A criminologist blames economic recession and complex financial system as major reasons for the rising white collar crimes in the U. S. “In huge numbers of cases, people are not aware that they have been victims of white collar crime, for example, subjected to illegally spewed out pollution, or that they have purchased products that are unsafe, or that they have been subjected to corporate price fixing, or to the consequences of commodity speculation, which is believed to be one significant factor in driving up the cost of gasoline at the pump.
“Witnesses” of white collar crime who often do not realize that a crime has occurred , may be confused about what to do in response to it. And our traditional frontline enforcement agencies ha not been organized to monitor and respond to white collar crime. In this case principal gents who handle such cases play an important role in white collar crime. Informers & Whistle Blowers: Ethics Text #6.
How can corporations ensure that their employees behave ethically? An ethical culture should be a top priority of every business, large or small.
The challenge for many organizations is trying to understand what it takes to build one. From an enforceable code of conduct, to ongoing training and communications, to an anonymous reporting hotline, companies can quickly implement ethics and compliance programs and solutions that foster an ethical culture across the enterprise. In many companies today, management is dealing with a hodge-podge of different personalities, belief systems, backgrounds, ethnicities and politic affiliations. These are just a few things that may impede creating a single unified system of ethics.
While many may say that right and wrong is what should ultimately determine the culture, others will argue that what is right for the majority may not be right for the minority. Having an ethical culture is an important component to running an effective business today. In fact, with the current state of legal and industry regulations, from Sarbanes-Oxley to HIPAA, not only is having an ethical culture a good idea, it is now practically a requirement. Developing an ethical culture will take more than creating a list of company dos and don’ts; although that list will help.
It will take more than issuing a code of conduct via email to a new hire; although that too will help. What it will take is a combination of things. On this page, we focus on the top six steps that have the most effective and direct impact on establishing an ethical culture.
Establish an Enforceable Code of Conduct
A code of conduct, often referred to as a code of ethics, is the foundation of any ethics program. The code of conduct should not be designed as a reaction to past missteps. An ethical culture is built upon the proactive efforts of the organization. The development of the code of conduct should be led by those at the top of the company, and should also include employees in the process.
Initial and Ongoing Training
There is a phrase that has been used many times when it comes to training: “The day we stop learning is the day we die. ”
One of the most important aspects of developing an ethical culture is the ongoing training that companies can provide to executives and employees. The purpose of training is to help employees know what is expected of them and to help them understand that a strong ethical culture can protect the company’s reputation and actually enhance profits. Employees need to know that their ethical or unethical choices will have a direct impact on the success or failure of the company. In addition, training should also be tailored to specific positions in the company and employees roles.
Management may need additional training to help deal with employee issues, while someone in purchasing may need more training on gifting policies and someone in finance needs to understand the company’s position on fraud.
Once the policy has been executed and training has started, communicating aspects about the code of conduct can have a significant impact on the ethical culture. Many of these communications come through the human resources department, but the voice of the executive management team is critical in these communications.
The goal of communications is to make ethics a live, ongoing conversation. If ethics is something that is constantly addressed, referenced frequently in company meetings, and in personal conversations among managers and employees, then people are more aware and more willing to defend the company’s policies when they see or hear of problems. Employees will hold other employees responsible and accountable for living the company’s values.
Anonymous Reporting Hotline
The fact that an ethics hotline exists within many companies may be a surprise to their employees. The hotline number or Web site URL is often hidden in the back of an employee handbook or within the dusty binder labeled Corporate Governance. An anonymous hotline provides employees with a confidential way of reporting unethical or inappropriate behavior.
Many people are not comfortable with reporting bad behavior for fear of being considered a “snitch,” possible repercussions if the guilty party learned of who reported him or her, or perhaps impacts on their job. “Unfortunately, more than two of five employees (42 percent) who witnessed misconduct did not report it through any company channels. Others may want to report their concerns, but are not comfortable going directly to a manager or fellow employee. This is why the anonymous reporting hotline is so important. In its 2006 Report to the Nation on Fraud and Abuse, the Association of Certified Fraud Examiners concluded that “Occupational frauds are more likely to be detected by a tip (34%) than by other means such as internal audits, external audits or internal controls.
A code of conduct has to be enforceable, and a company needs to take action when problems arise. Employees should be part of the enforcement and know if and when it has been violated. While 42 percent of employees are reluctant to report unethical behavior, the good news is that the ERC study also found that “the rate of misconduct is cut by three-fourths at companies with strong ethical cultures, and reporting is doubled at companies with comprehensive ethics programs. ” Unethical behavior can have a damaging effect on a variety of aspects of a business, from brand reputation to bottom-line revenues.
WorldCom’s and Enron’s names will forever be connected to accounting scandals that led to the Sarbanes-Oxley Act of 2002. Lockheed Martin was forced to pay $2. 5 million for knowingly looking the other way on alleged racial discrimination. Without enforcement, ethical guidelines listed in a corporate code of conduct are simply nice suggestions.
That Live the Culture The final step in developing an ethical culture is rewarding employees that behave ethically and live the culture that the organization is trying to instill companywide.
With an ethics policy in place, ongoing training and communications, the ability to report unethical behavior and strict enforcement, an organization will have the structure in place that will leave little doubt the importance of ethical behavior. Like a manufacturing company that brags about its safety record with signs indicating how many days without an accident, companies should publicly congratulate their employees for adhering to the code of conduct.
That performance could be rewarded in terms of a bonus based on how much money the company saved by not having internal issues or having to fight legal battles over unethical business or accounting practices. If an employee completes ethics training, is responsible for blowing the whistle on questionable activities, or provides unique ways for protecting the company’s confidential information, he or she should be recognized publicly by management. Employees need to know that creating an ethical culture is important to everyone from their direct managers to c-level executives.
Cite this essay
Business Ethical Culture. (2018, Nov 12). Retrieved from https://studymoose.com/business-ethical-culture-essay