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Business Ethics Ethical Decision Making and Cases, Seventh Edition O.C. Ferrell University of New Mexico John Fraedrich University of Wyoming Linda Ferrell For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page. University of New Mexico Copyright © Houghton Mifflin Company 8-1 Chapter 8 Developing an Effective Ethics Program Copyright © Houghton Mifflin Company 8-2 The Responsibility of the Corporation as a Moral Agent • Increasingly, corporations are viewed not merely as profit-making entities but also as moral agents that are accountable for their conduct to their employees, investors, suppliers, and customers. Copyright © Houghton Mifflin Company 8-3 Why Do Companies Develop Ethics Programs? • To allow employees and stakeholders to understand the values of the business • To comply with policies and codes of conduct • To create the ethical climate of the business • To create TRUST Copyright © Houghton Mifflin Company 8-4 Building Trust and Confidence • Make customers the top priority • Assume personal responsibility and accountability • Open and frequent communication • Handle crises honestly • Stick to your ethics code no matter what Copyright © Houghton Mifflin Company 8-5 Values or Compliance Programs? • Compliance orientation – Legal terms, statutes, contracts, rules, and penalties • Values orientation – Develop shared values – Focus on the abstract – Teach to aspire to ethical behavior instead of coercion Copyright © Houghton Mifflin Company 8-6 An Effective Ethics Program • Code of ethics • Ethics compliance program • Monitor, audit, and report misconduct • Training • Enforcement • Continuous improvement program Copyright © Houghton Mifflin Company 8-7 Code of Ethics and Conduct • Formal statement of what an organization expects in the way of ethical behavior (what behaviors are acceptable or unacceptable) • Reflects senior management’s organizational values, rules, and policies Copyright © Houghton Mifflin Company 8-8 Six Steps in Implementing a Code of Ethics • Distribute internally and externally • Assist employees in understanding • Specify management’s role • Make employees responsible for understanding the code • Establish grievance procedures • Provide a concluding statement Copyright © Houghton Mifflin Company 8-9 Role of an Ethics Officer • Coordinate the program with top management • Develop, revise, and disseminate the code of ethics • Develop effective ethics training tools • Establish audit and control systems • Develop enforcement techniques • Revise the program as needed Copyright © Houghton Mifflin Company 8-10 Common Mistakes in Designing and Implementing an Ethics Program • Developing materials that do not address the average employee • Implementing an “American” program to a firm’s international operations • Designing an ethics program with a few lectures or cases • Taking a legalistic approach Copyright © Houghton Mifflin Company 8-11 Common Mistakes in Designing and Implementing an Ethics Program • Not recognizing the need for a program • Not setting realistic and measurable program objectives • Management’s failure to take ownership of the ethics program Copyright © Houghton Mifflin Company 8-12