Chapter 6 – Strategic Approaches to Improving Ethical ...



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.

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