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