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Managing Business Ethics
Chapter 6
Treviño & Nelson – 5th Edition
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Chapter 6 Overview
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Introduction
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Structuring Ethics Management
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Communicating Ethics
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Using the Reward System to Reinforce the Ethics Message
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Evaluating the Ethics Program
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Values or Compliance Approaches
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Globalizing and Ethics Program
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Conlusion
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Structuring Ethics Management
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Corporate Ethics Office
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Ethics Officers
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Insiders vs. Outsiders
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Ethics Officer Background
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Ethics Infrastructure
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Corporate Ethics Committee
+ U.S. Sentencing Guidelines
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Established in 1991 for companies being sentenced
or reaching settlements
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Apply to all companies
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Can be triggered by the activities of one employee
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Give judges latitude to impose additional fines
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Death Penalty is also an option: government forces
company to divest all assets and be liquidated
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Do not apply to Equal Employment Opportunity
Commission (EEOC) violations
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Such as discrimination, sexual harassment, etc.
EEOC has its own penalties
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U.S. Sentencing Commission Guidelines - 1991
1.
Companies must “self-report” wrong-doing
2.
Companies must cooperate with any investigation
3.
Companies must have an “effective” ethics program in
place
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Defined, well-communicated policy
Specific executive named to manage ethics and compliance
Care taken re: hiring and promotions
Ethics training and communications for all employees and
agents
Compliance & whistle-blowing systems
Care taken re: future offenses
Consistent discipline
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Communicating Ethics

Basic Communication Principles

Evaluating the Current State of Ethics Communication
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Multiple Communication Channels
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Novel Approach to Ethics Communication at USAA
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Mission or Values Statements
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Policy Manuals
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Codes of Conduct
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Communicating Senior Management Commitment to Ethics
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Ethics training programs
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Training new recruits
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Training existing employees
Formal Reporting Systems
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Know Your Audience
Characteristics
Needs
Good Soldier

Good compass
 Know rules

Encouragement
Reinforcement
Loose Canons

Good compass
 Don’t know rules

Grenades

No compass
 Personal agenda
 May or may not know
rules
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Training
Heightened
supervision
Senior management
example
 Swift discipline
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Compliance vs. Values-Based Approaches
Compliance-Based
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Rooted in law & regulations
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Reactive
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Values-Based
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Rooted in culture & driven
by values
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Proactive and aspirational
Limited senior mgmt
involvement
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Commitment from senior
mgmt
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Obvious penalties
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Aligned with performance
measures
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“Signatures required”
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Compliance vs. Values-Based Approachesv
Values-Based
Compliance-Based
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Employees more likely to:
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think company is
protecting itself
seek advice outside
be cynical
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Less likely to:
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report bad news
be committed
Employees more likely to:
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
seek advice inside
be willing to report
be committed
support decisions
be aware of ethical &
legal issues
Less likely to be unethical
+ What’s wrong with this picture?
You're a management consultant who has been asked by Green
Company to help design an ethics communication and training program
for all Green Co. employees. Your meetings to date have been with the
head of human resources, and your contract with the company has been
negotiated with him. Once the papers have been signed, you begin your
research and are quickly stymied by Green's corporate counsel. He says
that you will not be allowed to ask employees about ethical dilemmas
that have occurred at Green. He specifically asks that you get your
information from other sources such as press accounts of problems in
the industry, or from other organizations with which you've worked. In
addition, the head of human resources has told you that you'll be unable
to meet the three most senior executives because they're busy
negotiating a large acquisition. You will have access to other high-level
managers who can tell you what they think the seniors want. You're
instructed to write a code of conduct for the company, a mission
statement, and prepare presentations for the seniors to give to
employees sometime next month on corporate expectations and values.