Creation and Evaluation of Code of Ethics - Essay Example

• Creation and Evaluation of Code of Ethics

• Introduction

Ethics involve the concept of determining what is wrong and right, whereas the Code of Ethics is the belief that rules the behavior of an individual or a group. It can be regarded as the mechanism to establish ethics within the organizations. The code of ethics consists of the rights and duties of the organization towards all its stakeholders. It articulates the “ideal social contracts” between the organizations and its stakeholders. It is grounded on the ideologies of objectivity, integrity, confidentiality, along with competency (Hughes.et. al, 2009)

• Part I
• Ethics and social responsibility influencing business manager

Ethics is the moral judgment for ascertaining wrong and right in any conduct or activity. Social responsibility is the framework that enforces every individual for ethical practices. Reputation is one of the important assets of the company that can be affected, if the company does not abide by ethical values and social responsibilities (Rex Bookstore. Inc, 2007).

The business managers should be able to identify the ethical concerns that arise in the organizations. The mangers should ensure that there is there is no conflict of interests or miscommunication, conduct the activities with fairness and honesty, and should consider the welfare of the customers as well as other members of the society. The managers should make every decision considering the culture, status, moral, and values of the customers (Hughes, et. al, 2009). The factors that affect every business managers are illustrated below.

Customers’ opinions. It is important for the mangers to know the opinions of the customers regarding those particular products. Different customers have different values, cultures, religious views, morals, and other social aspects. The more sales results more profits and so the products should not have a negative impact on the customers belonging to the particular society. Therefore, it is very crucial for the mangers to consider customers’ choices and preferences, along with that identify the potential customers and influence their buying decisions (Hughes, et. al, 2009).

Employees within the firm. The employees are the foundation of the organization; it is the duty of the mangers to motivate the employees to work for the organizational benefits by considering the ethical and social values. In this regard, every individual in an organization should work with fairness, morality, and respect for each other. The mangers should make an effort to increase the productivity and to reduce the absenteeism of the employees or labor turnover. For this, he/she should provide the employees with facilities, incentives, and convenient working conditions and by considering their grievances (Hughes, et. al, 2009).

Reputation of the company. Considering the fact that reputation is one of the major assets of the company, the managers should take effective measures for its sustenance. The company should work considering their ethical values and in a responsible way. When the company works with the strong business ethics, the employees would feel more convenient in working by considering the fact that they are performing without any unethical practices. If the company works in an ethical and responsible way, then the investors would be easily interested to invest and maintain the company’s share at high rate that protects the business from takeover (Hughes, et. al, 2009).

The customers buying. The customers would be convenient in buying, if they know that the particular company provides their products and services in an ethical and responsible manner. For example, a paper company that emphasizes in manufacturing the papers by recycling waste papers or with sustainable plants without causing deforestation. It also involves by ensuring no local life is damaged and contributing to the society (Hughes, et. al, 2009).

Therefore, the ethics and social responsibility influence businesses. Ethics deals with moral standards to the behavior of the organization. On the other hand, the social responsibility refers to the obligations of the business over its legal responsibilities for the security and interest of every individual working in an organization, shareholders, customers, and the society (Hughes, et. al, 2009).

• Code of Ethics

A code of ethics has an important role in any kind of business. It helps in reducing the uncertainty or ambiguity within the organization and considers the individuals’ perception in ethical standards and other decision-making process.

Purpose

A code of ethics provides guidelines for a manager to take decisions. Code of ethics is the framework that every individuals of a company must follow towards the common goal. An effective code of ethics helps to protect the reputation of the company, which involves taking legal action if violated by the employees.

Scope

Every individual within the organization including the top management and other senior executives should practice the policy.

• Established Code of Ethics

Morality. Every working individual is confined to work with honesty and fairness. Any fraudulent act is not supported. The company must abide by ethical values. Each individual shall be obligated to conduct the business with morality and integrity to ensure confidentiality regarding the mission and private information of the company.

Respect for every individual and the customers. The company respects every working individual, wherein it ensures strict confidentiality of personal information of each individual. No employee should conduct unfair dealings, misrepresentation with the customers or with any individual within the firm. The company believes to have open communication with everyone. The appropriate ideas and opinions of every individual are equally considered.

Avoidance of conflict of interests. Every employee has different views and opinions, but the company believes in avoiding the matter that leads to conflicts of interests. The company personnel are obligated to file a report for any kind of issues relating to the conflict of interests.

Professional conduct. All the activities performed within the company should be conducted professionally. Every working individual should support the decision of the company. The company would also look forward to any kind of recommendations from the employees as per the requirements. The issues of the company should not be influenced by any external factors, except the interests of the company or clients.

Welfare of the society. Every working individual should work to achieve the common objectives of the organization by considering ethical values, and being socially responsible.

