Codes of Ethics and Codes of Conduct

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Understand the difference between a Code of Ethics and a Code of Conduct Explain the importance of code awareness and expectations Describe the content found in most Codes of Ethics and Codes of Conduct Create and implement an effective Code of Ethics communication strategy Conduct an annual employee assessment of the Code of Ethics Chapter 4 Learning Objectives Chapter 4: Collins, Business Ethics

Transcript of Codes of Ethics and Codes of Conduct

Codes of Ethics and Codes of Conduct
Chapter Four Codes of Ethics and Codes of Conduct Visitfor the latest in business news stories. Copyright John Wiley & Sons Understand the difference between a Code of Ethics and a Code of Conduct
Explain the importance of code awareness and expectations Describe the content found in most Codes of Ethics and Codes of Conduct Create and implement an effective Code of Ethics communication strategy Conduct an annual employee assessment of the Code of Ethics Chapter 4 Learning Objectives Chapter 4: Collins, Business Ethics Difference Between a Code of Ethics and a Code of Conduct
A Code of Ethics briefly describes broad ethical aspirations It is sometimes referred to as a Values Statement It has a few general principles to guide behavior that could fit on a business card These principles describe the kind of people we want to be The general principles embodied in a Code of Ethics represent aspirations When faced with an ethical dilemma or ambiguous situation, principles articulated in the Code of Ethics can help guide the decision maker Chapter 4: Collins, Business Ethics Difference Between a Code of Ethics and a Code of Conduct
A Code of Conduct more extensively describes acceptable behaviors for specific situations that are likely to arise It is often developed by an employee with legal expertise, provides substance to the Code of Ethics and is usually several pages long A Code of Conduct applies the Code of Ethics to a host of relevant situations Chapter 4: Collins, Business Ethics Purpose and Importance of Codes
The extent of an organizations ethics program is often related to its size In the 1960s, only 15 percent of surveyed companies had a Code of Ethics Now, nearly all Fortune 1000 companies have aCode of Ethics Begin drafting a Code of ethics when the number of employees reaches about 10 Assign responsibility for managing organizational ethics to a specific individual at the 50-employee level and begin developing some ethics training Chapter 4: Collins, Business Ethics Exhibit 4.1 Ethics Program Growth and Organizational Size
Insert Exhibit 4.1 Chapter 4: Collins, Business Ethics Purpose and Importance of Codes
Demonstrate Managerial Concern for Ethics Discuss the organizations Codes of Ethics and Conduct with new employees to establish ethical expectations New employees play a pivotal role in helping an organization achieve the highest standards for honesty and ethical behaviors By discussing the organizations Code of Ethics and Conduct, managers demonstrate concern that ethical issues will be appropriately addressed Chapter 4: Collins, Business Ethics Purpose and Importance of Codes
Convey a Particular Set of Values and Obligations Codes of Ethics clarifies appropriate behaviors and provides employees with clear and consistent moral guidance It articulates and reinforce a moral consensus It legitimizes dialogue about ethical issues when challenging situations arise Employees need a reliable source of information to guide them when ethical issues arise Chapter 4: Collins, Business Ethics Purpose and Importance of Codes
Meet Legal Requirements and Industry Trends The Sarbanes-Oxley Act: required all publicly traded companies to disclose whether they had a Code of Ethics for senior financial officers Many industry associations and professional organizations develop codes as a self-regulating strategy that deflects government regulation Banks, health care firms, and organizations doing business with municipal, state, and federal governments are required to have an ethics code Lawyers, accountants, teachers, and social workers who violate their professional code can lose their license Chapter 4: Collins, Business Ethics Purpose and Importance of Codes
Positive impact on employee behaviors: Researchers report that organizations with Codes of Ethics have higher levels of employee commitment and greater tolerance for diversity Within an organization culture of trust, employees are more likely to trust managerial decisions, and managers are more likely to trust employee decisions Chapter 4: Collins, Business Ethics Code of Ethics Content Providing employees with a list of prohibitionsthings they should not docan feel oppressive Make the Code of Ethics an affirmative statement of how employees should act Its similar to the difference between a coach telling an athlete not to play badly versus a coach telling an athlete she is playing well and can do even better Chapter 4: Collins, Business Ethics Code of Ethics Content An extensive scholarly review of corporate Codes of Ethics, global Codes of Ethics, and business ethics literature found the following