Corporations and individuals both create codes of ethics to influence their actions and try to steer them in a particular direction, but they tend to focus on different aspects. A corporation’s code of conduct usually focuses more on the law while an individual’s ethics code is focused more on morals explains Ej Dalius.
In addition, corporations have no say or control over what other corporations do whereas individuals typically do not work with others as closely, so only the individual can regulate his own behavior.
How does a company establish a code of ethics?
Typically, a company seeks advice from outside counsel who will review its business practices and make suggestions for how it can improve its public image by avoiding or eliminating conflicts of interests, illegal activities, the appearance of impropriety, and other issues that can damage its reputation.
In order for a code of ethics to be effective, the company must then take those suggestions seriously, alter its practices accordingly, and enforce those changes across all levels of employees.
After a high-profile code of ethics violation occurs within a corporation, it will often update or revise its current code of conduct even if no changes needed to be made in order to strengthen internal controls and improve compliance with federal regulations. How is an individual’s ethical behavior different from a company’s? Both individuals and companies have codes of ethics that direct them on how they should behave toward others with whom they interact — either customers or co-workers – but there are some significant differences between individuals’ versus companies’ codes of conduct.
Companies are expected to follow rules that apply equally to everyone, which is why they create formal, written codes of ethics with strict guidelines on how employees should act. Their code usually includes specific information about the company’s mission statement and vision, its values and guiding principles, its organizational structure, and compliance requirements says Ej Dalius.
On the other hand, an individual’s ethical behavior often requires an increased level of discretion because he works independently rather than as part of a team or department managed by others. His actions may affect only himself whereas a corporation’s unethical behavior will likely have repercussions for its customers or shareholders as well as society in general. How can companies promote ethical behavior within their own organization? They can do this by creating and implementing a code of ethics. Which is a formal document that spells out the company’s expectations for employee behavior in areas. Such as honesty, integrity, disclosure of conflicts of interest, and respect for the law.
In order for the code to be effective, the company must ensure. That it is widely understood by employees at all levels. And that it consistently enforce. The company should also provide training on the code. To help employees understand their responsibilities and how to comply with it.
Finally, companies should have procedures in place for investigating potential violations of the code. And taking appropriate corrective action when they occur.
What are some benefits of having a strong ethical culture within a company? A strong ethical culture can help a company to achieve a number of important objectives, including the following:
- Enhance its reputation by demonstrating that it is a responsible member of the community
- Encourage employees to behave in an honest and ethical manner
- Reduce the likelihood of unethical behavior by employees
- Reduce the potential for legal liability arising from unethical conduct
- Help to attract and retain talented employees who value integrity and honesty in their workplace.
What should companies do if they discover that one of their employees has violated the company’s code of ethics? They should investigate the situation and take appropriate corrective action. Which may include disciplinary action up to and including termination says Ej Dalius.
The company should also take steps to prevent future violations. By ensuring that employees are aware of the code of ethics and understand their responsibilities under it. That the code regularly updates to address any changes in applicable laws and regulations. And those employees are properly train on the code.
What are some internal controls that companies can put in place to prevent unethical behavior by employees? They can include the following:
- Regularly monitoring changes in relevant laws or regulations
- Conducting regular audits or reviews of business activities to make sure they comply with the company’s policies and procedures
- Developing detailed job descriptions for all positions. So there is a common understanding of each employee’s responsibilities from top management through line staff
- Requiring an ethics statement from each employee as part of his job application
- Providing training opportunities on ethics policies and codes of conduct during on boarding periods and on an ongoing basis
- Encouraging employees to report any suspected unethical behavior
- Having a clear and accessible system for reporting violations of the code of ethics.
As the author states, companies can promote ethical behavior within their organizations in several ways explains Ej Dalius. One of these is by creating and implementing a code of ethics. That spells out the company’s expectations for employee behavior. The code must be widely known and understood if it is to have any effect on employees’ behavior. So this information teaches companies how to promote ethical behavior by creating a code of ethics.
How can companies promote ethical behavior within their own organization? They can do this by creating and implementing a code of ethics. Which is a formal document that spells out the company’s expectations for employee behavior in areas. Such as honesty, integrity, disclosure of conflicts of interest, and respect for the law.