The information in today’s issue is adapted from a course in the Leadership for Employees Library on TrainingToday called “Business Ethics—What Employees Need to Know.”
HR experts and labor and employment attorneys agree that businesses—regardless of their industry or size—should be concerned about the ethical conduct of their employees. According to a survey by the Ethics Officers Association, a nonprofit organization composed of corporate ethics and compliance officers, in conjunction with the American Society of Chartered Life Underwriters, half of U.S. workers have committed one or more illegal or unethical acts. These acts included stealing office supplies, abusing sick days, massaging quality control figures, and using or abusing drugs and alcohol on work time.
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Other types of unethical behavior include:
- Conflicts of interest
- Disclosure of personal or proprietary information
- Inappropriate (giving or receipt of) gifts, favors, and extra compensation
- Bribes, gratuities, or padding of quotes in order to unfairly win a deal
- Use of company equipment for private gain
- Illegal copying of software
- Securities violations such as insider trading
- Falsification of records
- Acts of discrimination
Such wrongful behavior is why businesses across the United States are developing or reinforcing ethics policies and codes of conduct, training employees in ethical decision making, and holding employees accountable for their conduct on the job.
Training Objectives
As you prepare your training session, make sure you put together meaningful goals. When the training is complete, for example, employees will be able to:
- Recognize the importance of business ethics
- Understand the requirements of the law and our ethics policy
- Identify ethical problems on the job
- Make ethical decisions
Legal Overview
Federal law requires publicly traded companies to abide by ethical standards. The Sarbanes-Oxley Act was adopted in the wake of the Enron, WorldCom, and other corporate scandals, as well as reforms led by the New York Stock Exchange. Section 406 of the Act specifically addresses corporate codes of ethics and disclosure requirements in corporations.
A directive in the Sarbanes-Oxley Act required the U.S. Sentencing Commission to amend the Federal Sentencing Guidelines. Those amendments specify seven requirements for ethics policies that apply to corporations, partnerships, associations, unions, trusts, pension funds, unincorporated organizations, governments, and nonprofit organizations.
The seven requirements for ethics policies are:
- Establishing ethics compliance standards and procedures.
- Assigning a specific high-level person in the organization to oversee the compliance program.
- Taking due care in the delegation of substantial discretionary authority to individuals in the organization; in other words, being careful to select an objective high-level person to investigate any violations.
- Communicating standards and procedures to all employees through training and through printed and electronic materials.
- Monitoring and auditing the operation of the compliance program, and establishing a help line to report possible wrongdoing.
- Consistently enforcing the policy and disciplining employees for violations.
- Responding promptly to any wrongdoing and remedying any deficiencies. Whenever an employee commits a criminal act within the scope of his or her employment, the organization as a whole can be held liable under the law for the act of the individual employee. Employers can face hefty fines, be put on probation for a period of up to 5 years, be forced to apologize to and compensate victims, post public notices of the conviction, and face forfeiture of assets.
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Training Requirements
Your business ethics training program should contain, at a minimum, the following elements:
- Definition of business ethics
- Importance of ethical conduct in the workplace
- Legal requirements
- Policy requirements
- Ethical values
- Common reasons for unethical conduct
- Ethical problem areas
- How to identify ethical problems
- Ethical decision making
- Questions to ask about ethical issues
- Ethics and relations with customers
- Ethics and relations with vendors
In tomorrow’s Advisor, we’ll provide a training exercise on business ethics for employees, and we’ll showcase an essential employee leadership resource with ready-to-use online courses on dozens of key leadership topics.