues
influence the organizational culture, significant others, & opportunity in the ethical decision making process
overall, provide for recognition of ethical issues, understanding of culture & values, and influence ethical decision making

10. Monitoring, Auditing, & Enforcing Ethical Standards...
an internal system for employees to report misconduct is an opportunity to register ethical concerns
ethics hot lines
questionnaires may be used to serve as benchmarks
corrective actions provide standards & punishment
consistent enforcement is critical

11. Continuous Improvement
if a company has determined that its ethical performance has not been satisfactory, management may want to recognize the way ethical decisions are made:
a decentralized organization may be centralized (perhaps temporarily) so that top level managers can ensure that ethical decisions are made
a centralized organization may be decentralized (perhaps temporarily) so that lower level managers can make more decisions

12. “Bad Apple-Bad Barrel” Theory
“bad apple”-the notion that blame for unethical behavior rests with a few unsavory individuals (difficult for organizations to influence ethical decision making)
“bad barrel”-views that people are not inherently ethical or unethical, but are influenced by the corporate culture surrounding them (more organizational control)

13. Ethical Compliance Audit
a systematic evaluation of an organization’s ethics program and/or performance to determine its effectiveness
can help in establishing codes & program
should provide a systematic & objective approach to surveying the ethical condition of the organization
may be more effective if performed by an external entity (organizations should participate in ethics audit instrument development)