Introduction

A code of ethics, also known as a code of conduct or statement of values, is a policy

statement of a company’s values, responsibilities, and conduct expectations. The
purpose of a code of ethics is to guide employees in handling ethical dilemmas. It is
essentially a moral compass.

The ethical lapses of global companies, such as Enron, Arthur Andersen, and
WorldCom, over the span of a few years caused much devastation. Enron and
WorldCom executives used deceptive accounting and sold inflated stock while
recommending it to employees and external investors. Arthur Andersen’s
accountants, who audited Enron and WorldCom, turned a blind eye to the fraud. As
a result, in 2002, Congress passed the Sarbanes-Oxley Act, which requires that
companies listed or applying to be listed on a public stock exchange establish and
enforce a code of ethics. It also requires that any changes to an established code of
ethics be disclosed to the public. A code of ethics that meets the requirements of the
act comprises the standards necessary to promote “honest and ethical conduct; full,
fair, accurate, timely and understandable disclosure in periodic reports” and
“compliance with applicable governmental rules and regulations.”

Codes of ethics vary in content, length, and complexity. Johnson & Johnson has a
relatively simple code of conduct, with just four paragraphs that can be summarized
as: Our customers are our first priority, then our employees, then our communities.
Stockholders come last. But if we take care of the others, then stockholders will do
well. Without being too detailed or lengthy, this credo expresses the company’s
values and gives employees the guidance they need to make ethical decisions.

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the definition of ethics in the workplace?
Ethics in the workplace is defined as the moral code that guides the behavior of
employees with respect to what is right and wrong in regard to conduct and
decision making. Ethical decision making in the workplace takes into account the
individual employee’s best interest and also takes into account the best interest of
those impacted. The latter of the definition is often where individual employees
struggle to act ethically. Furthermore, ethical behavior doesn’t only apply to
individual employees, the organization itself should exemplify standards of ethical
conduct.

Why is ethical behavior in the workplace important?

It is important to understand that ethical behavior in the workplace can stimulate
positive employee behaviors that lead to organizational growth, just as unethical
behavior in the workplace can inspire damaging headlines that lead to
organizational demise.

Simply put, organizational stakeholders that include individuals, groups and

organizations of various types enter into a relationship with a business organization
for that business to protect their interests in a specific way. Therefore, there is a
mutual expectation that stakeholders and business organizations act in an ethical
manner and in each other’s best interest.

A decision to act unethically, by the organization or a stakeholder, can strain the

relationship and damage the reputation of the organization. The increased risk of
reputational damage and harm from negative headlines is often the catalyst for
organizations to promote and encourage ethical behavior and prevent and report
unethical behavior. Furthermore, where many individuals are connected to social
media with mobile technology, the risk that unethical behavior will cause
reputational damage to an organization is arguably much greater that in decades

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past, as behavior is more easily recorded on video, captured in photos, shared
online and propelled into headlines.

However, there are benefits of ethical behavior in the workplace beyond the
avoidance of reputational harm. An organization that is perceived to act ethically by
employees can realize positive benefits and improved business outcomes. The
perception of ethical behavior can increase employee performance, job satisfaction,
organizational commitment, trust and organizational citizenship behaviors.
Organizational citizenship behaviors include altruism, conscientiousness, civic
virtue, sportsmanship and courtesy.

What can organizations do to encourage ethical behavior in the

workplace?
The good news is that organizations can take steps to create a good narrative around
their reputation by implementing measures that help ensure ethical conditions and
perceptions of organizational support are present in the workplace. Many
organizations implement reactive systems to report unethical behavior. However,
the single most important thing organizations can do different to promote ethical
behavior is to implement a proactive employee voice system and use voice of the
employee tools to proactively give employees the capacity to be heard.

Voice the employee systems that effectively promote ethical behavior and
encourage reporting unethical behavior meet five key criteria:

1. Elegance: be easily understood, applicable to the entire organization and all

employees and effectively diagnose issues

2. Accessibility: be easy to use, widely promoted, accessible to all employees

3. Correctness: be well-administered and include follow-up to complaints

4. Responsiveness: be timely, be responsive, be used by management and

show results

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 5. Non punitiveness: be anonymous and be free of retaliation – managers and
employees must be protected.

