Case discussion

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Chapter 6

of Stakeholders, Ethics, Public Policy:

“Organizational Ethics”

Shawn Berman

Anderson School of Management

University of New Mexico

Management 308

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Organizational Culture

Organizational and individual rewards

Socialization tactics

Signs, symbols, and stories

Norms and values

Rites and ceremonies

Organizational Culture

Culture controls people…

…but who controls culture?

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Ethical climates

• Ethical climate
• The unspoken understanding among employees of what is and is not acceptable behavior

What does it mean to have ethical climate?

• Multiple climates (or subclimates) can exist within one organization

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Business Ethics across Organizational Functions

Examples of business professional associations and their codes:

• American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct
• Chartered Financial Analyst (CFA)®, CFA Institute Code of Ethics and Standards of Professional Conduct
• American Marketing Association (AMA) Code of Ethics
• Association of Information Technology Professionals Code of Ethics and Standards of Conduct

See Exhibits 6.A and 6.B in text on pp. 119-121 to review these codes

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Making Ethics Work in Corporations

Corporations can do many things to try to institutionalize ethical behavior among employees, including:

• The involvement and commitment of top management. Without this no ethics program will work.
• Having an ethics policy or code of ethics.
• Having an ethics officer or chief compliance officer or an omsbudsperson.

This can depend on whether the company has a compliance-based or integrity-based ethics program.

• Having an ethics hotline.
• Having an ethics training program.
• Conducting an ethics audit.

What does your company do to encourage ethical behavior?

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Corporate law breaking

Simply put, does crime “pay” for corporate executives? Why or why not?

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Ethics in a Global Economy

Doing business in global context brings up host of complex ethical challenges.

Bribery: a questionable or unjust payment often to a government official to ensure or facilitate a business transaction.

International watchdog agency, Transparency International, publishes a survey of countries’ levels of corruption.

• Bribe-taking more likely in countries with low per capita income, low salaries for government officials, and less income variation

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Efforts to Curtail Unethical Practices

Dow Jones Anti-Corruption Survey

• Seventy-one percent of respondents stopped or delayed business dealings with corrupt partners.

Numerous efforts to prohibit bribery:

• U.S. Foreign ­Corrupt Practices Act (FCPA).
• The United Kingdom’s Bribery Act prohibits bribery.
• Anti-Bribery Law in Brazil, India and Mexico.

Organization’s culture and ethical work climate play a central role in encouraging employees to act ethically.

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Equifax’s,
discussion questions

• Do you think the company reacted appropriately upon learning about the breach?
• What could Equifax have done differently to prevent the cyberattack?
• What type(s) of ethical climate existed at Equifax, and did this contribute to the hacking issues there?
• What changes should managers and the board of directors make now to reduce the likelihood of an incident like this from occurring in the future?
• What types of ethics training would you recommend for Equifax employees in the future to prevent such corrupt behavior?