Business ethics is a critical topic and a highly debated subject in the current business environment. The concept refers to the application of ethical values or moral principles when conducting business (Grigoropoulos, 2019). As a practice, ethics applies to all persons within an organization, regardless of ranks, positions, or roles they partake. Studies by Ferrell et al. (2007) assert that moral rules and ethical codes of conduct govern people’s behaviors or actions. Business ethics involve arranging values to govern decisions whereby a set of priorities are clearly defined concerning what must be protected (Brusseau, 2012). Emulating ethics in organization practices supports the construction of arguments that make sense to external parties or observers. The focus of this paper is to examine the development of ethical programs in an organization.
Reasons for Ethical Programs
Before addressing the development of ethical programs in organizations, it is paramount to know the need or value of implementing the policies. Undoubtedly, entities are continually seen as moral agents owning the responsibility of availing proper business conducts to stakeholders. In effect, organizations must operate under regulations to ensure that workers are guided on how to approach ethical issues (Grigoropoulos, 2019). Moreover, it is necessary for enterprise managers to determine goals to be met when enacting an ethical program (Kaptein, 2014). An example of the key attribute of the projects should be action-oriented, timely, and relevant. A practical, ethical program achieves desired outcomes while blending the needs of a company.
Running an ethical program is considered crucial as it communicates to the key stakeholders how well an institution is structured. Such is reflected in clearly defined missions, visions, and set objectives to be attained (Kaptein, 2014). Therefore, when ethical practices become a norm within a company, goodwill is established where potential investors will want to associate. Furthermore, ethical programs help to prevent unnecessary lawsuits as well as costs. Lawsuits can result from unethical practices from events such as fraud, misconduct, tax evasion, and misappropriation of funds. Such behaviors would yield legal actions against a company causing an unwanted financial burden (Grigoropoulos, 2019). Another problem is the loss of investors, who are major sources of capital that runs an organization’s operations related to cost issues. Most business partners prefer to collaborate with entities with a positive reputation and goodwill enforced through ethical programs.
Ethics programs in a company help communicate a business’s philosophy to workers, investors, clients, and vendors. A good ethical plan should strengthen relationships between an organization and major stakeholders to improve reputation (Grigoropoulos, 2019; Ferrell et al., 2007). Even though employees might be aware of a company’s informal instance, implementing a program eradicates confusion (Kaptein, 2014). Ethical plans avail clear information to workers concerning common issues such as acceptable conduct. For instance, a program guideline can explain when individuals should accept gifts from external stakeholders, the types, and allowable rewards. Furthermore, workers can consult resources such as the employee handbook to respond to questions pertaining to whether some actions are ethical or not.
Values and Compliance Program
No matter the set goals, ethical programs are developed as control systems for organizations to create predictability in workers’ behavior. In formulating an ethical program, two control systems are designed, which include compliance and value orientation. A compliance tool creates order by requiring individuals to identify and commit to a specific practice (Ferrell et al., 2007). Normally, it uses statutes, terms, or contracts that teach individuals regulations and consequences of non-compliance. On the other hand, value orientation aims to foster shared values, and although there might be penalties for policy violations, the focus is maintained on core ideals such as accountability.
A code of conduct is one of the core components in developing ethical programs in a company. According to Grigoropoulos (2019), the code of conduct is a formal statement that describes the expectations of workers. The guidelines or moral principles are emulated to steer the conduct of both an organization itself and workers in all business functions. The benefits of designing a corporate code of conduct are enormous, including enhancing an entity’s reputation, inspiring public confidence, giving new workers ethical guidance, and a sense of belonging (Ferrell et al., 2007). Moreover, the code of conduct promotes a culture of confidence in the workplace, provides explicit guidance to managers and employees, and signals customers’ expectations.
On the other hand, a code of conduct has demerits such as raising expectations too high such that it gets difficult for employees to meet them. A corporate code of behavior can lead to pessimism if it is perceived as a paper exercise. Without better guidance, various parts of a company can interpret the code of ethics differently, leading to devaluation (Ferrell et al., 2007). Establishing a code of ethics in a company is not sufficient as it is doomed to fail if not well supported. Reasons why a company’s code of ethics might fail include lack of wide accessibility if not promoted and workers do not read it, in case it is hard to understand or if top management refers to the policies vaguely.
Considerations when Developing Ethical Programs
During ethical program development, it is vital to consider areas of risk and define values correctly. Usually, values are buffers in preventing serious malpractices, and when correctly identified and defined, they would ensure organization compliance with the law. Another factor to consider includes elements that link a company with external stakeholders. Attempting to find an overlap between shareholders and an organization would help promote a positive relationship (Ferrell et al., 2007). The code of conduct should be understandable to every worker while leaders site examples that reflect true values. Besides, the code should be communicated frequently in a language that employees understand. Lastly, revising the code annually is paramount, and this should be done with inputs from organizational members.
Another vital consideration when formulating ethical programs is critical stakeholders to involve. For example, ethics officers are vital high-ranking professionals known to respect ethical guidelines. Such people could help oversee the best organizational ethical program. Ethics officers are responsible for assessing the needs and risks that a company’s comprehensive plan must address, developing a code of conduct, and designing training programs for workers (Epley & Kumar, 2019). Furthermore, ethics officers are tasked with responding to employees’ questions about ethics issues, ensuring an entity is compliant with local authorities, and taking actions on possible violations of an organization’s code.
