CHAPTER 6

Strategic Approaches to Improving Ethical BehaviorStrategic 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 currentethical issues.

• Consider values that link the organization to a stakeholder orientation.

• Make the code understandable by providingexamples 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 engagein 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.