Post on 20-Aug-2015
2
Lesson's Objectives◦Define Professional Ethics◦Organizational standards and codes of ethics,◦Evaluation of code of ethics,◦ Implementing business ethics,◦The ethics audit.
3
Professional Ethics◦A profession is a job that requires specific
training and is regulated by certain standards◦Professional ethics the ethical norms, values,
and principles that guide a profession and the ethics of decisions made within the profession.
◦Lecturer◦Doctor◦Accountant
4
Professional EthicsProfessional ethics are often established
by professional organizations to help guide members in performing their job functions according to sound and consistent ethical principles.
5
Characteristics of a Profession◦Common body of knowledge◦Formal educational process◦Standards of entry◦Recognition of public responsibility◦The Public Interest◦ Integrity◦Objectivity and independence◦Due Care◦Scope and Nature of Services
7
To Be Ethical LeaderTo be perceived as an ethical leader, must be a
visibly ethical person and an ethical manager with a consistent message
Therefore to be a ethical leader;Being a moral person alone is insufficientExecutives are distant from most employees and, without "moral management," bottom line messages can overwhelm all others.
8
To Be Ethical Leader Being a moral manager is insufficient
Moral management gain legitimacy only if employees believe the given principled, caring person who means what s/he says
◦Then ethical leadership is Much more than traits (e.g. integrity) Requires great care to create and sustain an ethical
culture that sends a consistent message that is at least as powerful as the "bottom line" drumbeat (via real attention to ethics in multiple cultural systems).
9
Hypocritical Leader Ethical Leader
Unethical Leader? Ethically
neutral (silent) leader
StrongMoral
Manager
Weak
Weak Moral Person
Strong
10
Ethical Leadership Example◦Known to be a person of the highest integrity.
Strength and revised corporate credo/philosophy, launched annual credo survey after Tylenol crisis, required action plans to address problems, handled ethical violations swiftly
James Burke,
Johnson & Johnson.
12
Unethical Leadership Example◦Lied to employee & financial analysts, was
condescending / not respecting, belligerent/ aggressive and disrespectful of employees, made decisions and rewarded employees based upon bottom line only, left company crippled, accused of filing false financial reports - settled with SEC for half million dollars.
Al Dunlap, Sunbeam
14
Hypocritical Leadership Example◦Talked about ethics, religion (doing "God's
work"). Yet, employees became aware of misleading financial practices, conflicts of interest, lying to donors, theft of donor contributions, sexual liaisons, etc!
Jim Bakker of PTL Ministries(PTL stands for "Praise the Lord" or "People That Love"),
later called The Jim and Tammy Show)
16
Ethical Neutral Leadership Example
Intense/strongly focus on bottom line. Decentralized management style means that ethics management is left to business unit managers. Describe by Fortune magazine as “tone deaf" on ethics issues. Citigroup has dealt with a variety of conflicts of interest scandals.
Sandy Weill, Citigroup
17
Need for Corporate Ethics Programs
◦Almost companies in Sri Lanka have reduced trust in businesses Beverage, Milk powder, Meat products, services...
◦Employees are not legal experts and need guidance as their orientation is deferent Compliance orientation Values orientation
◦Therefore an ethical program is required.
18
Values Vs. Compliance Orientation
◦Compliance orientation Requires that employees identify with and commit
to specified conduct Uses legal terms, statutes and contracts that teach
employees the rules and penalties for noncompliance
◦Values orientation Focuses more on an abstract core of ideals such as
respect and responsibility Research shows is most effective at creating ethical
reasoning
19
Ethical Programs◦It is a programe that create firm's ethical climate
and helps ensure that all employees understand the organization's values and comply with the policies and codes of conduct.
◦Organizations should develop an organizational ethics program by establishing, communicating, and monitoring uniform ethical values and legal requirements.
