Developing A Structure for Ethical Decision Making

1
Developing A Structure for Ethical Decision
Making

• O.C. Ferrell, Ph.D
• Professor and Chair, Marketing Dept.
• Colorado State University
• Round Table Facilitation
• NAII Executive Round Table Seminar
• Las Vegas, Nevada- February 3, 2003

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An Effective Ethics Program

• or how to make ethics a part of every decision
• establish codes of ethics compliance standards
• develop oversight for ethics program
• ethics officer or committee
• use care in delegation of authority
• communicate values standards
• ethics training
• use auditing monitoring systems
• enforce compliance standards
• if offense is committed, modify program to
  prevent future misconduct

3
Government Rewards Penalties for Ethics Programs

• The Federal Sentencing Guidelines for
  Organizations
• requires an effective ethics program
• results in up to a 95 reduction in fines
• reduces risks associated with employee misconduct
• minimizes likelihood of excessive penalties
  (if programs are in place)
• protects board of directors from individual
  liability arising from non-compliant conduct

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Government Rewards Penalties for Ethics Programs

• Sarbanes-Oxley Act (2002)
• top executives are responsible for certifying
  financial reporting subject to penalties
• penalties, fines prison terms up to 10 years
  for fraud
• auditing firms, boards of directors, and
  corporations must follow existing, new future
  regulations
• reports to the SEC are mandatory
• currently there are 3,000 pages of regulations

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What should top management do now?

• 1. Conduct a rigorous self-assessment
• values
• ethics compliance programs
• 2. Maintain top management commitment
• are managers ethically committed
• are there going to be differences or improvements
• 3. Publish, post make codes of ethics available
  understandable
• written guidance
• 4. Communicate, communicate, communicate
• electronic, visual, printmultiple channels

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What should top management do now?

• 5. Training
• timely
• reinforce knowledge
• 6. Provide confidential resources
• where can employees go
• is confidence maintained
• 7. Ensure consistent implementation
• do systems work
• are values responsibilities clear
• 8. Respond enforce consistently, promptly
  fairly
• remind of appropriate behavior be consistent

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What should top management do now?

• 9. Monitor assess
• appropriate methods
• employee feedback
• 10. Revise reform
• update
• continuous improvement

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Conduct an Ethics Risk Assessment

• Ethical Misconduct Disaster (EMD) Recovery
  Planning
• ethical disasters are more disruptive than
  natural disasters or technological disruptions
• assess risks liabilities provide a
  contingency plan for potential ethical disasters
• EMD planning should be integrated into the ethics
  program internal audits
• Examples of Disasters
• discrimination, financial fraud, executive
  compensation

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Gallup Poll Honesty Ethics Ratings of
Professions

• Five Highest
• nurses
• military officers
• high school teachers
• clergy
• policeman

• Five Lowest
• real estate agents
• stockbrokers
• advertising practitioners
• car salespersons
• telemarketers

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Growth of Ethics Programs Ethics Officers

• Most companies are developing ethics programs
• Ethics Officers Association (EOA)-850 members
• EOA developing certification programs
• Ethics Certificate Program-Colorado State Univ.
• www.e-businessethics.com additional virtual
  resources