A business exists because of its relationships between employees, customers, shareholders and investors. There is a need to maintain these relationships by developing an ethics programs. An effective ethics programme will assist in creating opportunities that will promote good business principles. An ethics programme assists in communicating an organizations objectives, vision and goals to its clients and also other relevant groups outside.
An ethics program is simply defined as a systematic evaluation that seeks to raise ethical awareness of employees, provides guidelines for a company’s acceptable behavior in their strategic formulation and day to day operations and having resources available to assist in identifying and resolving ethical issues. Most organizations have ethical policies that define how those organizations carry out their activities. The ethical activities are enforced by management with support from other employees.
An effective ethics program employs a variety of resources to monitor ethical conduct and measure the program’s effectiveness. Compliance with the company’s ethical code and standards can be assessed through observing employees, performing internal audits and surveys, instituting reporting systems and conducting investigations as well as by external audits and review.
Successful ethics training is important in helping employees identify ethical issues and in providing then with the means to address and resolve such issues. Training helps educate employees about the firm’s policies and expectations, available resources, support systems and designated ethics personnel as well as about relevant laws and regulations and general social standards. Furthermore, through the training, employees are made aware of the responsibilities they need to shoulder and efforts needed to minimize conflicts in the work place.
Ethics auditing is a tool that companies can employ to identify and measure their ethical commitment to stakeholders. Over time these stakeholders are increasingly demanding that organizations be ethical and accountable for their conduct. In response, businesses are working to incorporate accountability into their operations. Business is not just about achieving revenue targets and increasing profits. It has become necessary that all these should be done in a manner that is suitable to all the stakeholders involved.
Ethics audit provides an objective method for demonstrating a company’s commitment to improve strategic planning, including its compliance with legal, ethical standards and social responsibility (Ferrell, 2009). Ethics audit helps an organization to identify areas of weaknesses and opportunities for improvement in the course achieving targets or pleasing shareholders. For an ethics audit to be deemed effective there are certain pre requisites that need to be laid down;
The first step is to secure top management commitment, this is essential if the audit program initiative is to be effective. A committee to oversee the audit should be set up, this team should include members who are well aware about the nature and role of ethics audit and should come from various departments within the firm or hire external consultants to coordinate the audit and report the results directly to the board of directors.
The ethics audit committee should establish the scope, process and subject matter, of the audit and monitor its progress to ensure that it stays on track. The scope of the audit is dependent on a number of factors such as the risks faced by the firm and opportunities available to manage ethics.
The audit process should involve a review of the company’s current mission statement, strategic objectives, policies and goals since the ethics audit involves comparing an organizations ethical performance to its goals, values and policies. The next step is to collect and analyze relevant information as well as identify tools or methods for measuring the firm’s adherence to ethical standards.
Once the information has been collected and analyzed, the results should be verified by an independent agent. Upon verification, the findings should be reported to the audit committee, and if approved, to managers and relevant stakeholders.
There several benefits that accrue to ethics auditing, it can improve a firms performance and effectiveness, increase its attractiveness to investors, improve its relationship with stakeholders, identify potential risks, and decrease the risk of misconduct and adverse publicity that can harm its reputation(Ferrell, 2009). Ethics audit is of strategic importance to a company, it provides an assessment of a company’s overall ethical performance as compared to its core values, ethics policy, internal operating practices, management systems and importantly stakeholder expectations.
Ethics reports are a useful management tools in helping a company identify and define their impact and facilitate important improvements. It can be used to reallocate resources and activities as well as focus on new opportunities.
The audit process can help organizations fulfill their mission statements in ways that boost profits and reduce risks. it can pin point areas where improving operating practices can improve both profits and stakeholder relationships.
Challenges involved in carrying out ethics audit is that it can be expensive and time consuming, selecting auditors can be difficult if objective, qualified personnel are not available, employees tend to fear comprehensive evaluations especially by external parties making the process extremely disruptive. Therefore, an effective ethics audit should put into consideration the likely consequences that may arise during the auditing and after.
Ferrell, O et al. (2009). Business ethics, ethical decision making & cases, (7thEdition). Boston, MA: Prentice Hall