Assignment on Ethics Codes

Organizational structures that are overly centralized or decentralized may "be recipes for-ethical problems. While there is not a "one best way" to structure a company, there are advantages and disadvantages to each type of stricture.

For example, centralized functional structures discourage open communication and sharing and must be integrated to allow for such draw-backs.

Decentralized structures, such as networks and project teams with little or no coordination, may create a climate for unethical activities, such as Fraud, theft, and pressuring of customers and alliance partners in unfair ways.Having leaders who rely on mission-driven ethical values that are communicated, reflected in the culture, and enforced throughout a firm is a necessary part of structural alignment.

Ethics codes, ombudsperson; peer review, and ethics officers programs are a way in which corporations can attempt to regulate themselves.

Johnson & Johnson's "Our Credo".

Culture of Compliance

 

Culture, structure, and other subsystems (e.g., finance, rewards, IT) are internal dimensions that enable leaders and professionals to implement strategy. "High-ethics company cultures can serve as a benchmark (i.e., standard of excellence) for other organizations' cultures.

Such cultures are grounded in well-defined purposes that-drive operations. These cultures are also modeled by leaders who are 'devoted to fairness, interaction with all stakeholders, concern for stakeholder interests, and individual responsibility.

While ethics and compliance, as well as the concept of "corporate responsibility" couldn't be more top of mind, it still isn't clear to many organizations how to implement and deploy a coordinated approach. Most organizations are doing all they can to just meet new regulatory requirements and have not been able to develop much of a strategy around these issues.

One of the greatest opportunities for the emerging corporate responsible professional is in addressing the greatest weakness in today's ethics, compliance, and corporate social responsibility programs the lack of coordination and integration of purpose and methods.

The concept of corporate responsibility applies to multiple roles within an organization. Each of these functions is critical in shaping an overall integrity program and yet these roles often don't relate to each other.

Sometimes, they even contradict each other:

• A well known company famous for its external social responsibility program has no internal ethics program that guides how managers treat employees.
  
• Another company that touts its world-class governance program has no means to impose consistent standards across its global operations.
  
• A company that has successfully deployed its internal controls to meet Sarbanes-Oxley requirements has no means to determine where managers are most likely to override those controls.
  
• A company with an award-winning ethics and compliance training program has performance evaluation and compensation structures that reward behavior contrary to its own code of conduct.
  

ETHICS CODES

Ethics codes are value statements that define an organization? Johnson & Johnson's credo is an outstanding example. Major purposes of ethics codes include the following:

• To state corporate leaders' dominant values and beliefs, which are the foundations of the corporate culture?
  
• To define the moral identity of the company inside and outside the firm.
  
• To set the moral tone of the work environment.
  
• To provide a more stable, permanent set of guidelines for right and wrong actions.
  
• To control erratic and autocratic power or whims of employees.
  
• To serve business interests (because: unethical practices invite outside government, law enforcement, and media intervention).
  
• To provide an instructional and motivational basis for training employees regarding ethical guidelines and for integrating ethics into operational policies, procedures, and problems.
  
• To constitute a legitimate source of support for professionals who face improper commands and intrusions on their skills or well-being.
  
• To offer a basis for adjudicating disputes among professionals the firm and between those inside and outside the firm.
  
• To provide an-added-means of socializing professionals, not only in
  

Specialized knowledge but also in beliefs, and practices the company

Values and rejects.

Companies looking' to buy (acquirers) other companies (targets) perform reacquisition due diligence on the management, finance, technology, services, and products, legality, .and ethics of the targets,

That is companies looking to buy other companies need to perform analyses to discover if the targets are telling the truth about their products, finances, and legal records. "Where does one that in uncovering the ethical vulnerability of a target?" The following basic questions are suggested as starting points:

• Does the target have a written code of conduct or code of ethics?
  
• Does the company provide ethics training or ethics awareness-building programs for management and company employees?
  
• Are avenues, such as an ethics office or hotline available for employees to ask questions about ethical issues?
  

The problems with corporate ethics codes in general are the following:

• Most codes are too vague to be meaningful, i.e. the codes do not inform Employees about how to prioritize among conflicting interests of distributor's, customers, and the company. What does being a "good citizen" really mean in practice?
  
• Codes do not set priorities among beliefs, values, and norms. Should profit
  

Always supersede concern for customers or employees?

• Codes are not enforced in firms.
  
• All employees are not informed of codes in most firms.
  

Ombudspersons and Peer Review Programs:

An example of an effective ombudsperson program is that of the Interna^{tional Franchise Association (IFA). Its board of directors adopted a comprehensive self-regulation program that has a clearly, strongly stated ethics code, an investor's awareness and education program, franchise education compliance and training program, a code enforcement mechanism, and an ombudsperson program which is described as follows:}

"The ombudsperson program is designed to enable franchisors and franchisees to identify disputes early and to assist them in taking preventative measures . . . facilitating dispute resolution … recommending non-Legal methods and approaches to resolving disputes, encourage (both parties] to work together to resolve disputes, provide confidentiality throughout the process, and pro-vide objective and unbiased advice and guidance to all the participants".

Peer review programs have received positive reviews and have had good results, particularly in the health care and accounting industries. Over 50% of the U.S. state boards of accountancy require certified public accountants (CPAs) to participate in a peer review program to obtain a license to practice: Congress has mandated the use' of the Medicare Peer Review Organization (PRO) since 1982. In England, peer review accreditation programs have evolved as external voluntary_, mechanisms that also provide organizational development of health care providers.^S2 Ombudsperson and peer review pro-grams serve as popular mechanisms, not only for solving disputes among stakeholders but also for integrating the interests of diverse stakeholders.

Ethics Programs:

Ethics programs serve several purposes. Telephone hotlines are the first step toward opening lines of communication in the organization. Professional staff in ethics departments, consisting of two to six full-time employees along with as many as 20 part-time employees, handle personal grievances and complaints, coordinate problem resolution across functional and staff areas, and create, update, and help enforce ethics codes. At General Dynamics, for example, more than 30,000 contacts with ethics officers since 1985 have resulted in 1,419 sanctions, 165 terminations, 5$ cases of financial reimbursement receiving financial reimbursement, 26 demotions, and 10 referrals to lawyers for civil lawsuits or to public prosecutors for criminal proceedings. Financial concerns factor in to the decision of whether or not to set up an-ethics program. Many companies, Such as Nynex, are investing in these pro-grams in response to a public scandal or known ^misconduct. Others; such as Texas Instruments (TI), have seen competitors struggling with issues of ethical conduct and have implemented ethics programs to reinforce their previously written company code of ethics. According to Carl Skoogland, D's first ethics director, "We have had a written code for over 30 years but we wanted a formal focal point for reinforcing what we felt was an already strong _culture." Whatever the motivation, ethics programs appear to be an effective means of handling a variety of personnel issues and moral issues in the workplace.