codes of ethics and codes of conduct
DESCRIPTION
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 EthicsTRANSCRIPT
CODES OF ETHICS AND CODES OF CONDUCT
Chapter Four
Visit http://wileymanagementupdates.com/ for the latest in business news stories. Copyright © 2012 John Wiley & Sons
Chapter 4
Learning Objectives
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: Collins, Business Ethics
Difference Between a Code of Ethics and a Code of Conduct
Code of Ethics:A Code of Ethics briefly describes broad
ethical aspirationsIt is sometimes referred to as a Values
StatementIt has a few general principles to guide
behavior that could fit on a business cardThese principles describe the kind of people
we want to be
Chapter 4: Collins, Business Ethics
Difference Between a Code of Ethics and a Code of Conduct
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
Chapter 4: Collins, Business Ethics
Purpose and Importance of Codes
The extent of an organization’s ethics program isoften 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 a Code of Ethics
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 EthicsDiscuss the organization’s 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
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 consensusIt legitimizes dialogue about ethical issues
when challenging situations arise
Chapter 4: Collins, Business Ethics
Purpose and Importance of Codes
Meet Legal Requirements and Industry TrendsThe 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
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
Chapter 4: Collins, Business Ethics
Code of Ethics Content
Providing employees with a list of prohibitions—things they should not do—can feel oppressive
Make the Code of Ethics an affirmative statement of how employees should act
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:
1.Trustworthiness2.Respect3.Responsibility4.Fairness5.Caring6.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”
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 approvalStep 2-Create a code-writing teamStep 3-Gather list of ethical issues from
relevant stakeholdersStep 4-Define a “Code of Ethics”Step 5-Gather a list of ethical behaviors from
participants
Chapter 4: Collins, Business Ethics
Code of Ethics Content
Step 6-Determine common themesStep 7-Draft a Code of EthicsStep 8-Compare to other codes and modifyStep 9-Compare to other groupsStep 10-Code alignmentStep 11-Code reviewStep 12-Code communication strategyStep 13-Code revision
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Connecting Code of Ethics to Strategic Planning
Strategic planning integrates an organization’s mission with its vision and provides clear direction on how the organization will progress from its current situation to a highly desired future situation
Chapter 4: Collins, Business Ethics
Exhibit 4.5: Crafting a Cause-Based Strategic Message
Insert Exhibit 4.4
Chapter 4: Collins, Business Ethics
Jim Armstrong’s 10-step process for developing a cause-based communication strategy
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
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:
1. Conflicts of Interest2. Corporate Opportunities3. Confidentiality 4. Fair Dealing5. Protection and Proper Use of Assets6. Compliance with Laws, Rules, and Regulations7. Encouraging the Reporting of Any Illegal or
Unethical Behavior
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 GratuityA 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
Chapter 4: Collins, Business Ethics
Code of Conduct Relevancy
EmailA 2009 survey reported that approximately
half of all organizations monitor email use
Clearly note in the Code of Conduct that the employer’s right to monitor email communications on company-owned computers and network systems supersedes employee privacy rights
Chapter 4: Collins, Business Ethics
Code of Conduct Relevancy
Association of Consulting Engineers Australia Code of Conduct Policy
Insert Exhibit 4.8
Chapter 4: Collins, Business Ethics
Implementing an Effective Code Communication Strategy
Ethical hypocrisy, the gap between an organization’s formal ethical proclamations and its actual behavior, damages employee morale
Researchers report that people working for a supervisor who encouraged employees to lie about delivery information to clients had less job and organizational satisfaction
Chapter 4: Collins, Business Ethics
Implementing an Effective Code Communication Strategy
Elements of an Effective Code Communication Strategy:
Connect the code to the organization’s strategyMention the Code of Ethics in job announcementsIntroduce the code during employee orientationAnnually distribute the Code of Ethics with a
letter signed by a high-level executive emphasizing the importance of applying the code on a daily basis
Chapter 4: Collins, Business Ethics
Implementing an Effective Code Communication Strategy
Elements (cont.)Display the Code of Ethics in newsletters, highly
traveled areas, and on stationary and websitesDiscuss the code during ethics training workshopsMention the Code of Ethics in correspondences with
suppliers and customersEvaluate employees on code adherence in
performance appraisalsLink code adherence to promotions and merit raisesAnnually assess how well the organization embodies
the code
Chapter 4: Collins, Business Ethics
Annual Code of Ethics Assessment
Insert Exhibit 4.9
Chapter 4: Collins, Business Ethics