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Managing Business Ethics

Managing Business Ethics. Chapter 6 Treviño & Nelson – 5 th Edition. Chapter 6 Overview . Introduction Structuring Ethics Management Communicating Ethics Using the Reward System to Reinforce the Ethics Message Evaluating the Ethics Program Values or Compliance Approaches

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Managing Business Ethics

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  1. Managing Business Ethics Chapter 6 Treviño & Nelson – 5th Edition

  2. Chapter 6 Overview • Introduction • Structuring Ethics Management • Communicating Ethics • Using the Reward System to Reinforce the Ethics Message • Evaluating the Ethics Program • Values or Compliance Approaches • Globalizing and Ethics Program • Conlusion

  3. Structuring Ethics Management • Corporate Ethics Office • Ethics Officers • Insiders vs. Outsiders • Ethics Officer Background • Ethics Infrastructure • Corporate Ethics Committee

  4. U.S. Sentencing Guidelines • Established in 1991 for companies being sentenced or reaching settlements • Apply to all companies • Can be triggered by the activities of one employee • Give judges latitude to impose additional fines • Death Penalty is also an option: government forces company to divest all assets and be liquidated • Do not apply to Equal Employment Opportunity Commission (EEOC) violations • Such as discrimination, sexual harassment, etc. • EEOC has its own penalties

  5. U.S. Sentencing Commission Guidelines - 1991 • Companies must “self-report” wrong-doing • Companies must cooperate with any investigation • Companies must have an “effective” ethics program in place • Defined, well-communicated policy • Specific executive named to manage ethics and compliance • Care taken re: hiring and promotions • Ethics training and communications for all employees and agents • Compliance & whistle-blowing systems • Care taken re: future offenses • Consistent discipline

  6. Communicating Ethics • Basic Communication Principles • Evaluating the Current State of Ethics Communication • Multiple Communication Channels • Novel Approach to Ethics Communication at USAA • Mission or Values Statements • Policy Manuals • Codes of Conduct • Communicating Senior Management Commitment to Ethics • Ethics training programs • Training new recruits • Training existing employees • Formal Reporting Systems

  7. Know Your Audience

  8. Compliance-Based Rooted in law & regulations Reactive Limited senior mgmt involvement Obvious penalties “Signatures required” Values-Based Rooted in culture & driven by values Proactive and aspirational Commitment from senior mgmt Aligned with performance measures Compliance vs. Values-Based Approaches

  9. Compliance-Based Employees more likely to: think company is protecting itself seek advice outside be cynical Less likely to: report bad news be committed Values-Based Employees more likely to: seek advice inside be willing to report be committed support decisions be aware of ethical & legal issues Less likely to be unethical Compliance vs. Values-Based Approachesv

  10. What’s wrong with this picture? You're a management consultant who has been asked by Green Company to help design an ethics communication and training program for all Green Co. employees. Your meetings to date have been with the head of human resources, and your contract with the company has been negotiated with him. Once the papers have been signed, you begin your research and are quickly stymied by Green's corporate counsel. He says that you will not be allowed to ask employees about ethical dilemmas that have occurred at Green. He specifically asks that you get your information from other sources such as press accounts of problems in the industry, or from other organizations with which you've worked. In addition, the head of human resources has told you that you'll be unable to meet the three most senior executives because they're busy negotiating a large acquisition. You will have access to other high-level managers who can tell you what they think the seniors want. You're instructed to write a code of conduct for the company, a mission statement, and prepare presentations for the seniors to give to employees sometime next month on corporate expectations and values.

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