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The case revolves around companies are now increasingly reinforcing and strengthening its code of ethics in the wake of scandals like Enron.
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PUTTING TEETH IN CORPORATE ETHICS
CODES
Group 3:
ANNA KARTINI AHMAD LOTFI PBS1411482
LIM YU WEY PBS1411614
MAZLINA DOL HAMLI PBS1411502
NOR HAFIZAH IBRAHIM PBS1411485
SYARIFAH A’TIYAH BINTI SYED HISHAM PBS1411628
GSM5131: BUSINESS LAW & ETHICS
INTRODUCTION
Clark Consulting Had a code of ethics for years but never really
apply it The CEO later revised, redistributed to all
employees A senior consultant was dismissed because
not compelling with Company’s Code of Ethics – rule no.1 : clients come first
What is ethics?Common definition – rules in distinguishing between
right or wrong
INTRODUCTION
“norms of conduct that distinguish between acceptable or unacceptable conduct”
David B. Resnik An action can be legal but unethical
Similarly an action can be illegal but ethical
CORPORATE CODE OF ETHICS
o Guidelines in which describing desirable behavior and prohibiting misbehave of employees
o It clarify the values and norms the company wish to uphold
o Formalized public statements of corporate principles and rules of conduct that govern interorganizational and intra organisational practices and relations
o Most successful codes have both administrative and criminal penalties
ISSUES
Corporate ScandalsCorporate scandals happen because of the unethical behavior of people acting within or on behalf company
Understanding on the code of ethics doesn’t stop people from conducting any wrongdoing action
Due to the scandals, more acts and regulation has been imposed such as:
1. Sarbanes-Oxley 2002
2. New listing standards by NYSE
3. Transparent compliance to PLC in Malaysia (RMK9)
COUNTLESS RULES CAN BE IMPOSED BUT CAN THESE RULES CHANGE THE ETHICAL
BEHAVIOR OF A PERSON….????????
LIST OF CORPORATE SCANDALS
SCANDALS YEARENRON 2001WORLDCOM 2001ARTHUR ANDERSEN 2002HEALTHSOUTH 2003TYCO LTD 2005AMERICAN INSURANCE GROUP
2005
LEHMAN BROTHERS 2008ROYAL BANK OF SCOTLAND GROUP
2008
SAYTAM 20091MDB 2015
Companies Trying To
Strengthen Their Ethic
Codes
Sanctions Sections
Top Manageme
nt
Signature, Consent And Agreement
Requirement
Tech Backup
Training Statement to be visibleProviding guidance for senior managers
Continuous Controls Monitoring ‘Flag System’
Employees needs to read and sign the ethics statement
o Documentation of COE
o Detailed and specific
o Guidelines for employees
Check and balance system
Straight from the top
Monitoring, Auditing ,Reporting
What more can a
company do to make sure
its code of ethics is followed?
Erecting a Robust and Self Sustaining Ethics Infrastructure:-1. assuring employee
compliance 2. staff training3. evaluations of
compliance systems4. appropriate funding
and staffing5. effective protections
to Whistleblower 6. establish
independent "hot lines" or "help lines"
Synthesizing Ethical Conduct into Corporate Systems:-1. Provide a
written pledge i.e: Credo or values2. Consistent
guidance 3. simple and non-
convoluted systems to measure the effectiveness of ethics initiative
4. Reward & punishment
Communication and Assimilation:-• Goals• Role
Integrity Continuity Management
Proactive Integrity Continuity Management Tactics•Set and maintain integrity goals at the strategic level.•Demonstrate top management commitment to integrity.•Monitor and audit conduct (formal and informal).•Tie performance rewards system to integrity conduct.•Distribute written rules, policies, and procedures.•Reinforce written rules, policies, and procedures.•Train employees to recognize and make ethical decisions.•Establish Corporate Ethics Officer/Team.•Designate Ethical Compliance Manager.•Install surveillance and evaluative processes and foster collaborative participation.•Maintain “whistle-blower” channels and policies.•Ensure supportive climate for ethical conduct.•Reward acts of integrity and ethical decisions.•Abide by and enforce disciplinary policy consistently and fairly.•Offer Organizational Transformation (OT) training and development programs.•Immediately respond to misconduct; follow procedures consistently and fairly.
Integrity Continuity Analysis(Murphy,2011)
57% of companies “have never” incorporated integrity continuity planning at the strategic executive or board level.
54% of companies do not have employee ethics compliance measurement among their performance appraisal criteria.
56% of companies have never conducted an ethical behavior compliance audit.
23% of companies have never engaged senior management in ethics/compliance training efforts.
What more can a
company do to make sure
its code of ethics is followed?
Improving Leadership Behavior to Boost Up Employee Commitment:-1) Inspire and
Motivate Others2) Driving for Results3) Strategic
Perspective4) Collaboration 5) Walk the Talk 6) Trust 7) Develops and
Supports Others 8) Building
Relationships 9) Courage
Back to Basics:-1) Ethical teachings
of most religions are compatible with each other
2) To embark a spiritual programs
3) close the social gap, reduce the greed, and to unite the entire organization
4) to understand their function and responsibility towards their Creator
CONCLUSION
There is a bridging gap between the governance of statutory provisions and the extent to which these provisions curb corporate misconducts or wrongdoings.
A radical transition and transposition of ethics is momentous in the realm of contending, circumventing and addressing the rifts of existing statutory provisions.
END
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