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Running head: POLICY ANALYSIS; A MEMORANDUM

Policy Analysis; A Memorandum


John Doe


MGT 320 – The Legal and Ethical Environment of Business Colorado State University – Global Campus


Dr. Kenneth Hogan


DATE

Memorandum

August 27, 2015
To: Governor Jerry Brown

Form: John Doe


Re: Policies aimed at strengthening ethical practices in the corporate world Comment by Kenneth Hogan: Ensure you have the appropriate memo title.

Corporate managers have intentions to operate principled companies. However, corruption and misconduct are widespread in the corporate arena. Part of the challenge is due to corporate leadership, rather than advocating for ethical business practices, is the one that allows criminal business practices and has, more often than not, been known to direct the corruption from the top. Often times, workers bend or disobey ethical practices owing to the fact the leadership turns a blind eye to identifying unethical practices, and can mistakenly motivate their employees to practice these dishonest actions (Bazerman, Tenbrunsel, 2011). Comment by Kenneth Hogan: This is an example of a parenthetical citation. It includes the authors’ last names and the year. If there was a quotation, a page or paragraph number would be included. Notice the period is at the end of the parentheses.

Heavy media coverage and public interest in unprincipled and unacceptable financial behavior caused a lot of brows to rise. Questionable practices committed by the upper management of large corporations resulted in the passage of landmark legislation that redefined the roles and tasks of companies as well as their employees and workers. Greed was the common denominator in the actions of a few to enrich themselves at the expense of the company’s shareholders. The twisting of the accounting standards at the time generated a number of questions regarding those standards. Many leading companies that are dependent on the public markets as well as the system of regulation were impacted by new standards implemented in the US corporate sector (Navran, Pittman, 2003).

The Sarbanes-Oxley Act – Ten Years Later Comment by Kenneth Hogan: Use headers for each subtopic of the memo to allow for ease of reading and flow of the memo. A level 1 header should be bold, centered and all major words capitalized. See https://owl.english.purdue.edu/owl/resource /560/16/ on how to format headings in APA.


July 30, 2012 was an important date. It was the 10th anniversary of the passage of the Sarbanes Oxley Act, which was an important day in the records of corporate America. Sarbanes Oxley was passed with the objective of enhancing corporate regulation in response to the aftermath of the 2001 financial implosion of energy giant Enron. However, Sarbanes has not impeded any new corporate ethical misadventures from occurring. Green Mountain Coffee, Chesapeake Energy, and Wal-Mart, among a host of others, have been reported after the adoption of Sarbanes.

It must be noted that it is not the fault of the law that it is being infringed upon; the real problem of ethical problems in corporate America are the people leading the companies-the Board of Directors. During a hearing of a Senate subcommittee on the issue, it was found that the company leadership-notably Ken Lay and Jeffrey Skilling-failed to protect the interests of the company’s shareholders resulting in the collapse of the company. Even the passage of the Sarbanes Oxley Act failed to significantly investigate and appreciate the crucial role that a company’s board can play in either enhancing or destroying ethical corporate administration (Rogers, as cited on Allen, 2012).

No company is completely secure from these threats. Practical businesses must strategize to discuss integrity continuity by analyzing their exposure to collapses in ethical compliance scandals, conducting proactive policies, and readying their companies to address and move past these instances. Ethical disasters can interrupt core operations, demobilize employees, decrease productivity, injure recruitment initiatives, employee retention, motivation, and employee morale will be adversely impacted. It can also damage confidence of the stockholders in the company, and can inflict countless legal and financial losses, inclusive of direct and indirect losses from mistrust (Chandler, 2014). Comment by Kenneth Hogan: Words that are significant should be italicized.

Sarbanes Oxley Act SOX was not entirely a great legislative failure; the effectiveness of the law is highly dependent on the strength at which law is implemented. Speculations continue as to the conduct of the Securities and Exchange Commission and the Justice Department as to their competence in the implementation of SOX. One of the components of the Act-applying the law-prison time for managers who deliberately certify false financial statements-is for the most part unused. Though SOX has been effective in raising awareness and attention in the corporate world to develop a strong ethical culture, there are still opportunities to improve on (Verschoor, 2012).

Corporate Ethics and Responsibility Comment by Kenneth Hogan: Headers allow the memo to flow and transition to relevant topics.

Every company or agency acquires a corporate ethos, gathering and hoarding its beliefs, traditions, and creations. This trade ethos is defined by the history of the company, the significant events that impacted the corporation, and the conduct of the individuals who have influenced it. It displays the reaction of the people towards the group, their expectations, and the behavior of the company. However, this culture does not remain static; it changes over time. Shifts can occur indirectly ether by, the assumption into office of a new CEO, the merging or buyout of the company, or the opening of a new facility overseas among many others.

Corporate ethos’ can also change explicitly. Responses to corporate losses can result in a call for shifts in existing corporate culture, such as the case of financial institutions in the wake of the 2008-2010 financial debacles. Actions can be taken to provoke an ethics ethos that can be regarded as appropriate for the company or sector. Establishing an ethics policy generally requires changes in the outlook and attitudes of all employees attached to the company.

