ETHICS TRAINING
As noted in the case of MCI, with increasing frequency companies are conducting ethics training sessions with employees. These training sessions involve the discussion and analysis of ethical dilemmas. Ethics training seminars are helpful in providing employees with the tools to make the right decisions in situations where their ethics are being tested.
CONSEQUENCES OF POOR ETHICAL DECISIONS
Enron illustrates how large-scale ethics violations can cause the downfall of a company and legal entanglements for executives. Enron filed for Chapter 11 bankruptcy and sold off many of its holdings. Several executives face trial. The ethics violations did not stop with Enron, but spread to its accounting firm, Arthur Andersen, whose reputation was also irreparably tarnished for covering up Enron’s accounting wrongdoings.
Despite the attention that has been given to ethics abuse by large corporations, smaller businesses suffer most from fraudulent activities. Small organizations reported losses of up to 25 percent more than those of larger organizations due to fraud.
MONITORING COMPLAINTS AND ENCOURAGING FEEDBACK
Companies can deal with ethical violations by monitoring complaints and encouraging feedback. Companies monitor complaints against the company made by customers, shareholders, and employees. Many companies also encourage feedback by having toll-free telephone lines for customers to call or by providing suggestion boxes for employees. This system of feedback makes customers, employees, and shareholders feel as though the executives are hearing their voices. Organizations that have hotlines set up were able to cut their losses from fraud by 50 percent, according to a 2002 survey by the Association of Certified Fraud Examiners.
GOVERNMENT REGULATIONS
As is the case when a social harm is identified, the federal government will step in and design regulations that will prevent further damage by unethical companies. Currently the government protects consumers from unethical companies in several ways.
The Federal Trade Commission (FTC) monitors advertising to ensure that companies are not misleading the public with false advertising. The goal is to stamp out deceptive practices. Another government agency, the Food and Drug Administration (FDA), protects consumers by monitoring the safety and quality of many products. Additionally, the government has many policies in place to encourage competition in the market in order to ensure that consumers will not be charged unfair prices for goods and services. To this end, the government’s antitrust statutes prevent monopolies from forming. The government has also protected consumers from unfair pricing by deregulating industries, such as the telecom industry, in order to allow more competition to enter the market.
As noted in the case of MCI, with increasing frequency companies are conducting ethics training sessions with employees. These training sessions involve the discussion and analysis of ethical dilemmas. Ethics training seminars are helpful in providing employees with the tools to make the right decisions in situations where their ethics are being tested.
CONSEQUENCES OF POOR ETHICAL DECISIONS
Enron illustrates how large-scale ethics violations can cause the downfall of a company and legal entanglements for executives. Enron filed for Chapter 11 bankruptcy and sold off many of its holdings. Several executives face trial. The ethics violations did not stop with Enron, but spread to its accounting firm, Arthur Andersen, whose reputation was also irreparably tarnished for covering up Enron’s accounting wrongdoings.
Despite the attention that has been given to ethics abuse by large corporations, smaller businesses suffer most from fraudulent activities. Small organizations reported losses of up to 25 percent more than those of larger organizations due to fraud.
MONITORING COMPLAINTS AND ENCOURAGING FEEDBACK
Companies can deal with ethical violations by monitoring complaints and encouraging feedback. Companies monitor complaints against the company made by customers, shareholders, and employees. Many companies also encourage feedback by having toll-free telephone lines for customers to call or by providing suggestion boxes for employees. This system of feedback makes customers, employees, and shareholders feel as though the executives are hearing their voices. Organizations that have hotlines set up were able to cut their losses from fraud by 50 percent, according to a 2002 survey by the Association of Certified Fraud Examiners.
GOVERNMENT REGULATIONS
As is the case when a social harm is identified, the federal government will step in and design regulations that will prevent further damage by unethical companies. Currently the government protects consumers from unethical companies in several ways.
The Federal Trade Commission (FTC) monitors advertising to ensure that companies are not misleading the public with false advertising. The goal is to stamp out deceptive practices. Another government agency, the Food and Drug Administration (FDA), protects consumers by monitoring the safety and quality of many products. Additionally, the government has many policies in place to encourage competition in the market in order to ensure that consumers will not be charged unfair prices for goods and services. To this end, the government’s antitrust statutes prevent monopolies from forming. The government has also protected consumers from unfair pricing by deregulating industries, such as the telecom industry, in order to allow more competition to enter the market.
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