4.1 Developing ethics codes and statements of values  (Page 6/11)

Textbox 1: responding to the federal sentencing guidelines

Recent efforts to develop ethics codes in the academic context for both students and faculty may, in part, stem from the success of ethics compliance programs developed in business and industry in response to the Federal Sentencing Guidelines. Organizational codes of ethics have been integrated alongside other compliance structure and activities to prevent criminal behavior, to detect criminal behavior, and to ensure prompt and effective organizational response once such behavior has been detected.

The following section contains short exerpts from the federal sentencing guidelines. for more details consult the materials referenced in note 5 below.

• "The hallmark of an effective program to prevent and detect violations of law is that the organization exercised due diligence in seeking to prevent and detect criminal conduct by its employees and other agents. Due giligence requires at a minimum that the organization must have taken the following types of steps:
• The organization must have established compliance standards and procedures to be followed by ite employees and other agents that are reasonably capable of reducing the prospect of criminal conduct.
• Specific individual(s) within high levelpersonnel of the organization must have been assigned overall responsibility to oversee compliance with such standards and procedures.
• The organization must have used due care not to delegate substantial discretionary authority to individuals whom the organization knew, or should have known through the exercise of due diligence, had a propensity to engage in illegal activities.
• The organization must have taken steps to communicate effectively its standards and procedures to all employees and other agents, e.g., by requiring participation in training programs or by disseminating publications that explain in a practical manner what is required.
• The organization must have taken reasonable steps to achieve compliance with its standards, e.g., by utilizing monitoring and auditing systems reasonably designed to detect criminal conduct by its empoyees and other agents and by having in place and publicizing a reporting system whereby employees and other agents could report criminal conduct by others within the organization without fear of retribution.

Recommendations by the federal sentencing guidelines for an effective compliance program

• Appointing individuals to serve as ethics or compliance officers
• Developing corporate credos and codes of ethics that effectively communicate an organization's ethical standards and expectations to employees.
• Designing ethics training programs for all employees
• Designing and implementing monitoring and auditing systems
• Designing and implementing an effective system of punishments and sanctions. These must be accompanied by investigative procedures that respect employee due process rights.

Textbox 2: compliance oriented codes and programs versus values oriented codes and programs

Compliance strategy

1. The initial and still probably the most prevalent method for responding to the Federal Sentencing Guidelines is the compliance strategy. This strategy is based on three interrelated components:
2. Rules : Compliance strategies are centered around strict codes of ethics composed of rules that set forth minimum thresholds of acceptable behavior. The use of rules to structure employee action does run into problems due to the gap between rule and application, the appearance of novel situations, and the impression that it gives to employees that obedience is based on conformity to authority.
3. Monitoring : The second component consists of monitoring activities designed to ensure that employees are conforming to rules and to identify instances of non-compliance. Monitoring is certainly effective but it requires that the organiztion expend time, money, and energy. Monitoring also places stress upon employees in that they are aware of constantly being watched. Those under observation tend either to rebel or to automatically adopt behaviors they believe those doing the monitoring want. This considerably dampens creativity, legitimate criticism, and innovation.
4. Disciplining Misconduct : The last key component to a compliance strategy is punishment. Punishment can be effective especially when establishing and enforcing conduct that remains above the criminal level. But reliance on punishment for control tends to impose solidarity on an organization rather than elicit it. Employees conform because they fear sanction. Organizations based on this fear are never really free to pursue excellence.