• Employment law

It is necessary for every working individuals to follow the code of ethics with honesty, trustworthiness, sincerity, and impartially. The employees are expected to be familiar with every procedures of the code suitably. In case the policies are not clear, it may lead to the occurrence of conflicts in interests. The employees are expected to consult with the legal advisors, if they become a victim of harassment, discrimination, threat, and exploitation. The person should immediately report to the management group, so that necessary action is taken, if the individuals having a serious health issues, for instance suffering from communicable diseases are not allowed to join the working place. Any criminal behavior of the employee within or outside the company will be terminated immediately; the person is even liable to go to jail. Any confidential information should not be disclosed outside the company. The employees are expected to have fair dealings with the customers. Any fraudulent act or misrepresentation should not persist within the organization. The members are encouraged to support make affordable contribution for development of code and to present their ideas and advice to the managers that would be forwarded to the director

• Mechanism for violating the code

It is not just sufficient for a company to have a strong code of ethics to run the business process smoothly. There is no certainty that the members would not fail to follow the code effectively. To make sure that the employees are aware about the code without any fail, the mechanisms to report violations should be established in a confidential manner.

There are few mechanisms for reporting the violations that may include reducing of the unethical behavior in the organization, and increasing the awareness programs towards ethical issues. It also involves encouraging in greater willingness to report about the bad news or unethical issues in the management, encouraging the employees’ commitment towards the firm.

Whistle blowing is the effective tool for exposing the activities going against the company’s code of ethics. It is a process where any person (also known as whistle blowers) reports for the unethical practices within the organization. The whistle blowers could be within the organization or outside. For this, he/she can take the help from government or media. However, the whistle blower sometimes has to face pay back or revenge from the accused person.

• Consequences for violating the code

The code of ethics is important for the entire organization and the people working therein. It ensures in reducing the ambiguity, maintains good relationship among the workers, customers, shareholders, and other personnel within the organization (Flanagan &Flanagan, 2015).

The person who is accused of breaking law or conducting activities against the organizational policy of the company is punishable. Moreover, the person dealing with unfair practices, misrepresentation, and fraud with the customers or causing harm to the public interests. In case of severe criminal activities on the job or off the job, the particular person is removed from the organization and is liable to go to jail (Flanagan &Flanagan, 2015).

• Part II: Analysis and Evaluation
• Effects of the code

The code of ethics is mainly the guidelines set by the mangers that the whole organization needs to follow. It enables the employees in effective decision-making process and has great effect in the work practices. It enables the company to operate in the same standards, but its effectiveness can be evaluated only when the company implements and executes it. The code of ethics has considerable impact on the owner of the business, the organizational mission, and society (Hughes, et. al, 2009).

The main source of code of ethics is the owner of the business. There would be smooth functioning of the organization, if the business manger sets his policies and procedures based on the ethical and social responsibilities. The organization’s mission statement should be based on the code of ethics, which can also be used as a mechanism for providing training to the new employees. It also enables the employees to work with mutual trust in harmonious and unambiguous environment. It is made for business purpose, as it helps to provide understanding and accepting of the ethical values and social responsibilities. Moreover, it handles the situations related with the company, government, and the society (ProQuest, 2007)

The code of ethics could be based on the cultural and social value. Different people from different location, cultures, or society have different understandings for business, morals, and ethical values. The code of ethics if developed at an International level of business, it may meet the ethical expectations globally (Shaw, 2015).

Moreover, the established code of ethics could affect the workers, customers, stakeholders, government, and the public as well, if not implemented or executed in an appropriate manner. If the purpose of the code of ethics is unrealistic and unclear, it may cause ambiguous and chaos among the working people of the organization. Eventually, it causes failure in achieving the organizational goals. If it is not made considering the interest of the customers and the public, the company will have a poor reputation (Mele, 2009)

• The corporate social theory of responsibility

The Corporate Social Responsibility (CSR) enables the employees to behave in a socially responsible way. The CSR theory is based on the responsibility to make profit and to behave ethically with the customers and with the society (Creative Commons, 2012). The CSR can be broadly categorized into four obligations, which are illustrated below. (Creative Commons, 2012)

Economic obligations. The economic obligation is the foremost decisive aspect that the company has to consider, which emphasizes in making money. The company that cannot maximize its profits or sales volume cannot survive in the modern market, hence destined to perish. If there were no profit there would be no business, correspondingly if there were no business there would be no business ethics. Nevertheless, it is very different in case of non- profit organizations, wherein the theory is different that can run without earning a profit. The money is made through their individual working as well as through funds and donations (Creative Commons, 2012)

Legal obligations. It is the form of CSR, concerned with the rules or obligations, which needs to be understood in a practical way. The responsible organization considers the rules as an effort to be socially good. The employees are obligated to follow the rules or the company as well as the government (Creative Commons, 2012).

