Is a formal statement of an organizations values on certain ethical and social issues

Ethical codes are specialized and specific codes of ethics. Such codes may be adopted by or on behalf of professions [e.g.,psychologists, doctors etc}, to guide the behavior of members, interactions among members, and interactions between members and the general public.

In the context of a code adopted by a profession or by a governmental or quasi-governmental organ to regulate that profession, an ethical code may be styled as a code of professional responsibility, which may dispense with difficult issues of what behavior is "ethical".

Some codes of ethics have the force of law; these are often promulgated by the [quasi-]governmental agency responsible for licensing a profession. Violations of these codes may be subject to administrative [e.g., loss of license], civil or penal remedies. Other codes can be enforced by the promulgating organization alone; violations of these codes is usually limited to loss of membership in the organization. Other codes are mearly advisory and there are no prescribed remedies for violations or even procedures for determining whether a violation even occurred.

In the context of an organization, a code of ethics is often a formal statement of the organization's values on certain ethical and social issues. Some set out general principles about an organization's beliefs on matters such as quality, employees or the environment. Others set out the procedures to be used in specific ethical situations - such as conflicts of interest or the acceptance of gifts, and delineate the procedures to determine whether a violation of the code of ethics occurred and, if so, what remedies should be imposed. The effectiveness of such codes of ethics depends on the extent to which to management supports them with sanctions and rewards. Violations of a private organization's code of ethics usually can subject the violator to the organization's remedies [in an employment context, this can mean termination of employment; in a membership context, this can mean expulsion]. Of course, certain acts that constitute a violation of a code of ethics may also violate a law or regulation and can be punished by the appropriate governmental organ.

They are often not part of any more general theory of ethics but accepted as pragmatic necessities.

Ethical codes are distinct from moral codes that may apply to the culture, education, and religion of a whole society.

Criticism

Some critics maintain that codes of ethics or professional responsibility actually assist professionals and organizations to be unethical. Compliance with a pre-existing code of ethics has been used as a defense for both professionals and organizations from charges arising from their questionable behavior. For example, is a lawyer defending someone who the lawyer knows is guilty ethical? Would it be ethical for the lawyer to argue that a different identified person committed the crime if that would improve the chances that the guilty client be acquitted? Is it ethical for a doctor to prescribe a drug that has not been approved for use if the doctor sincerely believes it would benefit the patient?

[cp. Chester Megreer, Ethical Management]

See also

• Ethics
• Moral code
• Moral core
• Business ethics
• Zero Aggression Principle

External links

• Creating a Code of Ethics for Your Organization by Chris MacDonald.
• ACM Code of Ethics and Professional Conduct from the Association for Computing Machinery.
• Code of Ethics of the National Association of Social Workers, USA.
• Code of Ethics of the American Library Association.
• Code of Ethics of the Society of Professional Journalists.
• Model Code of Professional Responsibility of the American Bar Association.
• Links to Bar Associations' Codes maintained by the American Bar Association.

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The Functions and Responsibilities of a Manager

When it comes to ethical standards, managers play a key role in setting the tone for their department or company. It is their responsibility to ensure that employees understand what is expected of them and that they are following the guidelines. 

Managers should also be on the lookout for any possible ethical breaches and take action if they occur. Here are the main functions and responsibilities of a manager:

1. Planning: Strategic, tactical, and operational are three types of planning.
                  a. Strategic—generally, a 3-5 year-long strategy for the company
                  b. Tactical – implementation plans that reach important objectives [usually less than one year or short-term].
                  c. Operational- entails several short-term strategies for attaining tactical objectives.
2. Organizing: from hiring to creating an organizational chart, etc.
3. Leading: the style in which you manage your firm. Theory X, Y, or Z is an example of this.
4. Directing: manage employees, lead and inspire them to achieve objectives.
5. Staffing: getting the appropriate individuals in the correct jobs.
6. Controlling: improving business performance through measurement and control.
7. Coordinating: bringing all management activities together into a coherent system.
8. Representing: representing the company to employees and to the outside world.
9. Innovating: creating the most excellent methods to achieve strategic, tactical, and operational objectives. Solve problems in an inventive way.
10. Motivating: positively managing employee morale and motivation.

