This document provides an overview of professional ethics and codes of ethics. It defines professional ethics as the ethical norms that guide decisions within a profession. Professional organizations often establish codes of ethics to provide guidance to members. An effective ethics program includes a written code, ethics officer, training, auditing and enforcement. Key aspects of implementing and overseeing an ethics program involve developing, communicating and enforcing the code, providing guidance on ethical issues, monitoring conduct, and measuring the program's effectiveness through methods like surveys and audits. Consistent enforcement is important for an ethics program to be effective.

1. Professional Ethics & Code of
Ethics
Lesson 06
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2. Lesson's Objectives
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Define Professional Ethics
Organizational standards and codes of ethics,
Evaluation of code of ethics,
Implementing business ethics,
The ethics audit.
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3. Professional Ethics
◦ A profession is a job that requires specific
training and is regulated by certain standards
◦ Professional ethics the ethical norms, values,
and principles that guide a profession and the
ethics of decisions made within the
profession.
◦ Lecturer
◦ Doctor
◦ Accountant
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4. Professional Ethics
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Professional ethics are often established
by professional organizations to help
guide members in performing their job
functions according to sound and
consistent ethical principles.
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5. Characteristics of a Profession
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Common body of knowledge
Formal educational process
Standards of entry
Recognition of public responsibility
The Public Interest
Integrity
Objectivity and independence
Due Care
Scope and Nature of Services
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6. Teens View of Business Leaders
non
39%
Ethical
12%
Unethical
49%
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7. To Be Ethical Leader
To be perceived as an ethical leader, must be a
visibly ethical person and an ethical manager
with a consistent message
Therefore to be a ethical leader;
Being a moral person alone is insufficient
Executives are distant from most employees
and, without "moral management," bottom line
messages can overwhelm all others.
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8. To Be Ethical Leader
 Being a moral manager is insufficient
Moral management gain legitimacy only if
employees believe the given principled, caring
person who means what s/he says
◦ Then ethical leadership is
 Much more than traits (e.g. integrity)
 Requires great care to create and sustain an ethical
culture that sends a consistent message that is at
least as powerful as the "bottom line" drumbeat
(via real attention to ethics in multiple cultural
systems).
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9. Weak
Strong
Moral
Person
Strong
Hypocritical
Leader
Ethical Leader
Unethical Leader
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Ethically
neutral (silent)
leader
Moral
Manager
Weak
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10. Ethical Leadership Example
◦ Known to be a person of the highest integrity.
Strength and revised corporate
credo/philosophy, launched annual credo
survey after Tylenol crisis, required action
plans to address problems, handled ethical
violations swiftly
James Burke,
Johnson & Johnson.
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11. James Burke.
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12. Unethical Leadership Example
◦ Lied to employee & financial analysts, was
condescending / not respecting, belligerent/
aggressive and disrespectful of
employees, made decisions and rewarded
employees based upon bottom line only, left
company crippled, accused of filing false
financial reports - settled with SEC for half
million dollars.
Al Dunlap, Sunbeam
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13. Al Dunlap, Sunbeam.
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14. Hypocritical Leadership Example
◦ Talked about ethics, religion (doing "God's
work"). Yet, employees became aware of
misleading financial practices, conflicts of
interest, lying to donors, theft of donor
contributions, sexual liaisons, etc!
Jim Bakker of PTL Ministries
(PTL stands for "Praise the Lord" or "People That
Love"), later called The Jim and Tammy Show)
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15. Jim Bakker of PTL Ministries.
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16. Ethical Neutral Leadership Example
Intense/strongly focus on bottom line.
Decentralized management style means that
ethics management is left to business unit
managers. Describe by Fortune magazine as
“tone deaf" on ethics issues. Citigroup has dealt
with a variety of conflicts of interest scandals.
Sandy Weill, Citigroup
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17. Need for Corporate Ethics Programs
◦ Almost companies in Sri Lanka have reduced
trust in businesses
 Beverage, Milk powder, Meat products, services...
◦ Employees are not legal experts and need
guidance as their orientation is deferent
 Compliance orientation
 Values orientation
◦ Therefore an ethical program is required.
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18. Values Vs. Compliance Orientation
◦ Compliance orientation
 Requires that employees identify with and commit
to specified conduct
 Uses legal terms, statutes and contracts that teach
employees the rules and penalties for
noncompliance
◦ Values orientation
 Focuses more on an abstract core of ideals such as
respect and responsibility
 Research shows is most effective at creating ethical
reasoning
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19. Ethical Programs
◦ It is a programe that create firm's ethical climate
and helps ensure that all employees understand
the organization's values and comply with the
policies and codes of conduct.
◦ Organizations should develop an organizational
ethics program by
establishing, communicating, and monitoring
uniform ethical values and legal requirements.
