CODES OF ETHICS

What is Codes of Ethics?

•A code of ethics is a guiding set of

principles intended to instruct
professionals to act in a manner that is
honest and that is beneficial to all
stakeholders involved.
 When huge corporate scandals began to proliferate,
companies began creating communications propaganda
for building corporate reputation. Feeling a need to
improve their images and facing increasing accusations
of corruption, businesses turned to ethical codes to
publicize their virtues and create a more positive
impression with stakeholders.
 Creeds or credos

Were the first called American ethical codes and those in the
1980’s were considered “legalistic” and more likely to talk
about ethics or the reputation of the company”(Benson, 1980,
p. 308); they showed concern over issues like affirmative
action.

Recently they were defined as written documents which

attempt to state the major philosophical principles and articulate
the values embraced by the organization (Stevens, 1996).
 Codes articulate ethical parameters of the
organization - what is acceptable or not.

Have been defined multiple times by Journal

of Business Ethics.
 Kaptein and Wempe (2012)
Nijhof et al. (2003)
-describe codes as policy
documents defining responsibilities -note codes contain open guidelines
of organization to stakeholders and describing desirable behaviors and
articulating the conduct expected of closed guidelines prohibiting
employees. certain behaviors.
Kaptein (2004) Stevens (1994)

-codes as instruments to -mission statements

enhance social responsibility, articulate the objectives of a
codes clarify the norms and company and declare what
values the organization seeks goals the organization
to uphold. intends to accomplish.
 Ethical codes differ from mission
statements by articulating the value system
and answering the question.

 Sufficient new evidence exist to show that

corporate codes can successfully moderate
ethical behavior.
Among the four types of organizational structure in Saucer’s (2008)
taxonomy, the culture of character is the ideal.

Sims (2005, p. 396)

-the organizational cultures whose leaders and members are truly
committed to ethical conduct and make ethical behavior a fundamental
component of their every action.
-they put a stake in the ground, explicitly stating what the organization
intends and expects.
-value statements and codes of ethical conduct are used as a benchmark
for judging both organizational policies and every individual’s conduct.
-they do not forget that trust, integrity, and fairness do matter, and they
are crucial to everyone in the organization.
 Carl Skoogland (2003)
oThe former ethics director of Texas Instruments.
oHe argues that “Ethical managers must know what is right,
value what is right, and do what is right”.

These are indeed the three key principles that are essential in
the practical and successful management of ethics at the
organizational level. But some leaders and members of
cultures of defiance may or may not know what is right, but
they certainly neither value nor do what is right.
Leaders of cultures of compliance, from this same
perspective, know what is right and even do what is right ,
but do not value what is right. Consequently, members of
these firms may be tempted to bend or break the rules
when opportunities occur and may even be surreptitiously
rewarded by their supervisors and peers for doing so. In
cultures of neglect, there may be a conscious effort to
know, value, and do what is right, but-through some (often
unconscious) flaw in the culture – this effort flags through
lack of diligence, resulting in a breach of moral standards
Finally, in cultures of character, positive moral
values are ingrained throughout the organization
such that all of its members strive without fail to
know what is right, value what is right, and do
what is right. This is an organizational culture
grounded in moral character. A culture of character,
thus, is the type of organizational culture in which
positive moral values are ingrained throughout the
organization.