Shaping Organizational Code of Ethics - Research Paper Example

 Organizational Code of ethics Introduction Current economic scenario has compelled business entrepreneurs to review their organizational code of ethics and fiscal policies. The recent economic depression and adverse fall of corporate giants were the consequence of ethical decline in their business and accounting practices. Obviously many of them have failed to comply with legal obligations and ethical objectives. Besides the governance of Organizational Regulations and Acts, a publicly accounted company should have a code of ethics of its own which is highly significant in determining the overall performance of its employees. Code of ethics to a company means the set of principles and concepts that is designed by its operators to achieve the proposed objectives and goals by ensuring the collective effort of all employees and individuals adhering to the requirements of community, law, employees and shareholders. Moreover, code of ethics is not merely a set of ambiguous ideas; instead it has a legal backup and so is mandatory. In this paper I try to develop the code of ethics of a midsize leather manufacturing and exporting company, by adding some more provisions which I find relevant. Code of ethics and legal compliance To illustrate, SOX 2002, section 406 proposes that any failure to adopt a code of ethics must be disclosed to SEC in organization’s annual report. Therefore having a code of ethics alone will not do, moreover it has to be practiced and informed to the legal authority. In short, a company is answerable to law for its failure in adhering to its code of ethics. For example, sections 103 also states that, ‘registered public accounting firms must adhere to the rules determined by the PCAOB regarding auditing, quality control independence, ethics, rules and standards’(cited in Anand & Wilkinson, 2008 p.35). In order to comply with the PCAOB requirement organizations have to establish ethics rules and standards of conduct, or alter or modify them whenever necessary. Selected Organization’s Core values and provisions The result of some informal interviews and surveys conducted among the customers, employees, and shareholders of the organization indicate the need of time to time revival of code of ethics. This study would reveal both the weakness and strength of the organization’s current code of ethics. Given below are the core values of the organization in brief. The preamble of the code states “this code of ethics describes the basic principles of conduct that we are bound to maintain as managers, staff, and employees in order to accomplish the business objectives along with gaining the trust of its shareholders and customers.” The core values of the organization can be summarized as follows; - This company is established for the overall wellbeing of its employees, operators, shareholders and other benefactors. - This company shall operate its business activities with a socially responsible approach. - This company shall comply with legal as well as moral obligations of the place and jurisdiction of its operation. -This company shall consider the trust of its shareholders and customers most valuable and shall provide them with adequate information, service, and dividend. The main provisions described in the current code are; 1) Conflict of interest 6) Multicultural policy 2) Organizational opportunities 7) Reporting misconduct 3) Relation with other organizations 8) Legal compliance 4) Gifts and donations 9) Shareholders’ privileges 5) Non discrimination policy 10) contractors A detailed analysis could prove that many of the essential factors have been omitted from this code. The following part of this paper would discuss the vital provisions that could be included in it, with examples and reasons, and with the assumptions gathered from interviews and surveys. 1. Rewards system The current reward system of the company is given below followed by the comments of some employees. It would help us know whether such reward system is fruit bearing or not. Here are some incentives and bonuses the company used to give the employees since its commencement. Completion of service year bonus: This bonus will be given to the eligible candidates who successfully enter in to a second year or complete the subsequent annual contract. Reward for exceptional performance: It is the bonus that may be given to an employee who has made a significant and exceptional contribution to the successful accomplishment of the company’s intended mission. Bonus for outstanding performance: It is an incentive in the form of increase in pay for an employ with an overall performance evaluation. Individual recognition day: Eligible Candidates will be selected from each department on this day for receiving a special remuneration for their overall performance. This system would attract new candidates perhaps unluckily only particular category of behaviors that have money as their motivating factor. Moreover it is inappropriate to motivate desired individuals in a modern organization. For example, the completion of the service year bonus becomes a regular yearly basis reward and thus not satisfactory to motivate or retain the desired behaviors. Moreover the system has failed to introduce group incentives or rewards to motivate the different departments as a whole while the harmonious behaviors have great impact in health care organizations. The fiscal importance of the strategy would lead to goal disparities which can adversely affect the smooth functioning of the organization. Common benefits such as vacations, sick leave, and pensions and rewards like salaries, wages, commissions, bonuses and merit awards can be named individual rewards. These individual rewards are important factors in attracting individuals to work for a firm. In spite of all these rewards, many individuals are found dissatisfied. During the interview some of them shared their views regarding rewards. They were in fact paid according to their expectations and qualifications. Money was not their sole objective; instead they were interested of acquiring some intrinsic rewards mainly job satisfaction. According to Hunt (1992), if the firm needs to stimulate creativity then the job satisfaction rewards of challenge, stretch, autonomy are more effective than the compliance rewards. Almost in every organization we can see some individuals who are greatly motivated by job satisfaction rewards. Therefore the company has to design strategies to promote intrinsic rewards. 