Whenever I thought of ethical training in the business world or why we are studying Corporate Social Responsibility in school I just automatically assumed it was a repercussion of the stock market crash of 2008. I never thought this kind of training dated back as far as 1964 with the Civil Rights Act. When I dug a little deeper I realized that many events have led to the growth of more and more laws surrounding ethics in the business world and why it is so crucial for businesses to practice good ethics.
Relating ethical training to the events leading up to the Civil Rights Act of 1964 almost sounds absurd. Clearly, the equality of people in the workforce based on gender, color, etc. sounds way more important than just a little ethics? Little did I know that it had everything to do with ethics. The Civil Rights Act was a major stepping stone in the awareness of worker’s rights. This law prohibited discrimination based on race, color, religion, or national origin in public commerce and ultimately gave way to companies creating sections in HR to make sure acts like these didn’t materialize. Now that the beginning of ethical training has been introduced we move on to the 1970 U.S. Occupational Safety and Health Act. This act was basically constructed to enforce the Civil Rights Act. It just took it a little further with making sure worker’s conditions were sanitary and safe. This was especially crucial in the factories many people worked in back then, with the smoke they were constantly inhaling and those long hours, it was becoming a detrimental health hazard. However, this law also made it so that the companies had to internalize taking care of these hazards, which would be nothing close to cheap. Without this law, some companies would’ve just looked the other way; but when held responsible for these conditions, they were forced took the actions necessary to eliminate them.
A little later on in the 1970’s a chain of bribery scandals were exposed-one involving Lockheed Martin, which brings us to the 1977 US Foreign Corrupt Practices Act. This act prohibits the payment of large sums of money to another party for special treatment. To me that just seems obviously unethical-but until it is made a law, it is still a legal act. These acts began to spark an ethical concern in the business industry because it suggested that most people had no moral conscience whatsoever. Even though “most” people were really a few crummy people just being made spectacles throughout the media. But the industry realized that if things didn’t start to change soon- the industry would be full of corruption and dreadful acts. This led to the 1986 Defense Industry Initiative that when signed, held companies responsible for having a written code of ethics, giving employees business ethics training, establishing monitoring mechanisms to detect improper activity, sharing best practices, and being accountable to the public. Finally, a law had been imposed to stop the atrocious acts ruining peoples’, companies’, and countries’ reputations.
What happens when an employee commits unethical/illegal acts and the company doesn’t know until it is served papers? The 1991 US Federal Sentencing Guidelines takes care of that. If it sees a company is doing all that it can in order to prevent such acts and all of sudden gets hit with a rotten employee’s charges, it can show the court system how it had a powerful code of ethics set up with the necessary training and devices to detect such acts and have the sentence reduced considerably. This gave companies more incentive to create such codes and go through the processes of training and setting up detection devices because they could save millions when something like this happens. You may think you know everyone you work with but when the selfish side comes out-there is no saying what one may do to get themselves ahead.
Now we have finally made it to the laws that came out of the more recent scandals and probably the ones that we are most familiar with when discussing the topic of ethics in the business world. In 2002, The Sarbanes Oxley Act was instated due to the high profile scandals involving Enron, WorldCom, and Arthur Anderson. This law made it so that the companies’ CEO and CFO certify the accuracy of financial statements with criminal penalties for knowingly certifying false statements. This was huge. Now that the CEO and CFO had some skin in the game-they knew to take a second look at everything they were signing. This also made a difference in the auditors performance knowing that the CEO and CFO would be looking over their work. No more room for false reporting and if they caught you before the law did-I’m assuming termination would be the answer. But even this wasn’t enough to stop the fraudulent reporting and stealing of innocent peoples’ money. The last act, 2010 Dodd Frank Wall Street Reform and Consumer Protection Act brought crucial changes in financial regulation. This law also created the new “whistleblowing program”. This rewards employees who come forward with original information with 10-30 percent of the money that was recovered from illegal activity.
It is sad to see how so many laws had to come from acts such as these. But with the progression of these laws, it will become harder and harder for people in large companies to continue to act unethically. It is a selfish act but when placed in the position, many “good” people may choose the “bad” decision to help benefit them and their families. They need to know the repercussions of these decisions so they can think a little harder before going through with them. This brings us back to ethos and what it has to do with ethics in the business world. Does the way you practice ethos in your personal life have an effect on the decisions you would make in your work life? Does the way you were raised help maintain your solid value in the business industry?
