Training employees on ethical behavior and company reputation

¶ … Training New Employees

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Benefits to Training New Employees on Ethical Behavior

A company's ethics will often establish its reputation. Good business ethics are vital for the long-term success of a company. Putting into practice an ethical program will promote a successful company culture and increase profitability. Developing a business ethics program takes time and effort, but doing so will do more than advance business, it will change lives.

Most people involved in business, whether being a small business owner, employee, or chief executive officer of a multinational company, ultimately face ethical or moral quandaries in the workplace. Such quandaries are typically complex, in the fact that they force the person making the choice to weigh the benefits that various business decisions impart on individuals, including him or herself, and groups with the negative consequences that those same decisions typically have on other individuals or groups. Reaching a right or just termination when faced with moral problems can be a confusing and troublesome proposition.

Ethics training for employee programs should be part of all companies as they provide insights for liability protection as well as advance employee morale, their retention is also positively affected by these programs. Ethics are very important for a business as it helps to establish how a company is perceived by others. If a company has a reputation of being ethical and trustworthy employees as well as customers and colleagues will feel proud to be connected with the business, not the same case though if ones ethics and reputation is bad.

Table of Contents

Executive Summary

Introduction

Business Ethics

Why Train Ethics

Benefits for Training Ethics

How to Train Ethics

Conclusion

Introduction

A company's ethics will often establish its reputation. Good business ethics are vital for the long-term success of a company. Putting into practice an ethical program will promote a successful company culture and increase profitability. Developing a business ethics program takes time and effort, but doing so will do more than advance business, it will change lives. A company's ethics will have an influence on all stages of business. It will influence all who work together with the company including customers, employees, suppliers and competitors. All of these groups will have an outcome on the way a company's ethics are developed. It is a two way street, the influence goes both ways, which makes understanding ethics a very significant part of doing business today. Ethics is very important, as bad news can now spread faster and farther than ever before (Business Ethics Training Manuel, n.d).

Ethics is about conduct. In the face of quandary, it is about doing the right thing. Ethical managerial leaders and their people take the right and good path when they come to the ethical choice points (Kerns, 2003). Business ethics is frequently defined as the principles and standards that establish acceptable behavior in business organizations. The suitability of behavior in business is determined by customers, competitors, government regulators, interest groups, and the public, as well as each individual's personal moral principles and values. It is thought that most unethical activities within organizations are sustained by an organizational culture that encourages workers to bend the rules (Business Ethics and Social Responsibility, n.d.).

It is often very difficult to recognize specific ethical issues in business practice. Whether a decision maker recognizes an issue as an ethical one often depends on the matter itself. Managers, for instance, tend to be more concerned about matters that affect those close to them, as well as issues that have instant rather than long-term consequences. Consequently, the perceived importance of an ethical issue significantly affects choices that are made (Business Ethics and Social Responsibility, n.d.).

Learning to distinguish ethical issues is the most important step in understanding business ethics. An ethical issue is an identifiable trouble, situation, or opportunity that necessitates a person to choose from amongst several actions that may be assessed as right or wrong, ethical or unethical. In business, such a choice frequently entails weighing monetary profit against what a person thinks is appropriate conduct. The best way to judge the ethics of a decision is to look at a situation from a customer's or competitor's point-of-view (Business Ethics and Social Responsibility, n.d.). Good ethics training is the key to recognition.

Business Ethics

Most people involved in business, whether being a small business owner, employee, or chief executive officer of a multinational company, ultimately face ethical or moral quandaries in the workplace. Such quandaries are typically complex, in the fact that they force the person making the choice to weigh the benefits that various business decisions impart on individuals, including him or herself, and groups with the negative consequences that those same decisions typically have on other individuals or groups. Reaching a right or just termination when faced with moral problems can be a confusing and troublesome proposition. But businesspeople are liable to reach and act on ethically appropriate decisions if they do not lose sight of the fundamental issue of justice. Those who get preoccupied by issues of productivity and legality in measuring the morality of a business decision, on the other hand, frequently reach ethically slanted choices. As has been demonstrated time and again in the business world, the validity of a course of action may be completely inappropriate to its rightness. " in addition, any discussion of business ethics is a subjective one, for everyone brings different concepts of ethical behavior to the table. These moral standards are shaped by all sorts of things, from home environment to religious background to cultural customs" (Business Ethics, 2012).

