1. Lecturer : DR AZLAN ALI 0193610027
THE ETHICAL
ORGANIZATION

2. CHARACTERISTICS OF AN ETHICAL
ORGANIZATION
CHARACTERISTICS OF
AN ETHICAL
ORGANIZATION
TRUST
EFFECTIVE
COMMUNICATION
UPWARD &
DOWNWARDS
OPENNESS
OBJECTIVITY &
FAIRNESS
INTEGRITY
TRANSPARENCY
VALUES
SHARING
COMPANY’S
WEALTH

3. • Trust
- trusting and believing in the employees or
subordinates, making them feel worth it and adding to
the project and the company, showing of
appreciation, i.e. praises and acknowledgement. E.g.
Airasia
• Effective communication upwards & downwards
- able to communicate the company objectives,
mission and vision with all customers, clients and the
stakeholders.
CONT…

4. CONT…
• Openness
- be open with your employees, no hidden
agendas. E.g. Arthur Andersen shredded
documents
• Objectivity and fairness
- be object in your praises and critics with the
employees. Do not judge, but communicate. E.g.
Lehman Brothers director salaries

5. • Integrity
- live up to the company’s values, beliefs in
whatever they do.
- treats its employees fairly, communicating with
them honestly and openly. E.g. I-Mac Apple
• Transparency
- Be fair, justify, consistent and objective in
anything the company do. E.g. Enron scandal
CONT…

6. • Values
- live up to the company’s values. E.g. Nestle
• Sharing company’s wealth
- i.e. knowledge and or money (Corporate Social
Responsibility). Empowering others who helped
the company become successful or whom the
company is benefiting from in the business
society, community, etc.
CONT…

7. • Corporate Social Responsibility = is the continuous
commitment by business to behave ethically and
contribute to economic development while improving the
quality of life of the workforce and their families as well as
of the local community and society at large.
• CSR is about how companies manage the business
processes to produce an overall positive impact on
society.
• E.g. case study “Johnson & Johnson and Tylenol” (refer article).
CORPORATE SOCIAL RESPONSIBILITY
(CSR)

8. • In general, organizations may exercise social
responsibility towards the following 3 areas:-
AREAS OF SOCIAL RESPONSIBILITY
Organization’s Social
Responsibility
Constituents
Natural Environment
General Social
Welfare

9. Organizational Constituents
- People and organizations directly affected by the practices of a
specific organizations and have a stake in its performance. Eg:
• state & federal government, creditors, customers, suppliers,
employees, interest groups, courts and investors.
• If the manager is caught doing criminal acts, it will result to hurt the
organization’s profit, stock prices, etc.
• Organizations that are socially responsible with employees, they treat
workers fairly, respect their dignity and basic human needs.
• To maintain a socially responsible stance towards investors, manager
should maintain proper accounting procedures, give appropriate
information to shareholders, and manage the company in a way to
protect shareholders’ rights and investment.
CONT…

11. Organizational Natural Environment.
- Companies have to be more social responsible in their release
of pollutants. Eg.:
• Companies need to develop economically feasible ways to avoid
contributing to acid rain, depletion of ozone layer and global
warming.
• Find alternative methods of handling sewage, hazardous wastes
and garbage. (need to develop safety policies to reduce
accidents that will potentially disastrous environmental results)
• Contributions to charities, philanthropic organizations, not-for-
profit foundations/association, support for museums,
radio/television, involve in improving public health & education,
etc.
CONT…

13. Organizational General Social Welfare.
- Business organizations should also promote the general
welfare of society. Some people believe that organizations
should act to correct, or at least not to contribute to political
inequalities.
* * * * * * * * * * * * * * * * * * * * * * * * *
Although there are arguments for and against the social
responsibility in organizations behavior, organizations that make
clear and visible contributions to society can achieve enhance
reputation and gain a greater market share for their products,
and increase profit itself.
CONT…

17. Corporate Moral Excellence = is the outstanding practices in
managing the organization and achieving results. It is mainly centers
on the corporate culture.
- It is the systematic use of quality management principles and tools
in business management, with the goal of improving performance
based on the principles of customer focus, stakeholder value, and
process management.
- Eg.: It can be found in company’s mission statement, and code of
ethics, etc.
CORPORATE MORAL EXCELLENCE

18. They are many ways organizations can achieve corporate
moral excellence:-
CORPORATE MORAL EXCELLENCE
Corporate Mission
Statement
Code of Ethics Organizational Culture
Total Quality Mgmt.
(TQM)

