Ethics in Corporate Governance - Essay Example

Corporate governance helps to bring a supreme level of satisfactions to five different constituencies, such as employees, customers, vendors, investors and societies. Effective corporate performance and successful markets are based on a commitment to fundamental ethical principles. Ethical standards can be expressed in a formal conduct requirement of the organization which can guide preferred behavior of an organization. Six Steps Majority of the successful organizations implemented several codes of ethics for their employees to conduct in an appropriate manner while practicing business operations.

Corporate ethics are considered as the guiding principles. “Ethics helps to build mutual relationship and develop the sense of social belongingness” (Sison, 2008). Effective corporate governance can be achieved through best practices and set of principles. An effective deal depends upon the honesty, integrity and manners. Corporate governance determines how an organization is managing their relationship with their stakeholders and shareholders. Ethical investors always expect transparency and honesty from the organizations.

Six steps can be recommended to the board of an organization in order to maintain ethics. The board of the organization must implement their own fundamental capabilities and values. This will help them to optimize their leadership potential. They should build an organizational environment of trust with their investors and employees. Moreover, all the stakeholders of the organization should feel free to discuss several ethical issues and dilemmas with the board of the organization. It is the important for the organizations to clarify and announce the responsibilities and roles of the management and board in order to provide an effective level of accountability to the stakeholders.

“Material matters’ disclosure should follow transparency by the organizations” (Fernando, 2009). The board of the organization should ensure that all the investors have effective access to the factual and clear information. Therefore, it can be stated that ethics play an important role in corporate governance and organizational performance. If the organizations have high reputation for effective ethical behavior, it can engender both employee and customer loyalty. Board of the organization should ensure that ethical codes and vision of the organization is communicated to every stakeholders of the organization.

The board should integrate these codes with the ethical vision of their company. This process can be executed through policy manuals, newsletters, team meetings, corporate meeting with investors, and several training events. The board of the organization should ensure that the organizational culture and behavior are following ethical vision. Reports regarding unethical behavior need to be thoroughly investigated by the board. Moreover, it is their responsibility to punish the violators of corporate governance and ethical standards.

In addition, the board should provide rewards to those employees who are maintaining positive ethical behavior. Most importantly, the organization should provide all true and factual information to their investors and other stakeholders. Last controlling and sustaining ethical behavior will be the last step for the board of the organization. They need to execute survey process in order to know the ethical behavior of the organizatio