Developing an Effective Ethics Program

Welcome to Lesson 8. Programs designed to foster ethical decision making in business are controversial today because much unethical and illegal business conduct continues to occur even in organizations that have adopted such programs. Enron, BP, and JP Morgan are examples of organizations with codes of ethics that experienced ethical disasters. Many business leaders believe ethics initiatives should arise naturally from a company’s corporate culture and that simply hiring good employees limits unethical conduct. Moreover, business executives and board members often do not understand how organizational ethics can be systematically implemented. In business, many ethical issues are complex and require organizations to reach a consensus on appropriate action. Top executives and boards of directors must provide the leadership and a system to resolve these issues. Legislation and regulatory rules require leadership to create and implement effective ethics programs. These requirements come into play when misconduct is investigated by the government. Customized ethics and compliance programs assist businesses to provide guidance so employees from diverse backgrounds understand what behaviors are acceptable (and unacceptable) within the organization. Reference: FERRELL, FRAEDRICH, AND FERRELL (2013). BUSINESS ETHICS (10th ed.). Stamford, CT: Cengage Learning. Read the Case Study entitled “Herbalife Reborn” on page 542 of the text and the following articles: Please answer the following questions: 1. Why has Herbalife’s multilevel compensation model been criticized as a pyramid scheme? 2. Describe the differences between a legitimate business model and a pyramid scheme. 3. How has Herbalife demonstrated social responsibility?