If an ethics policy implementation is successful, the effects of the policy will be seen in the outlook and attitude of the workers, as these interact with each other, the company, as well as external shareholders. Anchoring the corporate ethos and establishing its bases are the rules and the societal norms of the country where the company is based. This includes laws in the areas of consumer protection, business, environment, criminal and civil laws, and many more. The other foundations for a company are community, regions, and the jurisdictions where these corporations are established. People’s beliefs in what is ethical conduct changes by area and over periods of time (Tricker, Tricker, 2014).

Code of Ethics: Alternative options

Ethics regulations are papers that declare the core philosophical beliefs of a group and articulate the values commonly held by an organization. In order to be effective, policy papers should describe the duties of each organization to their stakeholders, the behavior expected from the workers, and define the ethical boundaries of the group. Codes may be engaged as a critical document in a group or it can simply be something to help the organization appear most ethical to the shareholders. Companies often craft ethics codes to guide or direct the conduct of their employees in order to foster ethical behavior that is suitable to their company.

As stated earlier, ethics programs vary from country to country as well as by region and continent. For example, studies show that codes from Europe focused less on government and customer interaction compared to the amount found in US codes. In addition, European programs centered more on the environment compared to US codes while honesty was a significant item in US codes compared to European codes. Codes help corporations by enhancing public perception and discourage the government from intervening in the operations of the company. The idea is to encourage more self-regulation and less government interference. European businesses have increasingly engaged the use of ethics codes to administer labor arbitrations and dissuade state intervention (Siskos, 2014).

By having less government intervention, the workers will have an enhanced work environment and an overall better perception of their company, and in turn, encourage more positive and ethical decision-making. The more that ethical behavior is discussed openly in the company, the more it will have an impact on the level of adherence and practice within the company. It would also be beneficial for leaders to increase outwardly sharing of ethical behaviors in the workplace (Stevens, 2009, p. 15).

Integrity Continuity Planning: Preserving ethical mindsets, cultures, and practices

Ethical failures are significant threats to the continuum, and potentially, existence of a company. Integrity failures are consistently in the headlines of mainstream media and news. Cumulatively, it may cost companies billions in make ethical mistakes. Such costs include legal fees, heightened expenses, foregone sales, rehabilitation costs, penalties, damaged public perception and image, damaged relations and confidence from clients, and possible prison time for erring management officials.

In important activity for companies in order to grow is “business continuity planning,” and must be considered a high priority. The purpose of this is to successfully anticipate, stop, alleviate, and move on from natural calamities, information loss, emergencies, and willful criminal actions. Businesses have come to acknowledge “integrity continuity planning” plays a significant role in the successful longevity of the company. Ethical concerns must be addressed by creating strategizing plans, and must strive to go above and beyond compliance requirements. Oversensitive punitive measures are an excellent way to effectively manage truthfulness and moral standards within the company (Chandler, 2005).

What does managing honesty require? It requires “Integrity management” which includes the development of official and unofficial ethics policies, as well as the processes and practices that are designed to enhance the likeliness employees will conduct themselves in compliance to legal mandates. This type of corporate philosophy follows principle objectives that ideally direct workers past simple legal issues, and point them to actions that are principled and compliant. “Integrity management” is interlinked with supervising the larger corporate mindset and the “reward system” which may sway worker decision-making and lead them to conduct in manners that overrides written policies (Chandler, 2014, p. 210). Comment by Kenneth Hogan: In-text format for direct quotes.

Continuity in Business and Integrity Comment by Kenneth Hogan: A level 2 header should be bold, left-justified and all major words capitalized.

Business continuousness is the process of developing corporate strength and recovery capacity in times of natural calamities; integrity continuousness, on the other hand, develops business strength and recovery mechanisms in terms of ethical failures and “ethical misconduct disasters (EMD). In the case of Enron, there would have been little consolation for its former workers and pensioners to know that the company had one of the most advanced data processing and calamity recovery mechanisms for large corporations. In the final analysis, it was not a massive natural disaster that finished off the energy giant, or a major data system collapse; it was a failure in ethical business practices that ultimately led to the demise of the company (Chandler, 2014).

In creating plans regarding business practices and group structures, a wide number of factors are assessed in terms of their significance. Arranging planning elements allows a company to comprehend where their requirements are, and identify the areas that must be reevaluated. An integral factor in a business continuum strategy is ethical accuracy. Developing and maintaining corporate ethical honesty is crucial for avoiding and alleviating corporate scandals and disasters. Principles must play a critical role in all facets of a business that means strategizing must expand beyond concerns with compliance to be able to manage truthfulness.