Ethical obligations. It is the obligations of determining the right and wrong activities, and thereby conducting the right tasks. It is the obligation made by the business to behave in an ethical way and to contribute for economic development and at the same time improve the quality life of workers as well as of the society (Creative Commons, 2012).

Philanthropic obligations. It is the obligation made by the company through social contribution. They also donate their part of share to charitable trusts, along with duly paying of the taxes (Creative Commons, 2012).

• Code of ethics influencing business world

Business organizations create guidelines to be followed by the every working force in the organization. The code of ethics enables them to work in equal standards. It helps the employees to shape their ethical behavior in a socially responsible way (Flynn, 2008).

The code of ethics consists of ethical values and social responsibility that can be implemented in the organizational mission statement, which provides the company with a guideline that helps to face the challenges faced in business environment (Flynn, 2008)..

The code of ethics helps to maintain the business relationships. The ethical values comprises of the way business handle to answer the customer questions or feedback, face negative business environment, and handle contract negotiations. The ethical values also guide to work with the other companies and deal with the society (Flynn, 2008).

The business organizations use code of ethics to exclude the unacceptable behavior of the employees like involvement in fraud, untrustworthiness, dishonest, and untruthfulness among others. The code helps the employees to understand the reason for the action taken for unacceptable behavior. The employees are thus motivated to perform in a better way (Flynn, 2008).

The owner of the business and the top-level management has an important role in the code of ethics. They encourage every individual to work with ethical practices and maintain responsiveness for their every action (Flynn, 2008).

The code helps to improve the working environment of the organization, as the code comprise of moral values, respect for every individual, equality, unity, and these factors enables an appropriate working environment (Flynn, 2008).

Moreover, it helps in making appropriate decisions regarding the business issues, as the organization is affected by the decisions made by the employees. The code should be made by considering the employees culture, values, and beliefs. The decision making process helps in identifying the problem of the organization, gathering of the required information, sharing of ideas and opinions, which in turn motivates the customer to achieve the common organizational goals (Flynn, 2008). .

• Effect on society and international legal environment

The code of ethics supports the respect of human rights and maintains the political factors related to the business without causing any negative effects to the society. The opinions and sensitivities of employees belonging to the different cultures and communities are equally respected. It enables the employees to manage their responsibilities and focus on positive effects related to business environment. The code emphasizes on maintaining amiable relationships with the public authorities without accepting any kind of commissions or offerings from the public. The code enables to contribute to the political parties only according to the existing legislation by assuring the transparency between them. The code emphasizes in collaborating with the public and private entities or any organization dedicated to develop and improve the society (European Corporate Governance Institution, 2016)

• Problems associated for implementing the code

The business organizations witness various problems while implementing the code of ethics, which are illustrated below.

The insufficiency of the code. The code should not be informal or should apply any unofficial practices apart from the code. The code should be meaningful and enforced by the systematic practices and supported by the management. The professional training for the ethics should be conducted (Whitton, 2001)

Culture. The culture of the people also affects the implementation of code. The newly made code does not gain much support immediately from the public. Thus, the code should be created by considering the cultural aspect of the people (Whitton, 2001)

Design of the Code. Design of the code of ethics also creates a problem in its implementation. The new code should not include any informal practices. The implemented code should be updated regularly with the ongoing business challenges (Whitton, 2001).

Enforcement. Enforcement of the code is also one of the problems for its implementation. If the code were not enforced in a proper manner, then the employees would fail to fulfill their respective duties. The code should be clear about the consequences for violating the law or for applying unethical issues (Whitton, 2001).

• Anticipation regarding implementing the code

To make an effective code of ethics or to avoid the above stated problems in future, some of the points need consideration. In this regard, it is decisive to forecast the factor causing threats to the ethical values in the working place that may harm the public interests. By adopting the new methods to improves the ethical values, to make the decision-making process more effective. The unofficial practices should be avoided. Moreover, it is necessary to apply the innovative ideas associated with the emerging trends in the business world (Whitton, 2001).

Conclusion

Code of Ethics consists of the set of principles and prospects, which governs the behavior of individuals or groups. It can be regarded as the mechanism to establish ethics within the organizations. The code of ethics consists of the rights and duties of the organization towards all its stakeholders. It contains behavior principles and a rule for conducting the process of decision-making.

The essay is mainly inclined towards determining how the ethics and social responsibility affects the business. The code could be effective only when it is enforced and implemented in a proper manner. Moreover, it elaborates the mechanisms to control the breaches of the policies and its consequences. It is also apparent from the essay that the code of ethics should be made based on the culture, moral values, and beliefs of the public officials.