Developing an Effective

Ethics Program
The Need for Corporate Ethics Programs

 Scandals in corporate have reduced

trust in corporations –both profit and
non-profit
 Understanding the factors that influence
ethical decision-making can help
companies encourage ethical behavior
 Employees are not legal/moral experts
and need guidance
A non-profit’s reputation is its single most
valuable asset: its reputation lies at the
very core of its ability to fullfil its mission.
Clearly, the best time to address the
protection of a nonprofit’s reputation is
before problems arise.
 Case 3

You and several co-workers attend a conference. They

have made similar trips for the organization, but this
your first. You keep your expenses very low by using the
hotel airport shuttle ($12 round trip), economizing on
meals and avoiding any unnecessary expenses. Part of
your job involves comparing receipts with expense
reports, and when you review your co-workers' receipts
you see that they each used a taxi to and from the
airport (around $30 one way), ordered room service
breakfast, consumed several mini-bar items, sent clothes
to the hotel laundry and bought tickets to a concert.
What, if anything, do you say to your supervisor?
 The Need for Corporate Ethics Programs

 Organizations should develop an

organizational ethics program by
establishing, communicating, and
monitoring uniform ethical values and
legal requirements
 A strong ethics program includes:
– Written code of conduct
– Ethics officer/leaders to oversee the program
– Care in the delegation of authority
– Formal ethics training
– Auditing, monitoring, enforcement, and
revision of program standards
 An Effective Ethics Program
 Helps ensure that all employees
understand the organization’s values and
comply with the policies and codes of
conduct that create its ethical climate.
 Cannot assume that employees will
know how to behave when entering an
organization
Minimum Requirements for Ethics and
Compliance Programs
Values Versus Compliance Orientation

 Compliance orientation
– Requires that employees identify with and commit to
specified conduct
– Uses legal terms, statutes and contracts that teach
employees the rules and penalties for
noncompliance
 Values orientation
– Focuses more on an abstract core of ideals such as
respect and responsibility
– Research shows is most effective at creating ethical
reasoning
 Codes of Conduct
 Codes of conduct
– Formal statements that describe what an organization
expects of its employees
 Codes of ethics
– Most comprehensive document
– Consists of general statements that serve as
principles and the basis for the rules of conduct
 Statement of values
– Serves the general public and addresses stakeholder
interests
Corporate Codes of Ethics
Often contain six core values
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
 Diaconic Institution Core Values

ANY SUGGESTION…..
Some elements of codes of ethics:

 Conflicts of interest. Conflicts of interest arise

when an employee benefits at the expense of
the organization or can’t exercise
independent judgment because of an
investment, activity, or association. Even the
appearance of a conflict of interest is
problematic.
 Records, funds, and assets. Organizations
must keep accurate records and protect funds
and other assets. Such records (including
financial statements) must meet government
regulations.
 Information. In for-profit organizations,
employees can be liable if they or even their
families reveal confidential information that
undermines performance or competitive
advantage. In the public sector, codes of
ethics encourage employees to share rather
than to withhold information from the public.
 Outside relationships. This category
addresses contact with customers, suppliers,
competitors, contractors, and other outside
individuals and organizations. Includes
prohibitions against bad-mouthing the
competition, price fixing, and the sharing of
sensitive information.
 • Employment practices. Covers
discrimination, sexual harassment, drug
use, voluntary activities, and related
human resource issues.
 • Other practices. Sets policies related
to a variety of other topics, including
health and safety, the use of
technology, the environment, political
activities, and the use of organizational
assets for personal benefit.
Exercise: Drafting a code of ethics for a
diaconic institution
 Imagine you are all connected with a
Hospital-a diaconic institution. Your
task is to formulate a draft code of
conduct.
1. Be short and easy to remember (try for a
maximum of six items);
2. Be very specific, behavioral items;
3. Agreed by all members of the group;
 Exercise

Group 1: Behavior Towards Employees, Staff,

and volunteers . This category covers hiring
and firing, wages and working conditions, and
privacy and respect. List three only
Group 2: Behavior Towards Stakeholders. This
category includes behavior towards clients,
customers, suppliers, competitors,
stockholders, dealers, and partners. List two
expected behaviors and another two which are
deemed unethical.
Group 3: Behavior Towards the Organization.
Specific behaviors to cover issues of conflict of
interest, confidentiality, and honesty.
 Ethics Officers (Leaders)
 Ethics officers/leaders or committees are
responsible for oversight of the
ethics/compliance program
– Assess the needs and risks that an ethics
program must address
– Develop, revise, and disseminate the code
– Conduct training programs for employees
– Develop effective communication
– Establish audits and control systems
– Review and modify the program to improve
effectiveness
Forms of Reported Retaliation Experienced
as a Result of Reported Misconduct

Source: 2009 National Business Ethics Survey, Ethics Resource Center, p. 36

 Continuous Improvement
 Implementation requires designing
activities to achieve organizational
objectives using available resources and
existing constraints
 Depends in part on how an organization
structures resources and activities to
achieve its ethical objectives
 Common Mistakes in Designing/Implementing
an Ethics Program

 Not having a clear understanding of the goals of

the program from the beginning
 Not setting realistic and measurable
program objectives
 Senior management’s failure to take
ownership of the ethics program
 Developing program materials that do not
address the needs of the average employee
 Transferring a domestic program internationally
 Designing a program as a series of lectures
 References
 Deborah L. Rhode & Amanda K. Packel, Ethics and Nonprofits
in Stanford Social Innovation Review (2009 Summer)
 Jeavons, Thomas H. "Ethical Nonprofit Management." In The
Jossey-Bass handbook of nonprofit leadership and
management, edited by David O. Renz and Robert D.
Herman. San Francisco: Jossey-Bass, 2010.
 Gibelman, M., & Gelman, S. R. Very public scandals: An
analysis of how and why non-governmental organizations get
in trouble. In Voluntas: International Journal of Voluntary and
Nonprofit Organizations, Vol. 12, No. 1, 2001.
 Developing an Effective Ethics Program chap 8 in Ferell, O. C.,
Fraedrick, J., & Ferell, L. (2011). Business Ethics: Ethical
Decision Making and Cases. Mason: South Western - Cengage
Learning.