Recently, the issue of business ethics has gained increased attention. "Corporate research and regulatory groups such as the Ethics Resource Center and the Council on Economic Priorities point out that the number of corporations that engage in ethics training and initiate socially responsive programs has increased dramatically over the course of the past two decades, and that courses on business ethics have proliferated in America's business schools during that time as well" (Business Ethics, 2012). But observers have also noted that over that same period of time, the business world saw numerous instances of stock price pumping through corporate downsizing, punitive actions against whistleblowers, and other practices that point to a still-prevalent emphasis on the bottom line over all other considerations in many industries.

Why Train Ethics

It only takes one employee, or even an agent of a company, to commit a crime, and an entire company may be held accountable. Under the Federal Sentencing Guidelines, a company may face very large fines, a 5-year probationary period, recompense for the victim of the crime, and more. The good news is that a company can reduce their likelihood of this happening if they establish an effective compliance and ethics program. To do this, one must train their employees at all levels, and all agents, on ethics. "According to the Federal Sentencing Commission, an organization that has an effective compliance and ethics program can reduce its fines for a criminal conviction by as much as 90%" (Developing a Training Plan for Legal Compliance, 2012).

The Federal Sentencing Commission states that the Federal Sentencing Guidelines apply to all companies whether they are publicly or privately held, and no matter what their nature of business is. This includes corporations, partnerships, labor unions, pension funds, trusts, nonprofit entities, and governmental units. The Federal Sentencing Guidelines outline seven steps an employer must take to have a successful compliance and ethics program:

A company must ascertain standards and procedures in order to prevent and detect criminal conduct.

A company's high-level personnel must be well-informed about and manage the content, implementation, operation, and effectiveness of the program.

A company must take realistic efforts to evade giving substantial authority to an individual that the organization knew, or should have known, has engaged in criminal activity or other conduct not in agreement with an effective ethics program.

A company must take realistic measures to occasionally conduct training programs for and distribute information to the company's governing authority, high-level personnel, employees, and agents.

A company must watch and audit for criminal activity, occasionally assess the effectiveness of the program, and create and communicate procedures for workers and agents to report criminal activity without fear of retaliation.

A company must offer incentives to comply with the program and impose disciplinary measures for engaging in criminal conduct or failing to prevent or detect criminal conduct.

A company must respond properly to criminal conduct and adapt the compliance and ethics program, if required, to prevent further criminal conduct (Developing a Training Plan for Legal Compliance, 2012).

How to Train Ethics

Employees should be trained on issues such as harassment, conflict resolution, diversity and workplace violence. A company code of ethics should be made regarding workplace email, whistleblowing, drug testing and occupational safety and health. In order to establish an ethics training program, it is important to first set standards for ethical behavior within the organization and determine what training will accomplish. Companies should outline goals for the training and produce documents to support it, such as a code of ethics. In order to be effective, the training must be mandatory for all employees. All members of an organization should participate, if leadership is exempt, it sends a clear message to employees that some people are exempt from the rules. Ethics training should include a copy of the organization's code of ethics, a discussion of relevant compliance laws, an ethical decision-making model, resources for help and role-playing scenarios. All employees should receive a copy of the code of ethics and should understand the underlying meaning. Strong ethics programs should cover five elements: responsibility, respect, fairness, honesty and compassion. A company's code of ethics should define these elements and set the appropriate behavioral standard (Tyler, 2011).

The overarching goal should be to generate a strong ethical culture supported by strong ethical leadership. Executive leaders must offer that makeup and ethical guidance, and they can do that best by connecting multiple formal and informal cultural systems. People should react positively to the kind of arrangement that aims to help them do the right thing. If management says that they want to do the right thing, employees should respond positively as long as they believe that management is genuine and they observe consistency between words and actions (Trevino & Brown, 2004).

Leaders are accountable for conveying culture in their companies, and the ethical measurement of organizational culture is no exception. "The most powerful mechanisms for embedding and reinforcing culture are: (1) what leaders pay attention to, measure, and control; (2) leader reactions to critical incidents and organizational crises; deliberate role modeling, teaching, and coaching by leaders; (3) criteria for allocation of rewards and status; and (4) criteria for recruitment, selection, promotion, retirement, and excommunication" (Trevino & Brown, 2004).

If leaders wish to construct a strong ethical culture, the first step is to comprehend the current environment. Because information frequently gets stuck at lower organizational levels, and executives are often protected from bad news, particularly if workers perceive that the company shoots the messenger. Executives need to use anonymous surveys, focus groups, and reporting lines in order to get a feel from what is really going on. Employees need to believe that the senior leaders really want to know, if they are to report truthfully on the current state of the ethical environment (Trevino & Brown, 2004).

