corporate culture: one way to curb unethical behavior
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Corporate Culture:One way to curb unethical
behavior
Corporate culture
A blend of ideas, customs, traditional practices,
organizational values and shared meanings that help define normal
behavior for everyone who works in a company
“The accepted way of thinking, feeling, and acting in an organization”
“Shared beliefs about what is important and how things are done”
“Social glue that binds members of the organization together through shared values, symbolic devices, and shared ideals”
Artifacts: What can you see & hear?
Symbols Slogans/mottos/credos Rituals Stories Dress code Layout of space Technology used
Observable
Espoused values: How the organization wants to operate
Rules/regulations Policies Code of conduct Strategies Goals Philosophies Ethical climate: The unspoken understanding
among employees of what is and is not acceptable behavior.
Somewhat observable
Assumptions and beliefs: Taken for granted
Beliefs Perceptions Thoughts Feelings
Not observable
Functions of Organizational Culture
Behaviorial control
Establishes Organizational Identity
Fosters Commitment
Promotes Stability •Expectations (norms and rules) and what to
anticipate and how to behave
Types of culture
Strong Weak
Foundation of a strong culture?
Ethical leaders!
“In thought, word and deed, a company’s leaders must clearly and unambiguously both advocate and model ethical behavior.” -CEO, Merck
What are the traits of an ethical leader?
Difference between good and ethical
We can’t assume everyone will be ethical all of the the time so… sometimes you have to
regulate.
Sarbanes-Oxley Act 2002
A Public Company Accounting Oversight Board is established.
The firms are not permitted to offer loans to its executive officers or board of directors.
SEC rules will create guidelines for internal controls and financial reporting procedures.
ERISA penalties are increased from $5,000 to $100,000 and one year in prison to $100,000 to $500,000 and up to 10 years in prison.
Sarbanes-Oxley Act 2002
The firm’s audit committee is entrusted with auditor oversight and with all independent directors on the committee
Certain nonaudit services by auditors to clients are banned, nonaudit services must be preapproved by the audit committee, the lead auditor must be rotated every five years, and auditors report to the audit committee.
The CEO and CFO must sign off on financial statements as accurate and fair and must repay bonuses if a restatement of financials is undertaken.
U.S Corporate Sentencing Guidelines: DirectivesEstablish standards and procedures to reduce criminal conductAssign high-level officer(s) responsibility for complianceNot assign discretionary authority to “risky” individualsEffectively communicate standards and procedures through trainingTake reasonable steps to ensure compliance-monitor and audit systems, maintain and publicize reporting systemsEnforce standards and procedures through disciplinary mechanismsFollowing direction of offense, respond appropriately and prevent reoccurrence
Effectively communicate standards and procedures through training
Take reasonable steps to ensure compliance-monitor and audit systems, maintain and
publicize reporting systems
In order to comply…
Codes of ethics exist in each of your chosen fields
AccountingFinance MarketingInformation Technology
Creating a culture of ethical leaders
Creating/enforcing codes of ethics•Print, post, pray
Ethics committees Ethics officers/ombudspersons Hot lines Ethics audits Corporate ethics awards
Ethics Training
Ethics training videos The Office
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Stakeholder Theory
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