The Ethical Imperative in Business

1. 2013 Global Ethics Summit The Ethical Imperative in Business March 5, 2013

2. Short Term Pressures • Focus on short term financial performance can lead to increased bad behavior and unethical activity in order to hit numbers. Instead, companies should focus on the big picture and be required/allowed to report less frequently than quarterly. • Short term stock trading plays a role in influencing bad behavior. A suggestion for improvement is to not allow shareholders to have a vote until holding on to their stock for a set minimum amount of time, such as 6 months. Another suggestion is to heavily tax profits made off short term trading.

3. Regulatory Compliance’s Role in an Ethical culture • Compliance programs can prevent companies from incurring financial penalty, but they do not ultimately create a culture of ethics. It‘s important for senior leaders at companies to focus on ethics programs and not just compliance programs. It‘s also important for these ethics programs to have buy in from different functions and titles, such as sales, marketing, business unit leaders , CEOs, board members and others, and not just limited to compliance. • Nevertheless, it‘s important for the compliance program to set the foundation of expectations around employee behavior. But it must be emphasized that the compliance program is just a foundation, and additional layers must be built to create an ethical culture.