20
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
21
Concepts of Code of Ethics◦Codes of conduct - represents employee
ethics Formal statements that describe what an
organization expects of its employees
◦Codes of ethics - corporate or business ethics Most comprehensive document and it consists of
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
22
Code of Ethics◦Code of ethics are formal statements of what
an organization expects in the way of ethical behavior It will not solve every dilemma Provide rules & guidelines It reflects senior management's desire for
compliance with values, rule & policies in support of an ethical climate
And it should be specific enough to be reasonably capable of preventing misconduct
23
Corporate Code of Ethics◦Often contain six core values
Trustworthiness Respect Responsibility Fairness Caring Citizenship
24
E.g. Uniliever◦General Code of Ethics focuses on:
Standard of Conduct : Honesty, Integrity & Openness
Obeying the Law : Laws of host country Employees : No forced or child labor Consumers : Consistent value offering Public Activities : No political affiliation Competition : strong & Fair Compliance & Monitoring : Board, Senior Mgt
25
E.g. Wal-Mart◦Wal-Mart's Ethics Beliefs
"respect for the individual," "service to the customer" and "Striving for excellence.“
Responsibilities and Obligations to Customers Fair Transaction with stakeholders Fair Competition
E.g. LG
26
Implementing Code of Ethics◦Distribute the code comprehensively:
employees, subsidiaries, & associated companies
◦Assist in interpretation & understanding◦Specify management's role in implementation◦Make employees responsible for
understanding◦Establish grievance procedures◦Provide a conclusion or closing statement
27
Consideration of Code of Ethics◦Ethics officers or committees are responsible
for oversight of the ethics/compliance program
◦Coordinates program with top management◦Develops, revises & disseminates the code◦Develops effective communication◦Establish audits & control systems◦Provides consistent enforcement of standards◦Reviews & modifies the program to improve
effectiveness.
28
Communication of Ethical Standards
◦Must start with a foundation, a code of ethics, a procedure for airing ethical concerns, and executive priorities on ethics
◦Can educate employees about firm's policies and expectations, laws and regulations, and general social standards
◦Can make employees aware of resources, support systems, and personnel who can assist them with ethical advice
◦Can empower employees.
29
Communication of Ethical Standards
◦Provides guidance for ethical standards & activities that integrate the functional areas of business
◦helps employees identify ethical issues & provides a mean to address & resolve
◦Can help reduce criminal, civil & administrative consequences including: Fines, penalties, judgments, etc.
30
Oversight of Ethical standards◦Reflect organizational size, culture, values,
management style & employee base◦ Improve employee understanding of ethical
issues◦ Influence the organizational culture,
significant others, & opportunity in the ethical decision making process
◦Overall, provide for recognition of ethical issues, understanding of culture & values, and influence ethical decision making
31
Enforcing Ethical Standards◦Consistent enforcement is critical◦But an internal system for employees to
report misconduct is an opportunity to register ethical concerns
◦Ethics hot lines◦Questionnaires may be used to serve as
benchmarks◦Corrective actions provide standards &
punishment
32
Enforcing Ethical Standards◦ If a company has determined that its ethical
performance has not been satisfactory, management may want to recognize the way ethical decisions are made:
◦A decentralized organization may be centralized (perhaps temporarily) so that top level managers can ensure that ethical decisions are made.
◦A centralized organization may be decentralized (perhaps temporarily) so that lower level managers can make more decisions.
33
Enforcing Ethical Standards◦An effective ethics program employs many
resources to monitor ethical conduct and measure the program’s effectiveness Observing employees Internal audits Surveys Reporting systems Investigations Independent audits
34
Ethical Compliance Audit◦A systematic evaluation of an organization's
ethics program and/or performance to determine its effectiveness
◦Can help in establishing codes & program◦Should provide a systematic & objective
approach to surveying the ethical condition of the organization
◦May be more effective if performed by an external entity (organizations should participate in ethics audit instrument development)
35
Mistakes in Ethical Program◦Not having a clear understanding of the goals of
the program from the beginning.◦Not setting realistic and measurable program
objectives.◦Senior management's failure to take ownership
of the ethics program.◦Developing program materials that do not
address the needs of the average employee.◦Transferring a domestic program internationally.◦Designing a program as a series of lectures.