Chapter 6 – Strategic Approaches to Improving Ethical Behavior – Summary
A strategic approach to ethical decisions will contribute to both business and society. To
be socially responsible and promote legal and ethical conduct, an organization should
develop an organizational ethics program by establishing, communicating, and
monitoring ethical values and legal requirements that characterize its history, culture,
industry, and operating environment. Most companies begin the process of establishing
an organizational ethics program by developing a code of conduct, a formal statement
that describes what the organization expects of its employees. A code should reflect
senior management’s desire for organizational compliance with values, rules, and policies
that support an ethical climate. Codes of conduct help employees and managers address
ethical dilemmas by prescribing or limiting specific activities.
Organizational ethics programs must have oversight by high-ranking persons
known to respect legal and ethical standards. Often referred to as ethics officers, these
persons are responsible for assessing the needs and risks to be addressed in an
organization-wide ethics program, developing and distributing a code of conduct,
conducting training programs for employees, establishing and maintaining a confidential
service to answer questions about ethical issues, making sure the company is in
compliance with government regulations, monitoring and auditing ethical conduct, taking
action on possible violations of the organization’s code, and reviewing and updating the
code. Instituting a training program and a system to communicate and educate employees
about the firm’s ethical standards is a major step in developing an effective ethics
program.
Ethical compliance involves comparing employee ethical performance with the
organization’s ethical standards. Ethical compliance can be measured through employee
observation, internal audits, reporting systems, and investigations. An internal system for
reporting misconduct is especially useful. Employees who conclude that they cannot
discuss current or potential unethical activities with coworkers or superiors and go
outside the organization for help are known as whistle-blowers.
Consistent enforcement and necessary disciplinary action are essential to a
functional ethical compliance program. Continuous improvement of the ethics program is
necessary. Ethical leadership and a strong corporate culture in support of ethical behavior
are necessary to implement an effective organizational ethics program.