Ethical Leadership and Organizations

Ethics – a system of principles and standards of judgment that informs whether something is right or wrong. These are the fundamental moral ideas and behavioral norms that underlie the decisions made by individuals in an organization as they interact with stakeholders.

The Three levels of Ethical Standards

1. The Law—This document tells everyone in society what actions are acceptable and which are not. The law simply establishes a minimum level of conduct. Legal behavior may not always be considered ethical.
2. Organizational policies and procedures—help employees make daily decisions. An organization can develop ethical frameworks and even a Code of Conduct to help guide employees.
3. The Moral Stance – when employees come across a pickle that does not fit into the levels one or two systems, they take this stance. People usually learn their morals from early life experiences, church, synagogue, etc. These are key standards that help in these situations.

Creating an Ethical Framework

An ethical framework is a system of values, guidelines, and principles that helps individuals within an organization make decisions. It provides guidance on how to deal with difficult situations and make choices that are in line with the organization’s values.

Step 1 – Recognize the ethical issues involved in a problem or decision.

• Acknowledge that there is an ethical dilemma present.
• Define the ethical concerns involved.
• Consider the moral principles: honesty, fairness, respect for the community, environmental awareness, trust, and others.

Step 2—Determine how the decision will affect key stakeholders and who they are.

• Every company decision has a variety of stakeholders to consider.
• Some stakeholders’ demands may conflict with those of other stakeholders.
• To determine which interests are most important, sort out the conflicting ones.
• Determine what is socially responsible when it comes to decision-making.

Step 3 – Develop various possible responses and identify which ones are ethical or unethical.

• Use the questions in the Code of Conduct to assist you in making your decision.
• Make sure that everyone involved is aware of the potential ethical implications of the situation.

Step 4 – Determine the “best” ethical response and put it into action.

• You should be able to make several ethical decisions.
• Weigh these choices against the “ideal” ethical outcome.
• Make a decision that is consistent with the company’s goals, culture, and value system.

Specific Ethical Behaviors of High Integrity Leaders

Leaders with high integrity possess many ethical values and principles that they use as guidelines in their decision-making process. Some of these behaviors are:

1. Possess humility – Do not be arrogant or boastful of your accomplishments and success
2. Maintain a commitment to the greater good—Make decisions for the company’s benefit, not personal interests.
3. Be truthful – Always be honest in your claims and actions.
4. Fulfill commitments – Always try to fulfill all obligations in an exemplary manner and never violate an agreement.
5. Strive for fairness – Make equitable judgments for everyone, avoid being biased in your decisions, and obtain all the information necessary before making a decision.
6. Take responsibility – For one’s actions rather than blaming others or falsely accusing them.
7. Failing to value others and not showing respect and appreciation for individuals.
8. Celebrate others’ success – Share the joy of others’ success and not be envious.
9. Develop others – Support employee development, and help and coach others to improve themselves.
10. Reproach unjust acts – Refuse to do any act that would be unjust and defend their principles.
11. Be forgiving – Let go of past negative actions, and get rid of any ill feelings or grudges.
12. Extend self to others – Assist others in times of need, and be generous with rewards when warranted.

The Characteristics of an Ethical Leader

Leaders who act ethically display traits that establish them as credible and trustworthy to those they manage. These ethical leaders effectively communicate their message and provide support, shaping the attitude, beliefs, and behaviors of those they work with through either a transformational or transactional leadership style.

The Characteristics of a Transformational Leader

Transformational leaders are those who inspire change in others by raising their level of consciousness and awareness. These types of leaders possess the ability to see the potential in others and help them reach it through mentorship, coaching, and modeling desired behaviors. 

In order to be an effective transformational leader, one must have a clear vision of what they want to achieve and be able to articulate it in a way that engages and motivates others. Here are the characteristics of a transformational leader:

• We are focused on developing a long-term vision for the company.
• Based on motivation from inspiration and influence from role models, individualized consideration, and intellectual stimulation.
• Transformational leader has a profound, positive ethical effect on their organization. Their personal beliefs, values, and attitudes shape the organization’s ethical culture.
• Employees are free to develop ideas and make decisions in an independent setting.
• The principles of ethical power are as follows::
  1. Purpose – the purpose of a leader is to establish a long-term vision for their team or organization.
  2. Perspective – making wise and fair decisions based on accurate and unbiased information.
  3. Patience – Roadblocks are an inevitable part of any journey, but remain patient
  4. Persistence – To keep going despite any difficulties or setbacks.