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20. A strong ethics program includes
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Written code of conduct
Ethics officer to oversee the program
Care in the delegation of authority
Formal ethics training
Auditing, monitoring, enforcement, and
revision of program standards
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21. Concepts of Code of Ethics
◦ Codes of conduct - represents employee
ethics
 Formal statements that describe what an
organization expects of its employees
◦ Codes of ethics - corporate or business ethics
 Most comprehensive document and it consists of
general statements that serve as principles and the
basis for the rules of conduct
◦ Statement of values
 Serves the general public and addresses
stakeholder interests
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22. Code of Ethics
◦ Code of ethics are formal statements of what
an organization expects in the way of ethical
behavior
 It will not solve every dilemma
 Provide rules & guidelines
 It reflects senior management's desire for
compliance with values, rule & policies in support
of an ethical climate
 And it should be specific enough to be reasonably
capable of preventing misconduct
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23. Corporate Code of Ethics
◦ Often contain six core values
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Trustworthiness
Respect
Responsibility
Fairness
Caring
Citizenship
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24. E.g. Uniliever
◦ General Code of Ethics focuses on:
 Standard of Conduct : Honesty, Integrity &
Openness
 Obeying the Law : Laws of host country
 Employees : No forced or child labor
 Consumers : Consistent value offering
 Public Activities : No political affiliation
 Competition : strong & Fair
 Compliance & Monitoring : Board, Senior Mgt
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25. E.g. Wal-Mart
◦ Wal-Mart's Ethics Beliefs
 "respect for the individual,"
 "service to the customer" and
 "Striving for excellence.“
E.g. LG
 Responsibilities and Obligations to Customers Fair
Transaction with stakeholders Fair Competition
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26. Implementing Code of Ethics
◦ Distribute the code comprehensively:
employees, subsidiaries, & associated
companies
◦ Assist in interpretation & understanding
◦ Specify management's role in implementation
◦ Make employees responsible for
understanding
◦ Establish grievance procedures
◦ Provide a conclusion or closing statement
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27. Consideration of Code of Ethics
◦ Ethics officers or committees are responsible
for oversight of the ethics/compliance
program
◦ Coordinates program with top management
◦ Develops, revises & disseminates the code
◦ Develops effective communication
◦ Establish audits & control systems
◦ Provides consistent enforcement of standards
◦ Reviews & modifies the program to improve
effectiveness.
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28. Communication of Ethical Standards
◦ Must start with a foundation, a code of ethics,
a procedure for airing ethical concerns, and
executive priorities on ethics
◦ Can educate employees about firm's policies
and expectations, laws and regulations, and
general social standards
◦ Can make employees aware of resources,
support systems, and personnel who can
assist them with ethical advice
◦ Can empower employees.
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29. Communication of Ethical Standards
◦ Provides guidance for ethical standards &
activities that integrate the functional areas of
business
◦ helps employees identify ethical issues &
provides a mean to address & resolve
◦ Can help reduce criminal, civil &
administrative consequences including:
 Fines, penalties, judgments, etc.
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30. Oversight of Ethical standards
◦ Reflect organizational size, culture, values,
management style & employee base
◦ Improve employee understanding of ethical
issues
◦ Influence the organizational culture,
significant others, & opportunity in the ethical
decision making process
◦ Overall, provide for recognition of ethical
issues, understanding of culture & values, and
influence ethical decision making
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31. Enforcing Ethical Standards
◦ Consistent enforcement is critical
◦ But an internal system for employees to
report misconduct is an opportunity to
register ethical concerns
◦ Ethics hot lines
◦ Questionnaires may be used to serve as
benchmarks
◦ Corrective actions provide standards &
punishment
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32. Enforcing Ethical Standards
◦ If a company has determined that its ethical
performance has not been
satisfactory, management may want to
recognize the way ethical decisions are made:
◦ A decentralized organization may be
centralized (perhaps temporarily) so that top
level managers can ensure that ethical
decisions are made.
◦ A centralized organization may be
decentralized (perhaps temporarily) so that
lower level managers can make more
decisions.
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33. Enforcing Ethical Standards
◦ An effective ethics program employs many
resources to monitor ethical conduct and
measure the program’s effectiveness
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Observing employees
Internal audits
Surveys
Reporting systems
Investigations
Independent audits
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34. Ethical Compliance Audit
◦ A systematic evaluation of an organization's
ethics program and/or performance to
determine its effectiveness
◦ Can help in establishing codes & program
◦ Should provide a systematic & objective
approach to surveying the ethical condition of
the organization
◦ May be more effective if performed by an
external entity (organizations should
participate in ethics audit instrument
development)
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35. Mistakes in Ethical Program
◦ Not having a clear understanding of the goals
of the program from the beginning.
◦ Not setting realistic and measurable program
objectives.
◦ Senior management's failure to take
ownership of the ethics program.
◦ Developing program materials that do not
address the needs of the average employee.
◦ Transferring a domestic program
internationally.
◦ Designing a program as a series of lectures.
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36. Thank You
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