Developing an Ethical Program
In developing a company’s ethical program, standards and procedures must be established first. The approach will help to prevent or detect misbehaviors and communicate them immediately when they arise. Bottom line, there should be a common ground whereby if an organization expects the rights thing, this must be maintained regardless of the circumstances (Epley & Kumar, 2019). Communication is paramount to make procedures or policies clear to everyone that should follow them. Mainly, leaders’ responses are expected to clarify what doing the right is and how employees can accomplish it. Equally important, it is best to pass information to people concisely, practically, and timely.
Secondly, maintaining leadership and oversight gives leaders overall responsibility for a compliance program. Senior executives- including the governing authority from the boards of directors- must oversee an ethics program. Furthermore, the entire management must understand policies relevant to business operations and ensure workers, especially new hires understand and follow protocols. According to Ferrell and Ferrell (n.d), most ethics professionals advise that it is essential to enlist support from the executive for a program to be successful. Seniors in a company should participate in training sessions, make ethics a regular element and align behaviors with corporate standards.
Thirdly, revising the roles of people in authority is crucial to avoid the propensity to act criminally. For instance, a reasonable effort should not be made to assign people who have previously engaged in unethical or illegal activities a chance in a supervisory position. However, it should be noted that this approach does not impose an absolute barrier in hiring people with records of misconduct. Yet, during the recruitment process, a company should consider the extent to which a person’s misbehavior records relate to anticipated responsibilities.
The fourth step is to conduct effective communication and effective training. A compliance program of a particular organization cannot appear firmer merely by formulation on papers. An entity has to implement the ethics plan through education (Brusseau, 2012). The extent of training would depend on the nature of an organization. For example, in the retail industry, training for many people might need to cover a wide range of concepts such as proper accounting, confidentiality, labor standards, unfair practices, organizational property, favors, or gifts. In such a case, educational effort must not roughly recite the law but explicitly elaborate to workers how some regulations relate to an organization’s policies. After training, employees should ask questions or clarify issues while providing instances of events they have encountered in day-to-day practices.
The fifth approach to ethical program development is monitoring, auditing, and disclosure. A compliance program needs to be properly audited to ensure the elements are well implemented, and periodic evaluations should be made to examine effectiveness (Weber, 2006). For instance, auditors might ask workers about the perception of unwritten rules within an organization as this will inform whether compliance goals of the program match the operations. An entity must provide workers with better mechanisms through which confidentially reporting pf potential unethical acts is done. Moreover, anonymous reporting channels would help people seek guidance on compliance and protect them against retaliation.
Disciplines and incentives should be defined to encourage compliance and support of ethical programs. An organization has to allow incentives to encourage workers to comply with laws appropriately, policies, procedures, or protocols established in the ethical program. Disciplinary measures are crucial for imposition when individuals fail to act ethically (Weber, 2006). Ideally, the company needs to enforce these regulations consistently to retain program credibility. Lastly, corrective action is needed as the key approach to ethical program development. According to Brusseau (2012), organizations should address misconducts after they occur, including self-reporting to the relevant authorities, and should take reasonable actions to prevent similar misbehaviors in the future. The audit committee board has to receive regular reports on audit results to determine the status of corrective approaches.
Notably, ethical programs may not be adequately implemented in the absence of vision and values statements. A vision defines a company’s long-term state and gives individuals, including employees and managers, a screening platform for decisions. For instance, when confronted by situations, individuals should consider asking themselves if the actions or choices will move a company closer to the big picture. During performance goal setting by human resource (HR), leaders question whether they further the visions or not (Weber, 2006). On the other hand, a value statement outlines the general principles of anticipated behaviors. Essentially, it is a standard against which decisions or actions are examined to inform if they match a company’s requirements. A business that adopts simple values of fairness and integrity can set only achievable goals through honest means.
Furthermore, what solidifies an implemented ethics program is ethical leadership. Bottom line, ethics can be considered a leadership issue because seniors should set the tone, shape an organization’s culture, and define the correct standards (Weber, 2006). In that way, if managers are honest and can be trusted and own honorable motivations to workers while paying attention to ethics as an integral part of a company, then problems will be rare.
In conclusion, this document has discussed ethical program development in organizations by connecting studies to recognize the role of ethics in business. While leaders are overwhelmed by external factors such as competition in the market and keeping up with the technology change, internal practices such as aligning vision with organizational culture remain crucial. Based on studies, there is still much to be done by businesses to integrate ethics in all areas of operation, which will prevent unethical behaviors from taking a toll (Brusseau, 2012). Nonetheless, personalities and strong ethical leadership will continue to be key ingredients in elevating business ethics.
References
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Epley, N., & Kumar, A. (2019). How to Design an Ethical Organization. Harvard Business Review. Web.
Ferrell, O., & Ferrell, L. (n.d). Historical Developments of Business Ethics: Then to Now, 1-20. Web.
Ferrell, O., Fraedrich, J., & Ferrell, L. (2007). Business Ethics: Ethical Decision Making and Cases (7th ed., pp. 1-496). Houghton Mifflin Harcourt.
Grigoropoulos, J. (2019). The Role of Ethics in 21st Century Organizations. International Journal of Progressive Education, 15(2), 167-175. Web.
Kaptein, M. (2014). The Effectiveness of Ethics Programs: The Role of Scope, Composition, and Sequence. Journal of Business Ethics, 132(2), 415-431. Web.
Weber, J. (2006). Implementing an Organizational Ethics Program in an Academic Environment: The Challenges and Opportunities for the Duquesne University Schools of Business. Journal of Business Ethics, 65(1), 23-42. Web.