This document discusses the need for organizations to develop effective ethics programs. It notes that ethics programs help sensitize employees to ethical issues, provide guidance on laws and regulations, and encourage ethical decision-making. The key components of an effective ethics program outlined are a written code of conduct, an ethics officer to oversee the program, ethics training for employees, and systems to audit and enforce program standards. Ethics programs aim to build an ethical culture and help organizations and employees avoid legal problems.

1. Chapter 8:
Developing an Effective
Ethics Program
Part Four:
Implementing Business Ethics in
a Global Economy
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2. Corporations as Moral Agents
Corporations increasingly are viewed as
moral agents accountable to stakeholders
 Companies cannot think through ethical issues
like people do–laws and regulations are
necessary to provide formal structural
restraints and guidance on ethical issues
 Individuals have a responsibility as moral agents
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3. Root Causes of Misconduct
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4. The Need for Organizational Ethics
Programs
It can be nearly impossible to know all laws
related to ethics
 Becoming sensitized to ethical issues can help
 Organizations can become bad barrels
 Opportunities for misconduct
Understanding factors that influence ethical decision making
can help companies encourage ethical behavior
• Employees are not legal experts and need guidance
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5. The Need for Corporate Ethics
Programs
Organizations should develop an
organizational ethics program by establishing,
communicating, and monitoring uniform
ethical values and legal requirements
 A strong ethics program includes
 Written code of conduct
 Ethics officer to oversee the program
 Care in the delegation of authority
 Formal ethics training
 Auditing, monitoring, enforcement, and revision of
program standards
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6. An Effective Ethics Program
Misconduct leads to low employee trust
and high turnover
 Ethics programs help employees to understand
organizational values and comply with policies
and codes of conduct
 Cannot assume that employees will know how to
behave in an organization
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7. An Ethics Program Can Help Avoid
Legal Problems
The FSGO encourages companies to assess
key risks and create programs to address
them
 An ethics program can help a firm avoid civil
liability
 The company bears the burden of proving that it
has an effective ethics program
A program developed in the absence of
misconduct will be more effective than one
imposed as a reaction to scandal
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8. Minimum Requirements for Ethics and
Compliance Programs
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9. Percentage of Boards Concerned About Personal
Liability for Fraud, Bribery, and Corruption
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10. Compliance Versus Values
Orientation
 Compliance orientation
 Requires that employees identify with and commit
to specified conduct
 Uses legal terms, statutes, and contracts to teach
employees the rules and penalties for
noncompliance
 Values orientation
 Focuses more on abstract ideals, such as respect
and responsibility
 Is most effective at creating ethical reasoning–
employees learn to make values-based decisions
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11. Codes of Conduct
Formal statements that describe what an
organization expects of its employees
 Codes of ethics
 Most comprehensive
 General statements that serve as principles and the
basis for the rules of conduct
 Statement of values
 Serves the general public and addresses
stakeholder interests
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12. Benefits of Having an Ethics Code
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13. Developing and Implementing a Code of
Ethics/Conduct
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14. Corporate Codes of Ethics
Often contain six core values
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
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15. Ethics Officers
Are responsible for oversight of the
ethics/compliance program
 Assess needs and risks
 Develop and distribute the code
 Conduct training programs for employees
 Establish audits and control systems to ensure
government compliance
 Review and modify the program to improve
effectiveness
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16. Ethics Training and
Communication
Must start with a theoretical foundation, code
of ethics, procedure for airing ethical concerns,
line and staff involvements, and executive
priorities on ethics
 Ethics training can
 Educate employees about policies and
expectations, laws and regulations, and general
standards
 Make employees aware of resources, support
systems, and personnel
 Empower employees
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17. Goals of Successful Ethics Training Programs
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18. Systems to Monitor and Enforce
Ethical Standards
Employee input helps to monitor training
effectiveness
 An effective ethics program uses many resources to
monitor ethical conduct and measure program
effectiveness
 Observing employees
 Internal audits
 Surveys
 Reporting systems
 Investigations
 Independent audits
Employees do not report misconduct when they
fear retaliation or think they will not make a
difference
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19. Continuous Improvement
Implementation requires designing
activities to achieve organizational
objectives using available resources and
existing constraints
 Translates a plan for action into operational
terms
 Establishes a means for monitoring,
controlling, and improving the program
Depends partly on how an organization structures
resources and activities to achieve ethical objectives
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20. Employees Reporting That Their Company
Has a Comprehensive Ethics Program
(According to Organizational Size)
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21. Common Mistakes in
Designing/Implementing an Ethics
Program
 Not understanding the goals of the program
 Not setting realistic and measurable program
objectives
 Senior management’s failure to take ownership
of the program
 Developing program materials that do not
address average employee needs
 Designing a program without interactive
components
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