Sunday, 4 May 2014

FRAMING THE ORGANIZATION'S ETHICAL BOUNDARIES.

It is imperative of good leadership to be guided by a set of ethical values. All organizations must have boundaries and controls to ensure that employees are acting in accordance with ethical standards. These include:
 Clear budgeting and accounting systems
 Include the use of activity based costing (ABC);this is a method for estimating the resources required to operate an organization's business processes
 The requirement for multiple signatories for bank accounts.
 the separation of the purchasing role from the accounting role within the organization regardless of size.

COMMUNICATING VALUES.

Even when the leadership and staff have identified a small set of values that are non-negotiable in their organization,these are often not translated down to the lowest levels of the organization.
Guiding values must be easily accessible and communicated clearly in language that resonates with employees.
In addition,the employees must be encouraged to use the language in the value statements and refer to the statements when making ethical decisions.

LIVING VALUES

Company leadership must be personally dedicated, visible role models who follow through on organizational values
When the leader respects and integrates organizational values into management decision making, employees will subconsciously form social contract to abide by the respected organizational values,
Annual audits through a credible external auditor reinforce ethical values.
Inventory control, checks and balances for detecting fraud should be encouraged.
Organizations should actively employ the benefit of computer software for trading components of their operations, especially sales,costs and cash flows.

REWARDS AND SANCTIONS

Creating a dream team with ethics requires an environment where it is tough to be unethical and where behaviour is always detected and punished.
Conversely,ethical behaviour must be expected, lauded and rewarded.

SYSTEMS

It is widely accepted knowledge that systems and structures instituted within organizations especially those that address marketing,compensation,human resources, finance and accounting practices, typically shape the conduct of management and employees.
Similarly,there are systems that explicitly strengthen an organization's ethical culture.

AN ETHICS SYSTEM INCLUDES:

Mission or values statement,code of ethics and within standards of ethical workplace conduct.
Orientation and continuing education or ethical workplace conduct including auditing, accounting and reporting.
Ethics managers,ombudsmen,compliance officers,committees,offices or information sources(hotlines,emails,websites,where employees can get advice about ethics related issues)
Channels for employees to anonymously report violations of ethics standards complete with formal protective mechanism, so that employees can discuss ethical dilemmas and report unethical behaviour without fear of reprimand or victimisation.
Evaluation of ethical conducts as part of regular performance appraisal and sanctions for employees who commit ethics violations.
Fair and timely payment of salaries to motivate and build loyalty between employer and employee.

SUMMARY

An organization's core values are manifest in its culture;that is in the basic ways that its business is conducted,how decisions are made and how rewards are distributed.How its employees are treated,how its customers are seen?
Employees learn these ways by doing business through observation of how colleagues and superiors behave. If no expectations are established and effectively communicated, employees will make it up as they go along when faced with ethical dilemmas.
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