Relating ethical training to the events leading up to the Civil Rights Act of 1964 almost sounds absurd. Clearly, the equality of people in the workforce based on gender, color, etc. sounds way more important than just a little ethics? Little did I know that it had everything to do with ethics. The Civil Rights Act was a major stepping stone in the awareness of worker’s rights. This law prohibited discrimination based on race, color, religion, or national origin in public commerce and ultimately gave way to companies creating sections in HR to make sure acts like these didn’t materialize. Now that the beginning of ethical training has been introduced we move on to the 1970 U.S. Occupational Safety and Health Act. This act was basically constructed to enforce the Civil Rights Act. It just took it a little further with making sure worker’s conditions were sanitary and safe. This was especially crucial in the factories many people worked in back then, with the smoke they were constantly inhaling and those long hours, it was becoming a detrimental health hazard. However, this law also made it so that the companies had to internalize taking care of these hazards, which would be nothing close to cheap. Without this law, some companies would’ve just looked the other way; but when held responsible for these conditions, they were forced took the actions necessary to eliminate them.
A little later on in the 1970’s a chain of bribery scandals were exposed-one involving Lockheed Martin, which brings us to the 1977 US Foreign Corrupt Practices Act. This act prohibits the payment of large sums of money to another party for special treatment. To me that just seems obviously unethical-but until it is made a law, it is still a legal act. These acts began to spark an ethical concern in the business industry because it suggested that most people had no moral conscience whatsoever. Even though “most” people were really a few crummy people just being made spectacles throughout the media. But the industry realized that if things didn’t start to change soon- the industry would be full of corruption and dreadful acts. This led to the 1986 Defense Industry Initiative that when signed, held companies responsible for having a written code of ethics, giving employees business ethics training, establishing monitoring mechanisms to detect improper activity, sharing best practices, and being accountable to the public. Finally, a law had been imposed to stop the atrocious acts ruining peoples’, companies’, and countries’ reputations.
What happens when an employee commits unethical/illegal acts and the company doesn’t know until it is served papers? The 1991 US Federal Sentencing Guidelines takes care of that. If it sees a company is doing all that it can in order to prevent such acts and all of sudden gets hit with a rotten employee’s charges, it can show the court system how it had a powerful code of ethics set up with the necessary training and devices to detect such acts and have the sentence reduced considerably. This gave companies more incentive to create such codes and go through the processes of training and setting up detection devices because they could save millions when something like this happens. You may think you know everyone you work with but when the selfish side comes out-there is no saying what one may do to get themselves ahead.
Now we have finally made it to the laws that came out of the more recent scandals and probably the ones that we are most familiar with when discussing the topic of ethics in the business world. In 2002, The Sarbanes Oxley Act was instated due to the high profile scandals involving Enron, WorldCom, and Arthur Anderson. This law made it so that the companies’ CEO and CFO certify the accuracy of financial statements with criminal penalties for knowingly certifying false statements. This was huge. Now that the CEO and CFO had some skin in the game-they knew to take a second look at everything they were signing. This also made a difference in the auditors performance knowing that the CEO and CFO would be looking over their work. No more room for false reporting and if they caught you before the law did-I’m assuming termination would be the answer. But even this wasn’t enough to stop the fraudulent reporting and stealing of innocent peoples’ money. The last act, 2010 Dodd Frank Wall Street Reform and Consumer Protection Act brought crucial changes in financial regulation. This law also created the new “whistleblowing program”. This rewards employees who come forward with original information with 10-30 percent of the money that was recovered from illegal activity.
It is sad to see how so many laws had to come from acts such as these. But with the progression of these laws, it will become harder and harder for people in large companies to continue to act unethically. It is a selfish act but when placed in the position, many “good” people may choose the “bad” decision to help benefit them and their families. They need to know the repercussions of these decisions so they can think a little harder before going through with them. This brings us back to ethos and what it has to do with ethics in the business world. Does the way you practice ethos in your personal life have an effect on the decisions you would make in your work life? Does the way you were raised help maintain your solid value in the business industry?
Source:
"The History of Business Ethics Training." The History of Business Ethics Training. The Network-Integrated GRC Solutions, n.d. Web. 1 Dec. 2014.
"The History of Business Ethics Training." The History of Business Ethics Training. The Network-Integrated GRC Solutions, n.d. Web. 1 Dec. 2014.