PECBE 001 –Entrepreneurial Management

MODULE 2 – ETHICAL & SOCIAL RESPONSIBILITIES OF THE

ENTREPRENEUR

III. HOW ETHICAL BEHAVIOR IS ENCOURAGED

There are specific ways of encouraging ethical behavior among employees. These are the
following:

1. Adaptation of a code of ethics;

2. Institution of rewards and punishment concerning ethical behavior;
3. Adaptation of internal programs for resolving conflicts;
4. Creation of ethics review committees;
5. Provision of training in ethics for employees; and
6. Top management support.

Code of ethics

➢ A formal document indicating the entrepreneurship adapted principles of appropriate

behavior.
➢ Very useful to the firm espousing ethical behavior and serves as an essential reference
for employees who make big or small decisions.

A code of ethics can be made effective if the following requirement is met:

1. It should refer to specific unethical practices like receiving gifts, avoiding warranty
claims, big-rigging, making fictitious claims, among others; and
2. Top management; support comes in various forms, such as providing sufficient funds
for its implementation and assigning specific employees to handle other employees'
ethical infractions and the like.

Rewards and Punishments concerning ethical behavior

A code of ethics is sufficient for some people if ethical behavior is required. For many people,
however, this may not be enough to motivate them to act ethically. Suppose the
entrepreneurship wants to have some measure of control over its personnel's behavior. In that
case, a system of reward and punishment must be instituted.
Punishment could take the form of dismissal, demotion, suspension, or reprimand. Rewards
may be given in the form of cash gifts, promotion, or citation.

Internal programs for resolving conflicts

Conflicts arise even when the ethical conduct of personnel is concerned. For exa,ple, a
subordinate may think his superior is acting unethically regarding promotions. The subordinate
may harbor ill feelings towards his superior if the subordinate is not provided with a means to
ventilate his grievance.

The module is for the exclusive use of the University of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means without the written permission of the University is strictly prohibited.
 PECBE 001 –Entrepreneurial Management

Ethics Review Committee

To encourage ethical behavior, the entrepreneurship may create an ethics review committee.
This committee is usually composed of company employees and some who are not employed
by the company. These persons have undergone special training in ethics. The committee
provides advice to the entrepreneur and their staff concerning sensitive ethical issues.

Provision of training in ethics for employees

Company personnel exposed to ethically charged activities must be provided with sufficient
training in ethics. Such training should make them sufficiently prepared to deal with various
ethical issues they would encounter in their respective workplaces.

Top Management Support

As mentioned earlier, it is challenging for any program or activity to succeed without top
management support. For instance, when unethical conduct is committed and no sanction is
imposed by top management, it can be expected that more violations of good ethics will be
made.

The module is for the exclusive use of the University of La Salette, Inc. Any form of reproduction, distribution, uploading, or
posting online in any form or by any means without the written permission of the University is strictly prohibited.