six values continually expressed: Trustworthiness Respect Responsibility Fairness Caring Citizenship Chapter 4: Collins, Business Ethics International Codes The Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. businesses to directly pay bribes in other nations The FCPA differentiates bribery from facilitating payments A bribe is typically defined as providing someone with a monetary incentive to do something contrary to his or her job description Facilitating payments, which are legal, expedite performance of routine governmental action Some businesses headquartered in the U.S. argued that the FCPA puts them at competitive disadvantage because businesses headquartered in other nations continue to pay bribes as a cost of doing business Chapter 4: Collins, Business Ethics Code of Ethics Content American businesses are obligated to obey both U.S. laws and host nation laws, with the higher ethical standards taking precedence The Caux Round Table spearheaded a collaborative effort to develop the Caux Principles for Responsible Business Chapter 4: Collins, Business Ethics Exhibit 4.4a Caux Principles for Responsible Business
Insert Exhibit 4.4 Chapter 4: Collins, Business Ethics Exhibit 4.4b Caux Principles for Responsible Business
Insert Exhibit 4.4 Chapter 4: Collins, Business Ethics Creating a Code of Ethics
Following are 13 steps for creating a Code of Ethics as a team-building exercise: Step 1-Obtain approval Step 2-Create a code-writing team Step 3-Gather list of ethical issues from relevant stakeholders Step 4-Define a Code of Ethics Step 5-Gather a list of ethical behaviors from participants An ethics code serves as a constant reminder, particularly when the owner is not present Chapter 4: Collins, Business Ethics Code of Ethics Content Step 6-Determine common themes
Step 7-Draft a Code of Ethics Step 8-Compare to other codes and modify Step 9-Compare to other groups Step 10-Code alignment Step 11-Code review Step 12-Code communication strategy Step 13-Code revision Chapter 4: Collins, Business Ethics Connecting Code of Ethics to Strategic Planning
Strategic planning integrates an organizations mission with its vision and provides clear direction on how the organization will progress from its current situation to a highly desired future situation Connecting the code to an organizations mission and vision, rather than keeping it separate, establishes credibility and visibility for the Code of Ethics Mission statements describe what an organization does and for whom Vision statements describe what an organization aspires to become in the future Strategic plans are communication devices Chapter 4: Collins, Business Ethics Exhibit 4.5: Crafting a Cause-Based Strategic Message
Jim Armstrongs 10-step process for developing a cause-based communication strategy Insert Exhibit 4.4 Chapter 4: Collins, Business Ethics Code of Conduct Content
A Code of Conduct addresses the wide range of legal expectations and ethical risks unique to an organization or job title Creating a Code of Conduct requires input from top-level executives, corporate lawyers, and human resource personnel Chapter 4: Collins, Business Ethics Code of Ethics Content The New York Stock Exchange recommends that a Code of Conduct address the following seven topics: Conflicts of Interest Corporate Opportunities Confidentiality Fair Dealing Protection and Proper Use of Assets Compliance with Laws, Rules, and Regulations Encouraging the Reporting of Any Illegal or Unethical Behavior Develop different Codes of Conduct for different business units, work functions, or stakeholders as an organization grows in complexity Revise the Code of Conduct when new issues arise Chapter 4: Collins, Business Ethics Code of Ethics Content Codes of Conduct are based on shifting moral expectations and legal obligations New technologies create new ethical dilemmas requiring new ethical guidelines Insert Exhibit 4.7 Chapter 4: Collins, Business Ethics Code of Conduct Relevancy
Business Gratuity A business gratuity is a present, gift, hospitality, or favor for which fair market value is not paid by the recipient A fine line exists between a business gratuity and a bribe The general guideline for when a gratuity evolves into a bribe is when the object of value unduly influences buying decisions Instructing buyers not to accept gratuities from suppliers, and then encouraging salespeople to offer gratuities to customers, sends mixed messages that damage managerial credibility Organizations need consistent policies to avoid the negative impacts of employees claiming hypocrisy Chapter 4: Collins, Business Ethics Code of Conduct Relevancy
A 2009 survey reported that approximately half of all organizations monitoruse Clearly note in the Code of Conduct that the employers right to monitorcommunications on company-owned computers and network systems supersedes employee privacy rights A 2007 survey conducted by the American Management Association found that 28 percent of the organizations had terminated an employee for inappropriateuse Chapter 4: Collins, Business Ethics Code of Conduct Relevancy
Association of Consulting Engineers Australia Code of Conduct Policy Insert Exhibit 4.8 Cha