2. Health and safety ethics Another ethical factor that needs to be improved is the health and safety provisions of the company. Company has not included anything regarding the health and safety issues and possible risks factors in its code of ethics. See the result of survey on particular incidents occurred in the organization; (From April 2007 to March 2008) Death 0 electric shock 9 falls 0 Major injury 1 allergy reported 15 suffocation 5 Evidently many workers in this company are suffering from allergic problems and it indicates the existence of a particular risk. The most probable cause must be the exposure to chemical substance or other allergic or toxic materials. This conclusion would help an employer to implement measures to control or prevent the exposure. The second priority has to be given to the risk of electric shock. Although it is less frequent as compared to the other, high in potential and severity. Most of the industrial accidents are the result of negligence and paucity of awareness about the risk factors and safety measures. According to the regulations industrial operations require permit when there is a chance of any of the following or similar risks; mechanical or natural toxic, electric shock, fall from height, radiation, suffocation, chemical exposure, explosion, inflammable substances etc. In short, safety work environment is an essential factor that has to be created by employers. Safety measures include an array of procedures such as risk assessment, permit to work system and isolation. Besides all other infrastructural risk control systems, the individuals who involve in risky jobs have to use personal protective equipments to avert the related health hazards. Therefore a company should develop its own ideology regarding health and safety of its employees. Furthermore, strict supervision and monitoring should be the major managerial concern in all kind of industrial works. Individuals who involve in works should be well informed about the possible risks and they should comply with the instructions given by the responsible manager. The monitoring faculty of a firm must have competitive skill and knowledge to meet every legal obligation. If job operators and individuals adhere to the proposed safety measures and procedures, most of the occupational accidents can be averted. 3. The ethics of work and play/recreation The current code of ethics omitted the significance of ‘work and play’ balance in the professional life of employees and staff. The result of survey reveals that the balance between work and play has to be interpreted in the company because the hectic schedule has thrust heavy pressure upon employees of all segments which has resulted in unnecessary stress and strain. Many of them admit that they are either workaholic or bound to be in same condition to meet the both ends as well as to meet the assigned career goals. According to Torkildsen (2005), Play is freely chosen activity indulged in for its own sake and it exhibits childlike characteristics of joy, spontaneity, and self expression whereas recreation is usually thought of as leisure time activity tend to be more organized. Labors require enough leisure or recreation in order to revitalize their potentiality for each day’s performance. The work and play balance in a person’s life is a delicate element that can be easily disturbed; and therefore if a company interprets how and when the employees should work, they can meet their personal needs and obligations as well as their professional commitments (Sisodia, Wolfe B. & Sheth N., 2007). Play/recreation is an essential physical need for people who are involved in sedentary jobs. They require some physical activity to maintain good health. Play/recreation can help them stimulate hearts and lungs and enhance the respiratory system. It also lowers cholesterol level in the body and thus enhances immunity. In other words play is the simplest way to enhance one’s quality of life. Therefore company has to develop a clear notion of work and play balance for its employees. This opinion can be supported by the theory of Mayo (1939). He suggests that workers are not solely concerned with economic needs and material comfort; moreover they are likely to be more responsive to the influence of colleagues than to attempts of management to control them by material incentives (cited in Tyson and York, 2000 p.13). Survey report on workers opinion about work and play balance; Employees satisfied 10% Not satisfied 70% No opinion 5% Totally dissatisfied 15% 4. Recruitment and retention The company tends to follow a policy of employment and retention which presumably affect the wellbeing of employees as well as the stability of the company. For instance, one manager commented that this model does not consider the psychological needs of the workers because instead of giving proper training it replaces the labors with new candidates who have better skills. Although this employment strategy would empower the company, on the other hand it would eventually plunge the labors in to adversity. The labors presumably lose their commitment and faith in the organization because the further contribution of a worker is highly influenced by the reward derived from his present efforts. Obviously, recruiting the right person at the right job is the most important thing because the efficient workforce is the asset