++

Managing Business EthicsChapter 6

Treviño & Nelson – 5th 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

Globalizing and Ethics Program

Conlusion

++Structuring Ethics Management

Corporate Ethics Office

Ethics Officers Insiders vs. Outsiders

Ethics Officer Background

Ethics Infrastructure

Corporate Ethics Committee

++ 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

++ U.S. Sentencing Commission Guidelines - 1991

1. Companies must “self-report” wrong-doing

2. Companies must cooperate with any investigation

3. 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

++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

++Know Your Audience

Characteristics Needs

Good Soldier Good compass Know rules

EncouragementReinforcement

Loose Canons Good compass Don’t know rules

TrainingHeightened supervision

Grenades No compass Personal agenda May or may not know rules

Senior management example

Swift discipline

++ Compliance vs. Values-Based Approaches

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 Approachesv

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

++ 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.