TOWARD AN ETHICAL CULTURE Characteristics of an Ethical Organization

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Significance of Identifying Characteristics of an Ethical Organization. Empowers us to make best culture of integrityLearn where every component can go wrongIdentify things to incorporate into moral danger analysisCreate agenda to meet desires of indictment and sentencing rules. New Sources of Ethics Best Practices .

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TOWARD AN ETHICAL CULTURE Characteristics of an Ethical Organization Kirk O. Hanson Business and Organizational Ethics Partnership Markkula Center for Applied Ethics Santa Clara University April 5, 2007 (Revised with contribution from Partnership Members)

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Importance of Identifying Characteristics of an Ethical Organization Enables us to make best culture of trustworthiness Learn where every component can turn out badly Identify things to incorporate into moral hazard examination Create agenda to meet desires of arraignment and sentencing rules

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New Sources of Ethics Best Practices Learning by the best organizations Sarbanes Oxley Act (2002) Stock Exchange Standards (rev.2003) Sentencing Guidelines (rev. 2004) DOJ Principles of Prosecution (rev. 2006)

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Clarify Values Model Values Communicate Values Discuss Difficult Ethical Cases Compliance: Audit Enforce Discipline Create Systems to Embody Values Continuous Monitoring of Behaviors Governance System Renew Values Regularly Best Practices for a Culture of Integrity Copyright 1984,2007 Kirk O. Hanson

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Best Practice Elements Statement of qualities Code of lead Example of senior officials Training and rehashed correspondence of qualities and norms Systems which exemplify the qualities

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Best Practice Elements, cont. 6. Continuous assessment of practices 7. Effective hotline framework 8. Mechanism for settling hardest cases 9. Compliance implementation framework 10. Periodic reestablishment prepare for qualities and guidelines 11. Governance framework for morals and qualities

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Values Statements Best Practice Grows out of involvement of organization Broad contribution to distinguishing proof of qualities One pager Where It Can Go Wrong Words, not values "in real life" Unrelated to organization choices, activities Deliberate misreading of significance Ignores reality of worldwide operations

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Codes of Conduct Best Practice Organized and far reaching Applies to all representatives Annual signoff Examples, Q and A Where It Can Go Wrong Impenetrable, looks like legitimate composed it Captures a year ago's trivia On the rack and never counseled Exemptions (routinely) allowed Deliberate misreading significance, gaming it Unclear application outside US

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Executive Modeling Best Practices CEO a mobile exemplification of qualities – in both open and private life CEO discusses the qualities CEO recounts stories about giving qualities something to do Where It Can Go Wrong CEO carries on inconsistent with qualities CEO private conduct conflicting CEO "delights" himself with corporate assets CEO never says values CEO shows despise for workers

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Training and Communication Best Practices Constant correspondence about qualities New contract preparing in qualities Regular and connecting with preparing in qualities Training that spotlights on late issues Training that stresses obligation of people Training that helps representatives know how to raise issues Where It Can Go Wrong Lack of follow-up to guarantee it is done Obvious lip benefit in regards to values Snickering references by supervisors Reductionist way to deal with preparing - do the minimum Don't generally anticipate that representatives will chance raising issues

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Systems that Embody Values Best Practices Performance assessment framework has unequivocal reference to values Repetitive frameworks have values classes Key choices analyzed in light of qualities Where It Can Go Wrong "Fluffy stuff" in execution disregarded Systems exist yet overlooked Some frameworks purposely left out Key choices made by absolutely monetary criteria Performance weights drive out qualities

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Systems that Embody Values Ernst & Young's rundown of frameworks/operations to be tended to: People forms Recruiting Orientation Performance targets and measures Global individuals review Learning and advancement Client-related procedures Proposals Engagement arranging Client acknowledgment Balanced Scorecard Quality and hazard administration work Corporate social duty work

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Continuous assessment of practices Best Practices Annual overview on associate and supervisor conduct Identification of issue ranges by means of study Identification of issue zones through hotline reports Identification of issue regions by official group Explicit examination of issue regions in morals administration handle and in official gatherings Where It Can Go Wrong Lack of trust in study, secrecy Poorly drawn study Lack of authenticity about issue zones Failure to connect with administrators in evaluation

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Hotlines and Helplines Best Practices External and sound announcing Anonymity conceivable; no requital Effective framework for follow-up Effective framework for examination Where It Can Go Wrong Lack of worker comprehension of capacity Lack of sympathy in those noting telephone Violation of namelessness; reprisal Lack of satisfactory development

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Way to Discuss Difficult Ethics Cases Best Practices Transparency exists in regards to extreme cases Employees sure they can take intense case to manager and really get help Top officials consider extreme morals cases important Mechanism or place exists for verifying cases Employees sure that they won't be punished for raising issues, actualizing values Employees trust they might be remunerated for raising issues Executive culture supports raising issues with CEO Where It Can Go Wrong "Don't solicit" culture; deniability Fear from adverse administration response Unwillingness of officials/chiefs to share load Failure to apply morals duties to worldwide operations

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Compliance Enforcement Best Practices Audit everything that is critical Put consistence in setting; one measurement of significant worth responsibility Investigation and authorization careful and aware Discipline proper and exactly Where It Can Go Wrong Compliance is the entire of the qualities message Compliance and teach less demanding on officials Compliance framework ensures just the organization

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Periodic Renewal Best Practices Periodic "taking off" of qualities and norms – more often than not a 3 year cycle Freshness of message for every restoration Engagement of association in new message Where It Can Go Wrong Letting the messages go stale; unaltered Failure to look for contribution from association for corrections Failure to address late occurrences; new issues Overemphasis on late episodes

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Governance of Ethics and Values Best Practices Senior official regulating morals exertion Qualified and propelled Ethics officer Active review or morals advisory group of board Periodic answering to board Real and ponder gaining as a matter of fact Continuous changes in accordance with morals and qualities frameworks Where It Can Go Wrong Assignment to lower level official Ethics officer not regarded Audit council not by any means intrigued Reporting is spur of the moment Failure to apply to worldwide operations No genuine desire that reports will prompt to enhancing framework