The challenge is that many organizations implement voice of the employee systems
with good intentions, but the voice of the employee tools used are not effective.
Voice of the employee tools, like interviews and surveys, that proactively seek to
uncover and stop unethical behavior should be conducted:

 Using an Open-Ended Question: to ensure all possible issues are uncovered,

voice of the employee efforts should focus on asking an open-ended
question about awareness of compliance issues. Closed-ended questions do
not provide the ability to uncover all possible issues or all details to
understand issues.

 Externally: to ensure accuracy, the research should be conducted through

an independent third-party to remove biases and remove barriers to
employees feeling they can express their true perceptions related to
unethical conduct in the workplace. When conducted internally, it’s likely
that true perceptions aren’t revealed because employees aren’t being honest
with the organization. Employees may not want to risk burning a bridge or
disappointing a manager. When conducted externally, data is systematically
collected and thoroughly reported.

 Using Mixed Methodology – Asking “Why?”: to obtain detailed reasons

for perceptions of unethical behavior, it is critical to use a mixed methods
research instrument that asks “why?” in an open-ended, qualitative manner
to avoid limiting the scope of what can be learned from each individual
employee. Third-party researchers can offer high-quality telephonic
interviews and web interviews that capture in-depth qualitative responses in
a systematic manner. In asking fewer open-ended questions, specifically
following up to ask why the participant perceives unethical behavior, you
obtain in-depth data and reveal the root causes of perceptions.

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  Systematically: to track trends and progress, data should be systematically
captured for use in subsequent data collection and analysis. External
research uses a consistent question set, data collection technology and a
dependable methodology to capture responses in a reliable system to
facilitate future reporting and analyses. This information can then be
analyzed to identify issues that might exist in specific employee segments,
departments, job groups or even certain supervisors.

Fostering Ethical Decisions

In addition to establishing a code of ethics, hiring ethical employees, and protecting
whistleblowers, key aspects of senior management’s role in fostering ethical
decisions and behavior in any organization include planning, implementing, and
communicating the specifics of an ethics program. Ethics programs disclose
important corporate values, often through the use of policies and
employee/manager training. After a program has been implemented, senior
management should monitor and evaluate it and then modify the program as needed
or desired to ensure its effectiveness.

It is also important for senior management to model ethical behavior. The

responsibilities of senior management in modeling ethical behavior include the
following:

 Act ethically and be seen to act ethically.

 Be active in the ethics program. For example, introduce the ethics training
or be the person to speak.

 Encourage employees to raise issues.

 Address ethics issues.

 Enforce the ethics program, such as by punishing violators.

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Ethics programs are like an insurance policy. They help mitigate the worst
consequences when employees do stray, and they help prevent “accidents” by
raising employee “safety” awareness.

Ethics Training

Having codes and policies in place that address ethics is not enough.
Employees need to be taught how to respond in situations involving
ethics. Therefore, many managers enroll their employees in an ethics
training program. Ethics programs often involve activities that encourage
ethical behavior and reinforce a company’s ethics code/policies.

One ethics activity involves having employees match various scenarios

on one set of cards with the possible responses on another set of cards.
Every scenario will have appropriate and inappropriate answers. After
the participants match scenarios with responses, the group discusses the
decision. Discussing the responses gives managers the opportunity to
explain why some policies are in place and demonstrate how employees
should respond in ethical situations they will likely face on the job.

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References

 In LaToya J. Murray’s “Sarbanes-Oxley Code of Conduct Requirements,”

Chron.com, accessed July 29, 2017,

 Ethics Research Center, “National Business Ethics Survey (NBES) 2013,”

accessed August 3, 2017,

 Neil Weinberg, “JPMorgan Whistle-Blowers Set to Reap Record $61 Million

Bounty,” July 20, 2017,

 https://smallbusiness.chron.com/sarbanes-oxley-code-conduct-requirements-
4060.html