CHAPTER 6

Strategic Approaches to Improving Ethical Behavior

Chapter Objectives

• To provide an overview of the need for an organizational ethics program

• To consider crucial keys to development of an effective ethics program

• To examine effective implementation of an ethics program

The Need forOrganizational Ethics Programs

• Organizations are held accountable for the conduct of their employees.

• Organizations can create unethical corporate cultures.

• Stakeholders demand greater ethical andsocial responsibility.

Codes of Conduct

Formal statements that describe what an organization expects of its employees

Developing andImplementing a Code of Ethics• Consider areas of risk and state values as well as necessary

conduct.• Identify values that specifically address current

ethical issues.• Consider values that link the organization to a stakeholder

orientation.• Make the code understandable by providing

examples that reflect values.• Communicate the code frequently in language employees can

understand.• Revise the code each year.

Ethics Officers

• Assess organizational needs and risks• Develop and distribute the code of ethics• Conduct ethics training programs• Establish and maintain a confidential system to

respond to ethics questions• Make certain the company is in compliance with

government regulation• Monitor and audit ethics conduct• Take action when there is a code violation• Review and update the code

Ethics Training and Communication

• Educates employees about the firm’s policies, expectations, relevant laws and regulations, and general social standards

• Makes employees aware of available resources, support systems, and personnel who can assist with ethics and legal advice

• Can empower employees

Training andCommunication Initiatives

• Should reflect the unique characteristics of an organization

• Must operate with a strong foundation • Are more effective if employees engage

in exercises that involve solving ethical dilemmas that relate to their job

Establishing Systems to Monitorand Enforce Ethical Standards

• Help or assistance lines• Observation and feedback• Whistle-blowing

Questions to Ask BeforeEngaging in External Whistle-blowing• Have I exhausted internal anonymous reporting opportunities

within the organization?• Have I examined company policies and codes that outline

acceptable behavior and violations of standards?• Is this a personal issue that should be resolved through other

means?• Can I manage the stress that may evolve from exposing

potential wrongdoing in the organization?• Can I deal with the consequences of resolving an ethical or

legal conflict within the organization?

Continuous Improvementof the Ethics Program

• Putting strategies into action• Translating a plan of action into operational

terms and monitoring, controlling, and improving organizational performance

ImplementingOrganizational Ethics Programs

• Role of leadership– Transformational leaders– Transactional leaders

Leaders influence Corporate Culture

• Organizational leaders use their power and influence to shape corporate culture. Power refers to the influence that leaders have over the behavior and decisions of subordinates.

Five Power Bases

• Reward power• Coercive power• Legitimate power• Expert power• Referent power

Variation in Employee Conduct

• Because people are culturally diverse and have different values, they interpret situations differently and will vary in the ethical decisions they make on the same ethical issue.