Ethics Policies and Codes

Ethics code:

A document that memorializes the standards the employer expects its employee to adhere to.

An ethics code memorializes the standards to which the employer expects its employees to adhere, for instance with respect to bribery and accurate reporting.

Basically all publicly traded companies doing business in the United States need ethics codes. The Sarbanes Oxley Act (passed after a series of top corporate management ethical lapses) requires companies to declare if they have a code of conduct. Federal sentencing guidelines reduce penalties for companies convicted of ethics violations if they have code of conduct.

Having a code does not guarantee ethical behavior. About three fourths of US firms have formal ethics codes and most (about 95%) offer ethics training . yet about four of every ten employees in the United States say they have witnessed serious legal or ethical problems where they work. The energy company Enron collapsed due to falsified accounting, Enron’s Web site stated, among other things that as a partner in the communities in which we operate Enron believes it has responsibility to conduct itself according to certain basic principles. Those include respect integrity communication and excellence.

However in general ethics codes do have a positive impact on employees’ ethical behavior. Researchers interviewed 766 subjects over a two year period. Respondents who worked for companies having a code of ethics judged subordinates co-workers themselves and supervisors and top managers to be more ethical than respondents employed in organizations not having a formal code of ethics Employees in companies with an ethics code also gave higher ratings off the company’s support for ethical behavior, and felt somewhat less pressure to behave unethically than respondents form companies without an ethics code

Some firms urge employees to apply a quick ethics test to evaluate whether what they’re about to do fits the company’s code of conduct. For example, the Raytheon Company asks employers who are faced with ethical dilemmas to ask:

1) Is the action legal?
2) Is it right?
3) Who will be affected?
4) Does it fit Raytheon’s value?
5) How will it feel afterwards?
6) How will it look in the newspaper?
7) Will it reflect poorly on the company?

The organization’s culture

One reason why ethics codes (and even what the boss says) does not always determine how ethically employees act is that it is not what the boss or employer says but what they do that’s important,. Organizational psychologists refer to this phenomenon as organizational culture. Organizational culture is the characteristics values, traditional and behaviors a company’s employee’s share. A value is a basic belief about what is right or wrong, or about what you should or shouldn’t do. (Honesty is the best policy would be a value) values are important because they guide channel behavior. Managing people and shaping their behavior therefore depends on shaping the values they use as behavioral guides. The firm’s culture should therefore send clean signals about what is and isn’t acceptable behavior.

To an outside observer, a company’s culture reveals itself in several ways. You can see it in employees’ pattern of behavior such as ceremonial events and written and spoken commands. For example managers and employees may engage in behaviors such as hiding information politicking or expressing concern when a colleagues is bending ethical rules. You can also see it in the physical manifestation of a company’s behavior such as written rules office layout organizational structure and ethics codes. In turn, these cultural symbols and behaviors tend to reflect the firm’s shared values such as the customer is always right or be honest. If management and employees really believe honesty is the best policy the written rules they follow and the things they do should reflect this value Jet Blue Airlines Founder, David Neeleman, wants all employees get the message that we’re all in this together. You’ll therefore sometimes still find him helping out to the gate, or handing luggage up into the plane.