Please click on a question to view the answer.
What is Organisational Ethics?
Is there a difference between a Code of Ethics and a code of conduct?
Reference is often made to the King Reports on Corporate Governance for South Africa (1994, 2002, 2009) drawing on the US Federal Sentencing Guidelines for Organizations. What are the Federal Sentencing Guidelines?
In light if Enron, WorldCom, LeisureNet and other similar cases, are we in a time when business is less ethical?
What is an ethics programme?
What are the components of an ethics programme?
What is an Ethics Officer?
What are the main responsibilities of an Ethics Officer?
Does my company need a dedicated Ethics Office?
What does an Ethics Office cost?
How do the courses offered by EthicSA differ from courses offered by universities?
Are there circumstances in which an organisation’s membership might be rescinded?
ANSWERS:
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Q: What is Organisational Ethics?
A: Organisational ethics involves understanding how values – our standards of right, good and fair conduct – shape the decisions and actions of organisations and individuals making decisions on its behalf. The actions of organisations and their internal and external stakeholders (for example employees and suppliers, respectively) need to conform to a set of ethical standards as defined by society, by laws and regulations, and by organisations own internal policies and procedures.
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Q: Is there a difference between a Code of Ethics and a code of conduct?
A: Not everyone draws a distinction, but we believe it is useful to do so. A Code of Ethics, as we understand it, contains the ethical standards to which an organisation commits itself, both as an organisation and in respect of individual conduct by members of the organisation.
A Code of Ethics has two components combined in one document:
- A brief values statement – A short, aspirational document listing and defining a organisation’s core ethical values, ideals or principles; and
- A code of conduct – A longer, enforceable, compliance-oriented, operational document setting out policies, procedures and rules regarding best practices relating to daily operational issues affecting the organisation.
A code of conduct provides illustrations of how values (contained in the values statement) translate into concrete decisions and actions, rather than a full or comprehensive catalogue of rules or prescriptions. It is not a comprehensive manual of applicable laws and legal regulations, but, where appropriate, it refers to such more technical or comprehensive documents for guidance.
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Q: Reference is often made to the King Reports on Corporate Governance for South Africa (1994, 2002, 2009) drawing on the US Federal Sentencing Guidelines for Organizations. What are the Federal Sentencing Guidelines?
A: In the US judiciary, federal judges are provided with a set of guidelines to ensure some degree of consistency among the hundreds of federal judges. In 1991, the US Sentencing Commission (USSC) updated the Federal Sentencing Guidelines for Organisations (FSGO) in an effort to incentivise the development and implementation of a process for bolstering the ethical conduct in US corporations. The USSC agreed to reduce fines for organisations found guilty of misconduct but had in place “an effective program to prevent and detect [ethical and/or criminal] violations.†The FSGO are increasingly used for international benchmarking. They are also incorporated in King II (2002) as corporate ethics management recommendations. They are less explicit in King III (2009), but are still implicit in its guidelines for ethics management in an organisation.
According to the FSGO organisations must:
- Codify compliance standards and procedures that are reasonably capable of reducing the prospect of criminal activity;
- Ensure oversight by high-level personnel;
- Exercise due care in delegating authority;
- Effectively communicate to all levels of employees;
- Take reasonable steps to ensure compliance via monitoring, auditing and reporting;
- Consistently enforce compliance standards; and
- Take reasonable steps to respond to and prevent further offences upon detection of a violation.
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Q: In light if Enron, WorldCom, LeisureNet and other similar cases, are we in a time when business is less ethical?
A: Interestingly, the data seem to contradict common perceptions. One large-scale survey of employees across all types of organisations in the US (The Ethics Resource Center’s 2003 National Business Ethics Survey – NBES) suggests that employees overall would disagree. Employees state that their own organisations are more ethical now than was reported in 2000. The Enrons of the world have done terrible damage and attracted a good deal of attention, but it appears that, generally speaking, organisations continue to pay more attention to ethics, impose higher standards and act ethically more often now than in the recent past.
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Q: What is an ethics programme?
A: An ethics management programme (“ethics programmeâ€, for short) refers to a systematic approach to addressing an organisation’s ethical culture. It typically includes the creation and maintenance of an organisational environment where everyone understands and consistently applies an agreed-to set of core values to their individual and collective decisions and actions.
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Q: What are the components of an ethics programme?
A: Typically, building an ethical organisational (including business) culture requires the following (see the King III draft published for public comment in February 2009; final report to be published on 1 September 2009 III):
- Assess the organisation’s ethics risks and opportunities;
- Develop ethical standards in the form of a Code of Ethics and, if necessary, more detailed ethics policies;
- Integrate the organisation’s ethical standards into its policies and procedures, and through processes such as communication strategies, education and training, reporting channels, including a whistle-blowing hotline, and the like: and
- Monitor and report on the organisation’s ethics initiatives.
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Q: What is an Ethics Officer?
A: Ethics Officers are typically mid-level to upper-level managers tasked with managing an organisation’s ethics programme.
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Q: What are the main responsibilities of an Ethics Officer?
A: An Ethics Officer’s main responsibilities include:
- Maintaining and updating the organisation’s Code of Ethics;
- Ethics education and training;
- An ethics communications strategy;
- An employee guidance/help line for advice on how to manage ethical issues;
- A whistle-blowing hotline where employees and others can report observed or suspected ethical misconduct;
- Monitoring and oversight of the ethics programme;
- Coordinating investigations of suspected misconduct;
- Ensuring the consistent application of appropriate discipline for ethics violations; and
- Gathering data necessary for informing senior management and the Board of Directors regarding the overall effectiveness of the ethics programme and the ethical well-being of the organisation.
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Q: Does my company need a dedicated Ethics Office?
A: Although this is the ideal, not every organisation has the resources to institute a dedicated Ethics Office. However, every organisation needs a designated person responsible for managing the ethics systems and climate. Even though everyone has the responsibility for ethical actions and decisions in their own sphere of influence, someone must have overall oversight, responsibility and accountability. Some argue that the CEO should stand for “Chief Ethics Officer†– that the CEO has overall responsibility for the organisation’s ethics strategy. Others see this as a legal issue and thus the responsibility of Chief Legal Advisor/Counsel or the Company Secretary. One can also argue that many ethics issues are Human Resources issues and thus that the head of HR should be the Ethics Officer. There are any numbers of ways to address the issue. In smaller organisations the Ethics Officer’s responsibilities may only require a part-time commitment. However, someone needs to be tasked with those responsibilities, irrespective of title.
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Q: What does an Ethics Office cost?
A: There is no standard answer. Consider the responsibilities of the Ethics Officer, the size of the organisation, its geographic and functional diversity and the “ethical health†of the current organisational climate and culture, and you will begin to understand some of the variables. Perhaps the better question is, “What is the cost of not having an Ethics Officer?†What did the last preventable law suit or out-of-court settlement cost your organisation? Does your organisation suffer from theft, fraud or corruption? How much is your reputation worth? That said, there are clear standards for costing an Ethics Office once key variables are fixed.
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Q: How do the courses offered by EthicSA differ from courses offered by universities?
A: Universities, generally speaking, focus on theory while practical application and skills are more in the background. By contrast, EthicSA’s courses contain only theory that is necessary for the acquisition of practical ethical skills in the workplace. As such, they complement existing academic qualifications trainees might already have.
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Q: Are there circumstances in which an organisation’s membership might be rescinded?
A: In exceptional cases, EthicSA reserves the right to suspend or even cancel membership, in confidential consultation with the member organisation, on account of the organisation’s clearly demonstrated mismanagement of an unethical practice or unethical conduct.
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