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Business Ethics
Ethical Decision Making and
Cases, Seventh Edition
O.C. Ferrell
University of New Mexico
John Fraedrich
University of Wyoming
Linda Ferrell
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University of New Mexico
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8-1
Chapter 8
Developing an
Effective Ethics
Program
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8-2
The Responsibility of the
Corporation as a Moral Agent
• Increasingly, corporations are viewed not
merely as profit-making entities but also as
moral agents that are accountable for their
conduct to their employees, investors,
suppliers, and customers.
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8-3
Why Do Companies Develop
Ethics Programs?
• To allow employees and stakeholders to
understand the values of the business
• To comply with policies and codes of
conduct
• To create the ethical climate of the
business
• To create TRUST
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Building Trust and
Confidence
• Make customers the top priority
• Assume personal responsibility and
accountability
• Open and frequent communication
• Handle crises honestly
• Stick to your ethics code no matter what
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Values or Compliance
Programs?
• Compliance orientation
– Legal terms, statutes, contracts, rules,
and penalties
• Values orientation
– Develop shared values
– Focus on the abstract
– Teach to aspire to ethical behavior instead
of coercion
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An Effective Ethics Program
• Code of ethics
• Ethics compliance program
• Monitor, audit, and report misconduct
• Training
• Enforcement
• Continuous improvement program
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Code of Ethics and Conduct
• Formal statement of what an organization
expects in the way of ethical behavior
(what behaviors are acceptable or
unacceptable)
• Reflects senior management’s
organizational values, rules, and policies
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Six Steps in Implementing a
Code of Ethics
• Distribute internally and externally
• Assist employees in understanding
• Specify management’s role
• Make employees responsible for
understanding the code
• Establish grievance procedures
• Provide a concluding statement
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8-9
Role of an Ethics Officer
• Coordinate the program with top
management
• Develop, revise, and disseminate the code
of ethics
• Develop effective ethics training tools
• Establish audit and control systems
• Develop enforcement techniques
• Revise the program as needed
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8-10
Common Mistakes in
Designing and Implementing
an Ethics Program
• Developing materials that do not
address the average employee
• Implementing an “American” program
to a firm’s international operations
• Designing an ethics program with a few
lectures or cases
• Taking a legalistic approach
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Common Mistakes in
Designing and Implementing
an Ethics Program
• Not recognizing the need for a program
• Not setting realistic and measurable
program objectives
• Management’s failure to take ownership
of the ethics program
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