Because of the increased scrutiny on the actions of corporations and those who act on behalf of organizations, there has been increased attention placed on the ethical actions within organizations. Many organizations have responded to this increased scrutiny by establishing formal ethics programs to address what are appropriate actions for those working for the company. There are several components of an ethical program; they include code of ethics, code of conduct, statement of values etc. this article will explore an ethical program with a bias on code of ethics.
A code of ethics is the most comprehensive of all ethical programs. It consists of general statements that are an inspiration and serve as the basis of rules of conduct. It specifies modes of reporting violations, disciplinary action and the structure of the due process. It may also be defined as a statement of the values adopted by the company, its employees and its directors. It is also a part of a broader, ongoing program to provide guidance for ethical decision making and to prevent misconduct. These broader programs must be actively managed and should include training for employees and directors, monitoring of compliance and regular report to the board.
There are many formats and approaches in developing a code of ethics. It requires one to take an examination to help determine the key purpose you would like your code of ethics to fulfill, either you want it to focus on specific conduct concerning certain individuals or more general standards and also how the code will operate amid the existing policies for board members and staff. It is also important to determine who will participate in drafting the code. Ethics taskforce or committee that includes primary staff representatives is one of the approaches to consider.
Key areas to include in creating a code of ethics
One of the key areas to include when creating a code of ethics is the purpose and the values of the business. This includes the service being offered, the group of products or set of services, financial goal of the business and the role in society as the company see s it. The key area in this company will be to provide consultancy services to nongovernmental organizations. Employees are another very sensitive area that should be included in the code of ethics pertaining the business. The company should value employees, their working conditions, recruitment, health, rewards, training and development, equal opportunities, retirement, diversity harassment and discrimination as indicated in the company’s policies ( Peter,1997)
Customers’ relation is something else to include in the creation of the code of ethics. The importance of satisfying customers and having good faith in all agreements, fair pricing, and quality and after sales services should be encouraged and maintained in the company. Shareholders and other providers of money in the company should be aware of all activities being undertaken by the company. The company should protect investment made and advance good returns on money lent. Also communicating on time and committing to accuracy of prospects and achievements is a key area of ethics.
Other players that must also be considered in developing the ethics program are the supplier .Efforts should be made to ensure that suppliers are paid in time, for the company to achieve quality and efficiency. Excess hospitality and bribery should not be given. It should be the aim of the company to protect and preserve the environment. The company should also consider implementation of codes issued, assurance and reporting reviews. Basically, a code of ethics should attempt to achieve the following; trustworthiness, respect, responsibility, fairness, care and citizenship.
Codes of ethics may not be effective if the distribution, training and support of management is not incorporated into the corporate culture.
Developing an appropriate ethics training program
In this challenging business environment of the 21st century, ethics in business is widely discussed but misunderstood in most cases. News on corruptions scandals in the corporate world have permeated the internet and television news, creating amazing headlines and sending heads wagging at the high degree of dishonest of business executives. This has been as a result of the lack of an appropriate ethics program.
Business ethics training for employees has to include all aspects of conducting ourselves ethically in a business environment. The first and the most effective way of training business ethics is to lead by example. Training won’t mean formal classroom learning but also can be conducted in the conference rooms and in the hallways while employees go on with their duties. Leaders in the company have to show their employees that it is possible to be successful in maintaining high standards of ethics (Brakel, 2007).
When a leader in a company sets an appropriate example, the employees are more willing to participate in training. Employees that witness their managers, supervisors or company owners conducting themselves in an unethical manner will not see the relevance of training and may brand it hypocritical. Business training shouldn’t cover the obvious such as concealing products flaws or falsifying records but should also touch everyday seemingly mundane topics such as inappropriate conversation about offensive emails and workers. It should be conducted over a period of a couple weeks or months and repeated throughout the year. It should not be a one hour topic and then forgotten until recruitment of new workers but should be an everyday activity all year round.
An ethics training program should address a number of factors as explained below. it should help employees identify the ethical dimensions in business decisions. This means that the ethical training program should be geared towards assisting employees to understand the ethical aspects of the business decisions that they make. This is important in improving ethics in an organization.
An ethical training program should also be geared towards addressing the complexity of ethical issues. A training program should assist employees to understand that ethics are very much intertwined with the success of the business in general and thus ethics should be taken very seriously in the conduct of everyday business.
Dag asserts that an ethics training program should stress the fact that no unethical behavior is justifiable by emphasizing that;
Whether discovered or not, unethical behavior cannot be justified;
Unethical behavior is never for the best interest of the company;
The firm is responsible for all the unethical behavior displayed by its employees and this calls for high standards of ethics in the organization;
A system of monitoring, assessment, audit and reporting of misconduct;
Auditors are very good for the assessment of control activities-the procedure, policies and aggregation of duties that exist. Auditors are very reluctant in assessing the control environment including criticizing management philosophy, attitude, styles of operational and competency when necessary. Most of the major frauds can be traced to the lack of efficient control environment but not the lack of control activities. Organizations fall when management overrides the system of control.
Auditor’s ethics are quite as important as the management ethics. The basics of our profession should not be forgotten which is a serious problem affecting the credibility and accountability of any profession. It is quite easy to think of asset in terms of bits and bytes on a computer failing to verify the existence of an asset that has been at the heart of many frauds that auditors missed. In today’s business environment with color copiers, scanners, color printers and access to corporate logos on the net, it is even easier for the manufacture of a document.
Companies external auditors should conduct an annual review in accordance with the audit plan of the companies material internal control effectiveness and management. Any failure in internal control or material non-compliance and recommendations for any improvement should be reported to the management. The auditor should review the effectiveness of the taken action by management and the recommendation made by the external auditors in this respect. Risk management and processes and management systems of internal controls in the company should be designed to manage rather than eliminate the risk of failure to achieve the company’s strategic objective.
Developing a plan to review and improve the ethics program overtime
Ethical behavior, integrity and honesty are issues that senior executives mostly identify as top priorities on their companies agenda. However the mere presence of codes of conducts, publicized reporting systems ensure a company has eliminated an environment that allows or encourages unethical misconduct. This is absolutely true when one is in constant pressure to perform and meet objectives for short term obligations are driving the employee’s behavior.
Depending on the size of the company, it faces different compliances risk .It is very possible to identify which compliance risk are of greater concern by reviewing training courses which employers are most frequently required to complete. The company should explore all aspects of a decision and weigh the option surrounding the courses of action.
To make everyone’s performance as individual or teams much easier sharing of business ethics and values should be practiced. Employees actually should know what they can do and what they can’t. Communicating business ethics within the vales statement is the first place to begin.Commmiting business ethics and values to writing and making sure that everybody is actively engaged in modeling the desired behavior. Procedures should be analyzed and policies reviewed to ensure that these same policies.
Ethics are critical to the success of an organization in modern times. An ethics program outlines the major ethical issues facing an organization and the organizational efforts to maintain a good ethical relationship with other stakeholders. An effective ethics program should thus be geared towards the attainment of fruitful results for the organizations long term survival.
Brakel, A (2007). The Moral Standard of a Company: Performing the Norms of Corporate Codes. International Journal of Business Governance and Ethics 3 (1):95-10
Dag G. A (2004). Ethics behind “Business Ethics”. Journal of Business Ethics 53 (1-2):3-8.
Peter W. D. (1997) Issues in business ethics: Rutledge