Employees need apparent and dependable messages that ethics is vital to the business model. Most businesses send numerous messages about competition and financial performance, and these easily drown out other messages. In order to contend with this constant drumbeat about the short-term bottom line, the messages about ethical behavior must be just as strong or stronger and as frequent. "Simply telling people to do the right thing, is not enough. They must be prepared for the types of issues that arise in their particular business and position, and they must know what to do when ethics and the bottom line appear to be in conflict. Executives should tie ethics to the long-term success of the business by providing examples from their own experience or the experiences of other successful employees" (Trevino & Brown, 2004).

The reward system may be the single most important way to deliver a message about what behaviors are expected. People do what's rewarded, and they keep away from doing what's punished. When looking at this concept it is conceivable that in the short-term, it is probably not feasibly to reward on a short-term basis. Primarily, ethical behavior is basically expected, and people don't anticipate or want to be rewarded for doing their jobs the right way. But in the longer term, ethical behavior can be rewarded by encouraging and compensating people who are not only good at what they do, but who have also developed a reputation with customers, peers, subordinates, and managers as being of the highest honesty. The best way to hold workers responsible for ethical conduct is to include evaluation of it into performance management systems and to make this assessment a precise part of compensation and promotion decisions (Trevino & Brown, 2004).

Being a moral person who is characterized by honesty and fairness, treats people well, and makes ethical decisions is significant. But those fundamentals deal only with the ethical part of ethical leadership. To be ethical leaders, executives have to think about the leadership part of their job. Providing ethical leadership means making ethical standards observable, communicating about not just the end result goals, but also the satisfactory and undesirable means of getting there. Being an ethical leader also means asking very openly how important decisions will affect numerous stakeholders including shareholders, employees, customers, society and making transparent the struggles about how to balance rival interests. It means using the reward system to plainly communicate what is expected and what is accepted. "That means rewarding ethical conduct and disciplining unethical conduct, even if the rule violator is a senior person or a top producer. It is important for a company to find a way to let employees know that the unethical conduct was taken seriously and the employee disciplined" (Trevino & Brown, 2004).

Ethical environments and ethical leaders frequently go hand in hand. Building an ethical culture can't be assigned. The CEO must be the Chief Ethics Officer of his or her company. A lot of CEOs may feel that they would rather pass on this challenge, that they don't really know how to do it, or they may favor to believe that everyone in their company is already ethical. But ethics is being managed in their company's with or without their awareness of it. Benign disregard of the ethical environment simply leads to workers reaching the conclusion, rightly or wrongly, that leaders don't care as much about ethics as they do about other things. Leaders build up a reputation in this arena. Chances are that if the leader hasn't thought much about this reputation or hasn't been very practical about it, people in the company will likely label him or her as an ethically unbiased leader. That doesn't mean that the leader is ethically unbiased or doesn't take ethics into account in decision-making. It does mean that people aren't sure where the leader stands on the recurrent conflicts between ethics and the bottom line. Lacking explicit guidance, they take for granted that the outcome messages are the most significant (Trevino & Brown, 2004).

Conclusion

Business ethics is an interesting branch of business theory, primarily because of the fact that they are inherently interesting in a market economy. People tend to be extremely distrustful of corporations in market economies and the bigger they are, the worse that problem of trust usually gets. Business ethics therefore are politically charged in many different circumstances and that in turn serves to make them interesting. Aside from this academic interest however, business ethics are also important for a company and its success. Here are some ways in which this is true (Why Business Ethics Are Important for a Company and Its Success, 2012).

Another reason that business ethics are important is the relationship they have to investment. When a person or an entity is considering investment in a particular stock, there are a number of things they take into account. Aside from the quantitative factors surrounding a company's profit margin a future prospects, consideration is also given to a particular company from the point-of-view of the qualitative aspects such as their public image and the products that they happen to sell. All of these things are taken into account before the final investment is made (Why Business Ethics Are Important for a Company and Its Success, 2012).

Therefore, a company that would like to encourage extra business investment is a company that has a strong sense of business ethics. Part of business ethics is responsibility to the investor and for that reason companies with strong reputations in the field of ethical business behavior are also companies that tend to attract more investment from people that are new into the market. Investment is most definitely important to success (Why Business Ethics Are Important for a Company and Its Success, 2012).

Having a good ethics program in place and training all employees is the best way to make sure that a company succeeds in today's business world. Everyone in the company must know what they rules are along with what the consequences are for non-compliance. It only takes one isolated incident for a company to be in a lot of trouble. Preventing this should be every company's number one goal.