2. Effective Ethical Compliance
Programs...
should reduce the possibilities of penalties &
negative public reaction to misconduct
must be communicated to all employees-
common understanding of organizational
values, policies & procedures
– companies that act to prevent organizational
misconduct may receive a ‘carrot’ and avoid
organizational penalties
– those that do not may receive a ‘stick’-fines &
penalties
3. The Sentencing of Organizations Under the
FSGO is Governed by 4 Considerations
the organization must remedy the harm
fines may be set sufficiently high to divest
the organization of all assets if it is found to
be criminal purpose
fines levied against the organization are
based on the seriousness of the offense &
the culpability of the organization
probation is deemed appropriate when the
organization will work to prevent further
misconduct
4. Effective Ethical Compliance
Programs...
must deal effectively with the risk associated
with a particular business & has to become
part of the corporate culture
can help avoid civil litigation
must exhibit due diligence to prevent
misconduct
5. Codes of Ethics...
are formal statements of what an organization
expects in the way of ethical behavior
– will not solve every dilemma
– provide rules & guidelines
– reflects senior management’s desire for compliance
with values, rules & policies in support of an ethical
climate
should be specific enough to be reasonably
capable of preventing misconduct
6. Manley’s Six Steps to Implement
a Code of Ethics
distribute the code comprehensively: employees,
subsidiaries, & associated companies
assist in interpretation & understanding
specify management’s role in implementation
make employees responsible for understanding
establish grievance procedures
provide a conclusion or closing statement
7. High Level Oversight
ethics officers or committees are responsible for
oversight of the ethics/compliance program
– coordinates program with top management
– develops, revises & disseminates the code
– develops effective communication
– establishes audits & control systems
– provides consistent enforcement of standards
– reviews & modifies the program to improve
effectiveness
8. Effective Communication of
Ethical Standards...
provides guidance for ethical standards &
activities that integrate the functional areas
of business
helps employees identify ethical issues &
provides a means to address & resolve
can help reduce criminal, civil &
administrative consequences
including:
– fines, penalties, judgements, etc.
9. Ethics Training Programs
Should...
reflect organizational size, culture, values,
management style & employee base
improve employee understanding of
ethical issues
influence the organizational culture,
significant others, & opportunity in
the ethical decision making process
overall, provide for recognition of ethical
issues, understanding of culture & values,
and influence ethical decision making
10. Monitoring, Auditing, & Enforcing
Ethical Standards...
an internal system for employees to report
misconduct is an opportunity to register
ethical concerns
– ethics hot lines
– questionnaires may be used to serve as
benchmarks
– corrective actions provide standards &
punishment
– consistent enforcement is critical
11. Continuous Improvement
if a company has determined that its ethical
performance has not been satisfactory,
management may want to recognize the way
ethical decisions are made:
– a decentralized organization may be centralized
(perhaps temporarily) so that top level managers
can ensure that ethical decisions are made
– a centralized organization may be decentralized
(perhaps temporarily) so that lower level
managers can make more decisions
12. “Bad Apple-Bad Barrel” Theory
“bad apple”-the notion that blame for
unethical behavior rests with a few
unsavory individuals (difficult for
organizations to influence ethical
decision making)
“bad barrel”-views that people are not
inherently ethical or unethical, but are
influenced by the corporate culture
surrounding them (more organizational
control)
13. Ethical Compliance Audit
a systematic evaluation of an organization’s
ethics program and/or performance
to determine its effectiveness
– can help in establishing codes & program
– should provide a systematic & objective
approach to surveying the ethical
condition of the organization
– may be more effective if performed by an external
entity (organizations should participate in ethics
audit instrument development)
