INTRODUCTION TO

BUSINESS ETHICS

ITETHIC 3rd Term 2007-2008

IM DLS-CSB
Paul A.B. Pajo Jr. II
Why Be Ethical?
 What is ethics, and why is it important to act
according to the a code of principles
 Why is business ethics becoming increasingly
important?
 What are corporations doing to improve
business ethics?
 Why are corporations interested in fostering
good business ethics?
 What approach can you take to ensure ethical
decision making?
 What trends have increased the risk of using
information technology
Definition of Ethics

 Ethics is the set of beliefs about right

and wrong
The importance of integrity

 Your moral principles are statements of

what you believe to be rules of right
conduct
 A person who acts with integrity acts in
accordance with a personal code of
principles – integrity is one of the
cornerstones of ethical behavior
Why are you doing it?

 “The changes in our life must come from

the impossibility to live otherwise than
according to the demands of our
conscience [...] not from our mental
resolution to try a new form of life”
 -Leo Tolstoy (1828-1910)
Self-Governance

 “A man cannot govern a nation if he

cannot govern a city; he cannot govern a
city if he cannot govern a family; he
cannot govern a family unless he can
govern himself; and he cannot govern
himself unless his passions are subject
to reason”
 Hugo Grotius
Why fostering Good Business
Ethics is important
 To gain the goodwill of the community
 To create an organization that operates
consistently
 To produce good business
 To protect the organization and its
employees from legal action
 To avoid unfavorable publicity
Creating an Organization that
Operates Consistently
 Operate with honesty and integrity, staying to
corporate principles
 Operate according to standards of ethical
conduct, in word and in action
 Treat colleagues, customers, consumers with
respect
 Strive to be the best at what matters most to the
company
 Accept personal responsibility for actions
 Value diversity
 Make decisions based on facts and principles
Key Features to implement an
effective program of compliance
and Ethics
1. Identify its core beliefs, which need to
include a commitment to complying
with the letter and spirit of the law and
ethical conduct
2. Understand the strengths and
weaknesses of its culture and
organization structures
Key Features to implement an
effective program of compliance
and Ethics
3. Scan its business environment,
presumably on an enterprise-wide basis
to determine what pressures the
organization faces, especially the risk
of criminal conduct and violating other
applicable laws, and more broadly, to
gather benchmarking data to compare
to industry standards and best
practices
Key Features to implement an
effective program of compliance
and Ethics
4. Determine relative to its goals and
objectives and baseline data its prior
performance, what outcomes should be
expected of the program
Key Features to implement an
effective program of compliance
and Ethics
5. Identify targets and measurable
indicators of expected program
outcomes
Key Features to implement an
effective program of compliance
and Ethics
6. Design, implement, and enforce a
program that will “exercise due
diligence to prevent, detect, and report
criminal conduct ad otherwise promote
an organizational structure that
encourages ethical conduct and a
commitment to compliance with all
applicable law
Key Features to implement an
effective program of compliance
and Ethics
7. Regularly evaluate its program to
determine if it is effective, and capture
what the organization learns along the
way
Appointing a Corporate Ethics
Officer
 What is a Corporate Ethics Officer?
 A senior-level manager who provides
vision and direction in the area of business
conduct
Members of the Ethic Officer
Association (EOA)
 Adelphia Communications Group
 AOL Time Warner
 AT&T
 BAE Systems
 British Telecom
 Cingular Wireless
 Computer Associates International
 Dell Computer
 Hewlett-Packard
 Intel
 MCI
 Microsoft
 Oracle
 QUALCOMM
 Qwest
 Sprint
 Sun Microsystems
 Texas Intruments
How Management can affect
Employees’ Ethical Behavior #1
 Manager:
 Set and hold people accountable for
meeting “stretch” goals, quotas, and
budgets
 Possible Employee Reaction:
 “My boss wants results not excuses, so I
have to cut corners to meet the goals has
set.”
How Management can affect
Employees’ Ethical Behavior #2
 Manager:
 Fail to provide a corporate code of ethics
and operating principles to guide decision
making
 Possible Employee Reaction:
 “Because there are no guidelines, I don’t
think my conduct is really wrong or illegal.”
How Management can affect
Employees’ Ethical Behavior #3
 Manager:
 Fail to hold people accountable for
unethical actions
 Possible Employee Reaction:
 “No one will ever know the difference, and
if they do, so what?”
How Management can affect
Employees’ Ethical Behavior #4
 Manager:
 When employees are hired, put a 3-inch binder
titled “Corporate Business Ethics, Policies, and
Procedures” on other desks. Tell them to “read it
when you have the time and sign the attached form
that say you read and understand corporate policy”.
 Possible Employee Reaction:
 “This is overwhelming. Can’t they just give me the
essentials? I can never absorb all this”.
Manager’s checklist for
establishing an ethical work
environment #1
 Does your company have corporate
code of ethics?
Manager’s checklist for
establishing an ethical work
environment #2
 Was the corporate code of ethics
developed with broad input from
employees at all levels within the
organization, and does it have their
support?
Manager’s checklist for
establishing an ethical work
environment #3
 Is the corporate code of ethics concise
and easy to understand, and does it
identify the values you need to operate
consistently and meet the needs of your
stakeholders?
Manager’s checklist for
establishing an ethical work
environment #3
 Is the corporate code of ethics concise
and easy to understand, and does it
identify the values you need to operate
consistently and meet the needs of your
stakeholders?
Manager’s checklist for
establishing an ethical work
environment #4
 Do all employees have easy access to a
copy of the corporate code of conduct,
and have they all signed a document
stating that they have read and
understood it?
Manager’s checklist for
establishing an ethical work
environment #5
 Do employees participate in annual
training to reinforce the values and
principles that make up the corporate
code of ethics?
Manager’s checklist for
establishing an ethical work
environment #6
 Do you set an example by
communicating the corporate code of
ethics and actively using it in your
decision making?
Manager’s checklist for
establishing an ethical work
environment #7
 Do you evaluate and provide feedback to
employees on how to operate with
respect to the values and principles in
your corporate code of ethics?
Manager’s checklist for
establishing an ethical work
environment #8
 Do you seek feedback from your
employees to ensure that their working
environment does not create conflicts
with the corporate code of ethics?
Manager’s checklist for
establishing an ethical work
environment #9
 Do you seek feedback from your
employees to ensure that their work
environment does not create conflicts
with corporate code of ethics?
Manager’s checklist for
establishing an ethical work
environment #10
 Do employees have an avenue, such as
an anonymous hotline, for reporting
infractions of the code of ethics?
Manager’s checklist for
establishing an ethical work
environment #11
 Are employees aware of sanctions for
breaching the code of ethics?
Seven Steps for Ethical
Decision Making
1. Get the facts
2. Identify stakeholders and their positions
3. Consider the consequences of their
decision
4. Weigh various guidelines and principles
5. Develop and evaluate your decision
6. Review your decision
7. Evaluate the results of your decision