Ch 8: Managing Ethics in Organizations

What are the 3 forms of ethical leadership?

Ethical leaders, Responsibly leaders, Servant leaders

Ethical leaders

communicate ethical standards, conduct, dealing with unethical behaviour promptly

Responsibly leaders

• narrow: focused on financial

• extended: incorporates stakeholder CSR

Servant leaders

serve needs of others with authenticity, humility, empowerment

What are corporate ethics programs?


comprise some: statement of values, code of conduct, ethics training, ethics audit/consulting, ethics officers & committees, ethics reporting systems

What are organizational values?


Organizational values -> leads to actions managers make -> lead to corporate culture -> leads to organization's identity

What is a statement of values?


description of beliefs, principles, basic assumptions about what is desirable/worth striving for in organizations

What are benefits of values?


value-driven companies outperform those that only focus on their products & services -> helps with selling & marketing

Code of conduct

what is & is not appropriate to do

Code of ethics

values that guide behaviour

What is the code's development over time?


First generation: focused on conflict of interest

Second generation: focused on bribery/kickbacks

Third generation: employee rights & relationships with customers/suppliers

Fourth: environmental protection & respect for communities

Fifth: extended to international concerns

What are some criticisms of codes of ethics/conduct?


• Minimal & unenforceable

• does not follow up & train (not used in practice)

• less effective for less thorough

What are ethics training?


teaching employees about values & policies on ethics they should follow in decision making

What are the 3 types of conflict of interest?


1. Real: knowledge of private/economic interest/gain

2. Apparent: deduced from appearances

3. Potential: may develop into conflict

How do you handle conflicts of interest?


1. Remove conflict (resign)

2. Disclose the conflict

3. Recusal (absention in conflict)

4. Request 3rd party evaluation

How do you institutionalize ethics?


• Ethics officer: independent manager reporting to board

• Compliance officer: responsible for ensuring all employees are familiar with policies/codes

• Ethics committee: group that monitor ethic standards/behaviour

• Ethics audit: effort to discover unethical behaviour

What are ethics reporting systems & whistleblowing?


Reporting systems in place to provide awareness of issues & concerns

Whistleblowing: act of voluntary disclosure of inappropriate behabiour

What are some whistleblowing considerations & government regulations?


Is issue illegal or immoral? Is whistleblower believed/rewarded, hero/snitch, what are consequences?

Very rigid whistleblowing protection in: Federal, provincial, territorial, Canadian securities, U.S Gov

Board of Directors?


Responsible for & must be involved & aware of organization's activities

• identify values for acceptable behaviour -> ensure values are reflected in action

Management?


Managers must provide moral leadership

• passion to do right, morally proactive, consider stakeholder, strong ethical character, fairness, principled decision-making, integrate ethics with management

What are the 3 approaches to ethics programs?


1. Formal: based on organizational norms written as code

2. Monological: allows managers & employees to determine for themselves right/wrong

3. Dialogical: communication before decision made & implemented

What is the compliance-based program approach?

Focus on adhering to legal/regulatory requirements & policies

What is the value-based program approach?

Focus on organization's values & ethical standards

What is integrity management?

Incorporate compliance & value approaches

• compliance to reduce misconduct

• values to influence attitude/behaviour

What are some implicit ethics programs?

Organization's culture, reward systems, promotion policies, management example, performance measures

How do you evaluate ethics programs?

• Visibility: codes visible & accessible

• Ownership: awareness, usage, integration

• Fit: appropriate to organization & industry

• Balance: imposed control & self-control

Why should you implement ethics programs?

Ethical issues will occur regularly -> it's above being legal

What is ethical leadership & leader integrity?

Managers must lead others to behave ethically on top of being ethical themselves

Corporate culture

complex set of values, beliefs, assumptions, symbols defining the way organizations conduct business

Ethical corporate culture

subset of organization's broader culture

Why do ethical leadership/programs fail?

Illegal behaviours are easy to condemn but some conduct is immoral not illegal

• managers are morally imperfect