Codes of Ethics and Codes of Conduct

⚫ Describe the difference between a Code of Ethics and a Code of Conduct

⚫ Explain the importance of code awareness and expectations

⚫ Describe the content found in most Codes of Ethics and Codes of Conduct

⚫ Create and implement an effective Code of Ethics communication strategy

⚫ Conduct an annual employee assessment of the Code of Ethics

Learning Objectives

• Describes broad ethical aspirations

• Sometimes referred to as Values Statement

• Has a few general principles to guide behavior

• Principles describe the kind of people we want to be

Code of Ethics:

The general principles embodied in a Code of Ethics represent aspirations. These principles can help guide a decision maker when faced with an ethical dilemma or

ambiguous situation.

Code of Conduct

• More extensively describes acceptable behaviors for specific situations

• Often developed by an employee with legal expertise

• Provides substance to Code of Ethics The Code of Conduct applies the

Code of Ethics to a host of relevant situations. You can think of the Code of Ethics as the theory, and the Code

of Conduct as the application.

Purpose and Importance of Codes

In 1960s, only 15 percent of surveyed companies had Code of Ethics

Now, nearly all Fortune 1000 companies have Code of Ethics

It’s clear that organizations have become aware of the importance of these Codes.

Exhibit 4.1 Ethics Program Growth and Organizational Size

Chapter 4: Collins, Business Ethics

The larger a company grows, the more important it is to have a comprehensive ethics program in place. In smaller companies, it’s much easier to informally

monitor employees.

Purpose and importance of codes:

Why do organizations have them?

Purpose and Importance of Codes

Demonstrate Managerial Concern for Ethics

Convey Values, Expectations, and Obligations

Meet Legal Requirements and Industry Trends

Purpose and Importance of Codes

Positive impact on employee behaviors:

• Researchers report that organizations with Codes of Ethics have higher levels of employee commitment and greater tolerance for diversity

Code of Ethics Content

• Providing employees with a list of prohibitions—things they should not do—can feel oppressive

• Make the Code of Ethics an affirmative statement of how employees should act

Code of Ethics Content

An extensive scholarly review of corporate Codes of Ethics, global Codes of Ethics, and business ethics literature found the following six values continually expressed:

1. Trustworthiness

2. Respect

3. Responsibility

4. Fairness

5. Caring

6. Citizenship

Creating a Code of Ethics

Following are 13 steps for creating a Code of Ethics as a team-building exercise:

• Step 1-Obtain approval • Step 2-Create a code-writing team • Step 3-Gather list of ethical issues from relevant

stakeholders • Step 4-Define a “Code of Ethics” • Step 5-Gather a list of ethical behaviors from

participants

• Step 6-Determine common themes

• Step 7-Draft a Code of Ethics

• Step 8-Compare to other codes and modify

• Step 9-Compare to other groups

• Step 10-Code alignment

• Step 11-Code review

• Step 12-Code communication strategy

• Step 13-Code revision

Code of Conduct Relevancy

• Codes of Conduct are based on shifting moral expectations and legal obligations

• New technologies create new ethical dilemmas requiring new ethical guidelines

Insert Exhibit 4.7

Code of Conduct Relevancy

Email • A 2009 survey reported that approximately

half of all organizations monitor email use

• Clearly note in the Code of Conduct that the employer’s right to monitor email communications on company-owned computers and network systems supersedes employee privacy rights

Another survey found that nearly 30% of organizations had terminated an employee for inappropriate email use.

Implementing an Effective Code Communication Strategy

Elements of an Effective Code Communication Strategy:

• Connect the code to the organization’s strategy • Mention the Code of Ethics in job announcements • Introduce the code during employee orientation • Annually distribute the Code of Ethics with a letter

signed by a high-level executive emphasizing the importance of applying the code on a daily basis

Implementing an Effective Code Communication Strategy

Elements (cont.) ⚫ Display the Code of Ethics in newsletters, highly

traveled areas, and on stationary and websites ⚫ Discuss the code during ethics training workshops ⚫ Mention the Code of Ethics in correspondences with

suppliers and customers ⚫ Evaluate employees on code adherence in

performance appraisals ⚫ Link code adherence to promotions and merit raises ⚫ Annually assess how well the organization embodies

the code

Annual Code of Ethics Assessment

Chapter 4: Collins, Business Ethics

What does a Code really look like?

• In small groups, use a search tool to find a code of ethics/conduct for a corporation.

• What are some of the key features of the code you found?

• How does it differ from your expectations?

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