Designing an Organizational Code of Ethics

A code of ethics is a useful document that organizations need to abide by in order for employees and stakeholders to be protected from unethical behavior, unethical decisions and most importantly, unwanted lawsuits. However, a code of ethics alone will not ensure that all employees will be ethical (Johnson, 2012; James, 2002). Leaders have an important role in modeling appropriate ethical and moral behavior (Brown, Trevino, & Harrison, 2005; Ruiz-Palomino & Martinez-Cañas, 2011). The purpose of this paper is to design a code of ethics, discuss how it was developed, a rationale explaining how the code was developed, similarities between personal ethics and the designed code of ethics, and an analysis comparing the code to two other organizational codes of ethics.

The development of the organizational code of ethics took into account the overall organization and how employees will focus on moral and ethical virtues such as honesty, respect, fairness, responsibility, reliability, integrity optimism, humility, trust, and trust (Brown, 2005; Johnson, 2012). Having a high degree of character is an essential component and can be the difference between the success and failure of the organization or leader (Johnson, 2012). When developing the code of ethics it is important for employees to understand that the code is not a set of rules, but a document that encourages rational judgment (Dienhart, 1995) when dealing with customers, business partners, and stakeholders. The written code of ethics was designed to ensure that the organization and employees do not fall short of being moral agents for the organization and society (Johnson, 2012), for example, there is a high level of corporate and social responsibility (Kotler & Lee, 2005; James, 2002).

However, when developing the code of ethics it was necessary to avoid falling into Dienhart’s (1995) three criticisms of organizational code of ethics, which are “ethical codes are conceptually and ethically incoherent, ethical codes are not effective, and ethical codes promote unethical behavior” (p. 226). Therefore, to avoid being incoherent the language of the code was simple so employees could read and comprehend their moral and ethical responsibility. To avoid ineffectiveness, the code of ethics is outlined so representatives will not receive gifts, the code protects the integrity of the organization, and representatives report unethical behavior. In an effort to avoid Dienhart’s third criticism, the code was designed for employees to understand the ethical and moral standards and to understand the unethical behavior that is deemed unacceptable. Another important consideration when developing the code of ethics was based on Briloff’s (1978) comment that petty offenders of codes of ethics are punished severely, while top-level officials typically get away with more complex offenses. To prevent this phenomenon from occurring, it is imperative that the board of directors and upper-level management are held equally responsible for their moral and ethical behavior.

Code of Ethics

• This company and its representatives will operate as an ethical organization by focusing on honesty, respect, fairness, social and personal responsibility, reliability, integrity, justice, and trust when dealing with customers, employees, business associates, and stakeholders.

• Board of directors, top management, managers, and employees will make sound decisions based on ethical and moral principles. More specifically, when making decisions, representatives of the organization will not accept bribes, kickbacks, gifts, or place themselves in a position where there is a conflict of interest when dealing with customers or other business associates.

• Organizational representatives will protect the integrity of the organization by not sharing pertinent information (e.g., marketing plan, customer data bases, records important to daily operations) with competitors or outside entities that could place the organization at a competitive disadvantage.

• Representative will honestly and accurately report information to all stakeholders and the public to ensure that the organization is represented as an ethical entity.

• Representatives of the organization have a duty to report illegal, dishonest, fraudulent and unethical behavior to human resources. If representative violate the code of ethics then representatives could face discipline and/or termination, depending on the circumstances.

After drafting the code of ethics and reflecting back to the design there were some similarities between the drafted code and my personal ethics and beliefs. To begin, the design was based on my belief of how a people are connected to the larger picture. As a result, the code of ethics was designed to hold the organization to a higher level of corporate and social responsibility while ensuring that decisions were made ethically and free from outside influences. In addition, the focus of the code of ethics is on how leaders shape followers by modeling appropriate moral and ethical behavior, which is why I included board of directors and managers in the code. After the implication of the bigger picture is considered, the code of ethics is designed to hold individuals accountable for their behavior and actions within the organization. There is an emphasis on individual accountability and high level of personal integrity and honesty. Personal accountability and integrity are two of the most important virtues that are part of my personal ethics.

When comparing and contrasting my organizational code of ethics to Berkshire Hathaway and US Bank’s code of ethics there are unique similarities and drastic differences. The similarities of the codes consist of the adjectives used to describe the ethical and moral virtues each organization wants their employees to strive for; words such as integrity, respect, and responsibility are some of the guiding words. Another similarity each of the code of ethics share includes conflict of interest, confidentiality, and accurate reporting of information. Lastly, the code of ethics also has a section stating how disciplined will be addressed for violators.

In contrast, one difference between the codes of ethics is the length of the Berkshire Hathaway (1994) and US Bank (2012) codes of ethics. The code I designed was short and succinct. However, this is attributed to my lack of experience with developing a code of ethics for an entire organization. Davis (1978) commented that a code of ethics should be written by a group of people to ensure a code of ethics is all encompassing and broad. Another important component the Berkshire Hathaway and US Bank code of ethics pose was a series of questions to determine unethical manner among employees. US Bank called this an “Ethics Quick Test” (p. 6) and Berkshire Hathaway termed these questions to keep in mind when conducting business.

In conclusion, a code of ethics is a document organizations develop and implement to ensure that employees adhere to appropriate ethical and moral behavior. The document is not a stand-alone document to ensure ethical behavior. Rather, it is a combination of the code of ethics and a leader modeling appropriate ethical behavior that will prevent unethical acts. Therefore, the code of ethics designed for this assignment is the first step in developing an organizational culture based on sound ethical principles and beliefs. Operating an organization based on sound ethical principles is good business that will collectively benefit employees, stakeholders, and society.

References

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