Essay about Sample: Ethics and Business Codes

Submitted By Amritpreet-Singh
Words: 1594
Pages: 7

Business codes are widely used globally to prevent unethical means in the organization, an increasing number of companies have adopted business code ethics, 52.5% of Fortune Global 200 companies in 2004 (Kaptein, 2004) compared to 87% of Fortune Global 200 companies in 2008 (KPMG, 2008). Business codes are a set of official document disclosed by and for a business firm to guide the behavior of managers and employees (Kaptein and Schwartz, 2008). The business code prescribed are related to matters such as human rights, labor conditions, ecological environment, confidential information, conflict of interests, fraud, corruption, product quality, profits, sexual harassment and competitions (Kaptein, 2011). Business codes ethic (BCE) are the fundamentals for corporate social responsibility (CSR) which are used to appraise companies for ethical performances and citizenship. Organizations with excellent CSR are rewarded with fame and reputations (Patick M., 2011), thus leading to better sales and company’s stock price (Ron Robins, 2011). However, business code and CSR appraisal can only prevent unethical behavior in the organization to a certain extent. For example, 15% of Ernst & Young’s executives were prepared to commit unethical conducts to win businesses even though the company implemented business codes (Christopher M., 2012). In this context, business codes without strong implementation cannot prevent unethical behavior in the workplace are discussed.

Business codes are viewed as window-dressing for the organization (White and Montgomery, 1980), and are less effective compared to sector codes or laws (McClintock, 1999). The implementation of business codes could have been due to pressure by the organization’s stakeholders or forced by law (Waddock et al., 2002). Thus the organization may not be genuine about the business codes implemented, therefore ineffective in preventing unethical behavior. However other studies suggests that business codes are crucial for setting the tone, and unethical behavior tend to happen more frequently in organizations without a code (Peterson, 2002). An experiment done by Mazar et al. (2008) showed that raising awareness about existence of a business code led to less unethical behavior. Further studies made by M. Kaptein (2011), goes to show that other than existence of the code, must be accompanied by other factors such as content of code, frequency and quality of communication and embedment of code in the workplace by senior and local management plays an important role in ensuring the effectiveness of ethical behavior in the workplace. Firstly, content of the code must be précised and specific, as it determines the types of behavior acceptable or restricted (Benson, 1989; Finegan and Theriault, 1997; Cowton and Thomspon, 2000). Vague business codes are ineffective (Finegan and Theriault, 1997) as employees and management do not understand the code. However, precise and specific codes are not as significantly effective as communication (Clark and Leonard, 1998), as codes are not distributed and workers tend to not go the extra mile to find the business codes. Therefore leading to the second factor, frequent quality communications of the code. As business codes ethic are presumably ineffective unless distributed to employees (Wood and Rimmer, 2003), thus distribution of codes through memos, e-mails, newsletter/bulletins and showing videos are emphasized by scholars (Helin and Sandström, 2007; Murphy, 1988; Somers, 2001; Stevens, 1994, 2008). The frequency of the communication shows the sincerity the organization takes business code ethics and seriously the employees and managers should take it. The quality of communication of business code ethics includes 3 factors, namely accessibility, understandability and usefulness (Kaptein, 2011). Quality communications enables employees to understand and better execute the business codes ethics, thus leading to less unethical behavior (Kaptein, 2011).…