Management at all levels, including the board of director, must demonstrate integrity and ethical values through their decisions, actions, and direction to internal control. The mission, values, codes and standards of conduct, policies, practices and operating principles should all reflect the formal right tone.
Management’s actions, decisions, and routine actions can all reflect the informal right tone. Organization leaders must be able to talk about their actions and motivate employees to act ethically in order for them have an effective internal control system. Many leaders are faced with the problem of having to communicate with people from different countries. To ensure that employees are following these standards, they must conduct training, communications, as well as control.
The board of director and senior management should ensure that integrity is not lost on employees and outsourced service providers. A Code of Conduct or some other baseline document can be used to establish guidelines for conduct. Organizations should set standards for employees and all stakeholders. It is possible for stakeholders and employees to behave according to their own rules, which can lead towards a lack of standards.
There are a few processes that can be used to help employees evaluate their performance and whether they adhere to ethical standards. There are many reasons why employees may not adhere to the standards. For example, a lack of oversight by the board of directors on senior management’s compliance with standards, weak internal audit functions, or insignificant penalties for inappropriate conduct.
Establishing methods to enforce standards is essential. The organization should also take other steps to ensure that they do not deviate from them. This must be done quickly and consistently to correct any deviations from the expected conduct standards. The severity of the violation should determine which punishment is best: termination, probation, warnings.
