Sidney Dolce for Sidney, There Are Two

Sidney Dolce For Sidney, there are two points of concern. The first is identifying the potential ethic issues in the finance and accounting departments. The second is evaluating the cost and benefits of the ethics department. The latter is not the primary focus on the meeting, and the decision appears to be a fait accompli so Sidney is going to let it rest. The focus of Sidney's position will therefore be on eliminating potential risk of ethical violations in the finance and accounting departments.

Sidney has a significant stake in this meeting. Many of the high profile scandals outside of PIE, such as those at Enron and WorldCom, involved the accounting and financing departments. The CEO was involved in the ethical problems in each of those firms. Thus, Sidney needs to ensure that his department not only has strong procedures and training programs to ensure compliance with all regulations regarding accounting, but Sidney also needs to create a situation where his department is free from undue influence of higher executives.

This may involve the creation, for example, of a whistleblower policy, which serves to complement and enhance the role of compliance in the organization (Aguilar, 2009). The WorldCom scandal was uncovered initially by the internal audit department (Knowledge @ Wharton, 2002). The current environment is unfavorable for scandal. The passing of the Sarbanes-Oxley Act in the United States highlights the fact that scandals have undermined confidence in capital markets and governments are willing to take companies to task for ethical deficiencies, even when the costs are high (Cone, 2006).

The competitive environment is intense, with a number of companies poised to take market share from PIE if it is perceived as unethical. Indeed, the nature of PIE's business holds that ethics are essential to competing. Companies entrust the company with precious documents and cargo -- crucial contracts, medical equipment, dangerous goods, parts that are needed immediately and other critical goods. The minute that PIE is seen as untrustworthy, it will lose its business.

The current environment means that Dolce needs to not only accept the need for enhanced compliance but to find ways to implement it. It is not simply enough to follow the rules -- the rules themselves do not guarantee ethical behavior and the market is looking for more from companies to ensure that risk is eliminated. The short-term objective for Dolce is to identify the most significant risks in his organization, and some of the best methods for reducing risk.

Personal ethics has long been ignored by the Finance department, but it is going to have to become part of the hiring and training process. Identifying the needs is the best short-run strategy, as there are no quick fixes for ethical issues. In the medium-term, there are things that can be done. The first is to improve whistleblower protections. The finance department is a line of defense against unethical behavior, but it needs to be protected in order to do this job properly.

Cynthia Cooper and her team at WorldCom had to work after hours in secret to uncover the fraud at that company, and received no protections for their duty. PIE needs to improve on that. The second thing in the medium term is that PIE's Finance department can develop a policy that clearly elucidates the ethical stance of the company and department. Ethics needs to be at the top of the priority list, and this must come from the top, from Dolce and the CEO in particular.

In the long-term, culture change.