19. 1) Corporate Mission Statement
• An organization’s mission consists of its long term vision
of what it seeks to achieve and reasons for its existence.
• Usually this mission of the organization is denoted
through its mission statement & it contains of how it
wishes to serve the society & contribute to social welfare.
• The mission statement has to be guided by a set of core
values that the organization strives to use in order to
achieve corporate moral in order excellence.
• It becomes the criterion by which the company measures
its activities & achievements.
CONT…

21. 2) Code of Ethics
A statement of the norms and beliefs of an organization. Norms are
the standards of behavior, expected from everyone in the organization
when confronted with a particular situation consisting of ethical
dilemmas.
3) Organizational Culture
In the organizational context, culture refers to the set of values,
dominant beliefs and guiding norms of behavior for its employees. It
denotes the climate, atmosphere, mental attitude shared by the
members of the organization.
4) Total Quality Mgmt (TQM)
A systematic approach to guide an organization towards excellence
through superior quality products, services & processes.
CONT…

24. • Corporate Governance (CG) = is the system by which
the companies hold the balance between economic and
social goals, and between individual and communal goals.
• CG is a set of policies & procedures that the company’s
directors employ in their conduct of company’s affairs and
their relationship with shareholders to whom they are
responsible as managers.
• The aim is to align as nearly as possible the interests of
individuals, corporations and society.
CORPORATE GOVERNANCE

25. DEFINITION OF CORPORATE CODE
• “Corporate code of conduct" refers to
companies' policy statements that define
ethical standards for their conduct. There is a
great variance in the ways these statements are
drafted.

26.  Intended to serve the following purposes:
 To give every employee an insight into the Mission, Values
and Principles underlying the Company’s activities;
 To establish standards of ethical behavior which shall govern
relations within the Company and with customers, business
associates, suppliers, state authorities, the community and
competitors;
 To serve as a tool for preventing possible offences and
conflict situations, as well as developing a corporate culture
based on high ethical standards.
 By adopting the Code, the Company confirms its intention to
follow the highest ethical standards of business practice.
CONT…

27. DEVELOPMENT OF CORPORATE CODE
Use the Code to Create
an Organizational
Compliance Roadmap
Keep Your
Audience in Mind
Use Questions to
Highlight Important
Concepts
Make the Obligations
Personal
Obtain Board of
Directors and Senior
Management Buy-In

28.  Keep Your Audience in Mind
- Codes of conduct make the most impact if they are
effectively communicated to all members of the
organization.
- For this reason, a code should be written clearly. Use
simple and concise language, and avoid excessive
“legalese” so that every employee at every level
understands it.
- It should also be tailored to an organization’s industry,
culture and corporate values.
CONT…

29.  Make the Obligations Personal
- Ideally, a code should be developed specifically for
your organization so that every employee at every level
feels a personal obligation to comply with it.
- Consider what elements would make it specific to your
organization, as well as what would differentiate it from
those developed by other organizations in your industry.
CONT…

30.  Use Questions to Highlight Important Concepts
- Consider using a question/answer format to explore
certain concepts and address specific situations that
employees are likely to encounter in their daily professional
pursuits.
- Questions can be incorporated throughout the code,
followed by corresponding answers that explore and develop
the relevant concepts.
- Providing information in this format not only will make it
more concrete, but also will make its guiding principles easier
to understand and remember.
CONT…

31. CONT…
 Obtain Board of Directors and Senior Management Buy-
In
- It is important to establish a commitment to ethical conduct
at all levels of an organization.
- When the code is developed, announce its existence to
the entire organization and make it publicly available on the
organization’s website.
- It should be clear that all levels of the organization,
including senior management and the organization’s board of
directors, will be governed by it, held to all of its standards and
that appropriate discipline will result at all levels for failure to
comply.

32.  Use the Code to Create an Organizational Compliance
Roadmap
- Beyond its direct application to your organization, a code
of conduct also can be used to lay the foundation for the
organization’s larger compliance efforts.
- Many organizations have implemented corporate
compliance programs using the elements outlined in
the U.S. Sentencing Commission Guidelines for
Organizations.
CONT…

33. The guidelines highlight seven elements used to prove that an
organization has adopted a program to promote compliance.
(1) Written policies, procedures and standards of conduct;
(2) Designation of a compliance officer and a compliance
committee;
(3) Effective training and education;
(4) Effective lines of communication;
(5) Well-publicized disciplinary guidelines for enforcing standards;
(6) Internal auditing and monitoring processes; and
(7) Prompt responses to detected offenses and corrective action.
CONT…

34. THANK
YOU