Ethical management is mandatory not only since it is a matter of legal prerogatives, but more importantly, as it is a matter of being morally upright. Companies who prioritize ethics in their business practices raise awareness to their employees on issues such as truthfulness, and honesty. This results in the generation of an ethical culture among their employees. In contrast, companies that forego a policy of developing an ethical corporate culture may develop employees whom believe their work is outside the scope of any ethics code. This may lead to abuse of any rewards systems that motivate them to stray from integrity based practices (Chandler, 2006).

Higher management levels, specifically within senior management can sometimes be guilty of not directly enforcing truthfulness from within. Studies have discovered six out of ten chief executives in addition to company boards have been fairly negligent in integrity continuum strategizing at critical board and executive discussions. Moreover, 57 percent of corporations have never integrated truthfulness continuity strategies in any fundamental planning or corporate level (Taub, 2012). One in two companies do not have “ethics compliance measurement” in their respective employee performance appraisal policies (Chandler, 2014, p. 107).

Company directors and senior management officials are responsible in crafting their companies’ mission and vision statements. These statements are reflective of the manner in which company wants the public to see it in, as well as how the company understands itself. Questions to ask are; where does it want to go and where it is now? Traditionally, these twin statements are unspoken. The evidence is in how the business conducts its trade and the explicit form of the company’s statements. Over the past years, businesses have released a clear declaration of the their goals and objectives and made sure to also make clear their vision.

Dynamic initiatives in instilling an ethics-based corporate culture are the key elements for embedding integrity into the corporate ethos. Concerns on honesty and truthfulness in corporate trade/business must be given the same importance as probabilities, efforts given to mitigate business disruptions, and continuation of business operations. Majority of the cases involving ethical lapses implicate workers who were unsuccessful in complying with their own companies’ pattern and policies. It is a sporadic event that ethical collapses will explode from the actions of one individual; the corporate culture prevailing in the company will tend to fuel actions of the employees’ to commit unethical behaviors (Chandler, 2014).

If company executives and senior management display their foresight and objectives in critical decision-making, the public will most likely favor the respectability and truth of the company as a whole. Ethical codes will be nothing more than rhetorical announcements for workers; this will ultimately be the case as the casual attitude expected by the directors and senior management will be simulated in the conduct of their employees. Senior management must consistently adopt these ethical codes for their workers to embrace these beliefs and reflect in their company’s ethics codes (Tricker, Tricker, 2004, p. 191).

Conclusion

To be able to move forward from EMDs, businesses must develop policies that are fundamental to the core of the company. Management should be obligated in the implementation of their individual honesty and truthfulness guidelines as well as taking a proactive stance in managing morality in their relevant companies. To strengthen the utmost value of these policies and the philosophy of the company management, corporations must project the belief that it is expected of their employees to place integrity above and beyond material yet illicit gain. Employees should practice ethical standards and outwardly show there is an appropriate rewards system in place. (Chandler, 2006).

References
 Comment by Kenneth Hogan: All reference should be in alphabetical order by authors last name.

Allen, F. E. (2012) “Sarbanes-Oxley 10 years later: boards are still the problem” Retrieved 15 August 2015 from <http://www.forbes.com/sites/frederickallen/2012/07/29/sarbanes- oxley-10-years-later-boards-are-still-the-problem/

Bazerman, M.H., Tenbrunsel, A. E. (2011) “Ethical breakdowns” Harvard Business

Review April 2011 <https://hbr.org/2011/04/ethical-breakdowns

Chandler, R. C (2005). Avoiding ethical misconduct disasters. Graziado Business Review

Volume 8 issue 3

Chandler, R.C. (2006). “Strategic integrity continuity: managing the risks for corporate

integrity in the post-Enron business world.” Retrieved 15 August 2015 from http://www.continuityinsights.com/articles/2006/10/strategic-integrity-continuity- managing-risks-corporate-integrity-post-enron-business-world

Chandler, R.C (2014) Business and corporate integrity: sustaining organizational

compliance, ethics, and trust. Santa Barbara, CA: ABC-CLIO Publishing

Navran, F., Pittman, E.L (2003) “Corporate ethics and Sarbanes-Oxley” Retrieved 15

August 2015 from <http://www.ethics.org/resource/corporate-ethics-and-sarbanes-oxley

Siskos, D. V. (2013). Lehman Brothers Case: Failure, Prevention and Recommendations.

Prevention and Recommendations (November 22, 2013).

Stevens, B (2009). Corporate ethical codes as strategic documents: an analysis of success

and failure. Electronic Journal of Business Ethics and Organization Studies Volume 14, number 2 pp. 14-20 POLICY ANALYSIS; A MEMORANDUM 12

Taub, S. (2002). Crisis of ethics: ethics officers predict a new wave of corporate scandals.

Retrieved June 19, 2002, from CFO.COM website: http://www.cfo.com/article.cfm/3005220?f=search

Tricker, B., Tricker, G (2014). Business Ethics: a stakeholder, governance, and risk

approach. New York: Routledge Verschoor, C.C (2012). “Has SOX been successful?” Retrieved 15 August 2015 from <http://www.accountingweb.com/practice/practice-excellence/has-sox-been-successful