of any company. If the career does not match with the individual’s profile the organization will fail to satisfy the individual and vice versa. Therefore company has to formulate a new provision to solve the fear of job uncertainty. Workers should be ensured with job security and further training programs to update their caliber. The Managers of companies often find difficulties with integrating the whole staff members in order to accomplish the intended mission. “Personal integrity of the founder or owner is the key to a firm’s ethical performance” (Moore W C & Gooderl, 2008). Employers’ goals may be at variance influenced by their culture, job, age, economic status, character formation and the reward they gain from their organization. The individuals working under the same roof can not be assumed as the individuals with the similar goals. Scheduling the reward system is a highly significant responsibility of a management. When a company designs its rewards or incentives every member of the organization must be measured to obtain the profit of the arrangement. As the goals divers the individuals’ expectations about rewards for the performance also might be different. The motivating factor for every individual may not be the same. “Those seeking money as the number one priority will be attracted to jobs where performance and reward are closely linked and performance is paid for in money preferably cash in the hand. Those who rank relationship highly will be attracted to jobs where relating with people is a major part of the work.”(Hunt,1992). 5. Expected behaviors The code of ethics of the selected company also does not say anything about its expected individual behaviors. It is an unavoidable obligation of any organizational operators to define the behavioral pattern of company staff and employees. This portion of the code can be developed as follows; a). Recruiting the right person for the particular job is the most important thing because the efficient manpower is the asset for any company. If the career does not match with the individual’s profile the organization will obviously fail to satisfy the individual and vice versa. So the criterion for each career needs to be well defined and the profile of the candidate must be scrutinized. Therefore we can formulate a concept as ‘people with high aptitude and serious concerns toward their career are highly expected in this company’. b). Secondly, today an organization with multifunctional features can not be easily led to the anticipated goal by a single person. Many organizations confront with problems created by dissatisfied and disobedient labors. Therefore individuals who comply with the code of conduct of the organizations are the expected behaviors. Such kind of workers would reduce the work load and enable the smooth functioning of an organization. c). Devoted employees are the back bone of any organization. Obtaining and retaining an efficient labor force is the main managerial challenge that every organization is facing today. It is the sole responsibility of the management to revitalize the whole working community with adequate rewards and other motivating techniques. Dedicated individuals who stick to their goals also must be identified and appreciated as expected behaviors. d). The next behavioral group is those who maintain the anticipated standards in their performance or gain great achievements. Performance of a person is determined by the motivation and the motivation comes from rewards. e). While working in an organization the individuals have to adjust with many different people having different objectives and mindset. The employees who cooperate with collogues have to be encouraged as the expected behaviors in the organization because they have a significant role in bridging the gap between the employees as well as between the employees and the company. 6. Environment concerns In order to develop the code of ethics the company ought to address the environment factors by defining the ethical parameters in which the organization would perform its business functions. The problems such as pollution and toxic exposure cannot be left to environmental experts alone. It is obvious that political leaders, and the related administrative organs of government, are not totally able to protect the environment. Therefore, each company has to give much emphasis on this issue by formulating and implementing strategies to control any sort of possible contamination. To summarize, the code of ethics of the selected organization requires including some more significant provisions such as reward system, health and safety, work and play, recruitment and retention, expected behaviors, and environment concerns. Many organizations are facing challenges to create a satisfied workforce only because they fail to interpret the goals, and to design a proper code of ethics defining the expected behaviors. Code of ethics is the frame work for professional responsibilities and a criterion for members for self-evaluation. A well designed code can clearly disclose what the organization is, what it stands for and what can be envisaged while participating in its business activities. References Anand & Wilkinson. (2008). The Sarbanes-Oxley Act: An Introduction. Van Haren Publishing p.35 Hunt J. W., (1992) Managing People at Work: A Manager’s Guide to Behavior in Organizations, 3rd edn, illustrated. Mc Graw-Hill, pp. 29-44 Moore W C. & Gooderl. (2008). Managing Small Business: An Entrepreneurial Emphasis, edn.14. Cengage Learning EMEA pp.51-52 McLean (2005). Organization Development: Principles, process, performance. illustrated, Berrett- Koehler Publishers p.388 Sisodia, Wolfe, & Sheth N. (2007).Firms of Endearment: The Pursuit of Purpose and Profit. Warton School Publishing, p.79 Tyson & York (2000). Essentials of HRM, illustrated edn.4, Elsevier p.13 Torkildson G. (2005). Leisure and Recreation Management. Illustrated edn.5, Routledge, pp.119-120 Read More