APCO 1P50 Wednesday October 3, 2012
Improving Corporate Ethics
Characteristics of a successful ethics program
Employees willing to seek advice about ethical issues
Employees feel prepared to handle situations that could lead to misconduct
Employees are rewarded for ethical behaviour
Employees are not rewarded for success obtained through questionable means
Employees feel positive about their company
Appointing a Corporate Ethics Officer
Duties of the Corporate Ethics Officer:
Provides vision/leadership in business conduct.
Should be well-respected, senior-level manager who reports directly to the CEO.
Ensures ethical procedures are put in place.
Creates and maintains ethics culture.
Is responsible for key knowledge/contact person for ethical issues.
Ethical Standards Set by Board of Directors
Board oversees the organization’s business activities and management.
Board members of company are expected to:
o Conduct themselves according to the highest standards of personal and professional integrity.
o Set standard for company-wide ethical conduct.
o Ensure complicance with laws and regulations.
o Create environment in which employees can seek advice about business conduct, raise issues,
and report misconduct.
Establishing a Corporate Code of Ethics
Features of a Code of Ethics:
Highlights an organization’s key ethical issues.
Identifies overarching values and important principles.
Focuses employees on areas of ethical risk.
Offers guidance for employees to recognize and deal with ethical issues.
Provides mechanisms to report unethical conduct.
Helps employees avide by the law, follow necessary regulations, and behave in an ethical manner.
Sarbanes-Oxley Act of 2002 (US)
Enacted in response to public outrage over several major accounting scandals.
Section 404 requires that the CEO and CFO sign any SEC filing to attest to its accuracy.
Section 406 requires public companies to disclose whether or not they have a code of ethics and if any
waivers to that code have been granted.
Cannot gain company-wide acceptance unless it is:
o Developed with employee pariticpation.
o Fully endorsed by organization’s leadership.
Must continually be applied to company’s decision making and emphasized as part of its culture.
Breaches in the code of ethics must be identified and dealt with appropriately. APCO 1P50 Wednesday October 3, 2012
Conducting Social Audits
Social audits review how well an organization is meeting ethical/social responsibility goals.
Communicates new goals for upcoming year.
Shared broadly with employees, shareholders, investors, market analysts, customers, suppliers, gov’t
agencies and local communities.
Requiring Employees to Take Ethics Training
Personal convictions improved through education.
Comprehensive ethics education program encourages employees to act responsibly and ethically.
o Often presented in small workshop formats.
o employees apply code of ethics to hypothetical but realistic case studies.
o Demonstration of recent company decisions based on principles form the code of ethics.
o Critical that training increase the percentage of employees who report incidents of misconduct.
o Employees must
Learn effective ways of reporting incidents.
Be reassured their feedback will be acted on without retaliation.
Including Ethical Criteria in Employee Appraisals
Only 43% of companies include ethical conduct in employee’s performance appraisal.
Ethical criteria can include:
o Treating others fairly and with respect.
o Operating effectively in a multicultural environment.
o Accepting personal accountability.
o Continually developing themselves and others.
o Operating openly and honestly with all.
Creating an Ethical Work Environment
Good employees may make bad ethical choices.
May be encouraged to do ‘whatever it takes’ to get the job done.
Employees need a knowledgable resource to discuss perceived unethical practices:
o A manager
o Legal/Interal Audit Department
o Business Unit’s legal counsel APCO 1P50 Wednesday October 3, 2012
o Anonymously through internal web site.
Including Ethical Considerations in Decision Making
Steps in a decision-making process Develop problem statement
Evaluate and choose alternative
Develop a Problem Statement
Clear, concise description of the issue
Answers these questions:
o What causes people to think there is a problem?
o Who is directly affected by the problem?
o Is there anyone else affected?
o How often does it occur?
o What is the impact of the problem?
o How serious is the problem?
Most critical step in decision-making process. APCO 1P50 Wednesday October 3, 2012