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Review the text material below for best practices of self-regulated ethics programs. Summarize the material of corporate self-regulation ethics programs. Explain the major challenges and issues to enforce these programs as well as the business ethics training portion, such as codes of conduct, peer review, and the readiness checklists. Use citations and references in APA style to support your post.
5 Corporate Self-Regulation and Ethics Programs: Challenges and Issues
According to the ethicist Lynn Paine in a Harvard Business Review article, a values-based approach in ethics programs should be more effective than a strict, rules-based compliance approach, since a values approach is grounded and motivated in personal self-governance. Employees are more likely to be motivated to “do the right thing” than threatened if they violate laws and rules. A values-based stakeholder management approach assumes that corporations (owners and management) ought to intrinsically value the interests of all stakeholders. In practice, this is not always the case. Later studies suggest that both values-based and compliance ethics programs seem to work effectively together. Without values-based compliance, however, compliance and fear-based programs are less likely to succeed. Responsible self-regulation in companies can enhance entrepreneurship and reduce unnecessary costs of too much bureaucratic control (e.g., it is estimated that the 2002 Sarbanes-Oxley Act costs large public companies $16 million to implement). One study by the Open Compliance Ethics Group (OCEG) found that firms that had had an ethics program for 10 or more years did not have “reputational damage” during the last five years. Ethics programs appear to have some intended effect. Complete your company’s “Ethical Weather Report” to identify your point of view regarding how ethical your company is.
Chapter 4 discussed in more detail ethics programs that include codes of ethical and legal conduct that are designed to help companies financially and legally. As noted there, the Federal Sentencing Guidelines for Organizations (FSGO) were established in 1984 by Congressâ€”which passed a crime bill that instituted the U.S. Sentencing Commission. This commission, made up of federal judges, was empowered with sentencing those found in violation of the guidelines. In 1987, uniform guidelines were created for sentencing individuals in the federal courts. Some federal judges quit the bench in protest of the strictness of the guidelines and the sentences they were required to hand down. In 1991, the commission shifted the emphasis from individual wrongdoers to organizations that might be found guilty for the illegal actions of their employees. The 1991 revised guidelines threaten fines of up to $290 million to companies found guilty of violating the federal guidelines. However, those fines can be substantially reduced if an organization implements an “effective program to prevent and detect violations of law.” Companies that followed the requirements of the FSGO could find relief from lawsuits that resulted from one or more criminally motivated professionals. However, without active, ethical leadership, there is less likely to be a strong culture, open communication, and support from other organizational systems to support ethics programs