Transaction-Focused Leadership

• The interaction between the leader and others should result in a mutually beneficial transaction.
• Focus on the operational and routine activities that keep the firm running.
• A leader focuses on distributing resources, keeping track of employee progress, and showing employees how to achieve the company’s goals.
• This style does not support an ethical commitment because its negative impact on employees causes a lack of communication.
• Employees are rewarded based on the results they achieve.
• Transactional leaders focus on achieving specific goals and expect employees to produce tangible results.

The Roles and Responsibilities of Key Stakeholders

The fact that, in some ethical dilemmas, there are no right or wrong answers creates difficulties for businesses. The issue arises from the conflict of interests between different groups and individuals involved with a company [stakeholders]. As an entrepreneur, you will have to deal with various conflicts. To do so effectively, you need to identify your stakeholders and figure out how best to accommodate them. For example, if you produce food products, you must consider how your decisions will affect numerous groups of people, including workers, farmers, raw material suppliers, unions, government agencies, banks, stockholders & investors who land the customers who purchase your products. Below is a list of potential key stakeholders for any business.

The Following Are Some Questions That Can Help Identify Ethical Issues

• Does this action meet my standards of how people should act?
• How will I feel about myself if I do this?
• Do we have a rule or policy for cases like this?
• What are my motives for making this decision?
• Would this action deceive others in any way?
• How would I feel if this action was against me?
• Who will benefit from this decision?
• Who will be hurt by this decision?
• What if my action became public knowledge?
• Is what I am doing right or wrong?
• Have I explored all potential options?
• Can I articulate my reasoning to others effectively?

Code of Conduct

An organization’s Code of Conduct is a formal statement of its values on ethical and social issues. This provides specific guidance to managers and employees regarding expected standards of behavior in terms of ethics. A Sample Code of Conduct is provided below:

• Integrity
• Usefulness
• Privacy
• Responsiveness
• Take action

II. Treat each other with respect.

• Equal opportunity employment
• Positive environment
• Drug and alcohol standard
• Safe workplace

III. Keep your conflicts of interest in check.

• Personal investments
• Outside employment
• Outside board membership
• Friends and relatives: co-worker relationships
• Gifts, entertainment, and payments
• Reporting

IV. Keep information private.

• Confidential information
• Customers or suppliers
• Competitors; former employees
• Outside communications and research

V. Keep company property safe.

• Intellectual property
• Company equipment
• Physical security
• Use of Equipment and facilities
• Employee data protection

VI. Guarantee money is handled correctly and responsibly.

• Spending money properly
• Signing contracts
• Recording transactions
• Reporting financial or accounting irregularities
• Hiring suppliers
• Retaining records

VII. Respect the law.

• Import/export regulations
• Competition laws
• Insider trading laws
• Anti-bribery laws

VIII. Conclusions and summary of the code.

Top Five Reasons Why You Should Run an Ethical Business

1. Safeguard your brand and company reputation
2. This is the right thing to do
3. Retaining customers’ trust and loyalty
4. Maintain investor confidence in your company
5. Gain public recognition and approval

The Five Most Important Factors for Maintaining Business Ethics

1. Large-scale corporate scandals
2. The competition in the marketplace
3. Investors’ demands
4. Customer pressure
5. Globalization

The Seven Deadly Sins

Seven deadly sins have been used to evaluate human behavior for centuries. They are:

1. Lust – When an individual has an excessive and continual sexual drive that consumes all of their thoughts.
2. Gluttony – When an individual overeats or consumes anything to the point of excess, it is called gluttony.
3. Greed – When an unhealthy obsession with acquiring wealth, regardless of the means.
4. Sloth – When individuals are experiencing sloth feel apathetic and sad, failing to find joy in their everyday lives. Sloths do not recognize or utilize their full potential and gifts.
5. Wrath – When an individual experiences wrath, they may feel uncontrolled anger or rage, leading to other emotions and actions such as impatience, revenge, or vigilantism.
6. Envy – When you covet what someone else has to such an extent that it consumes your thoughts and feelings.
7. Pride – Also called vanity or hubris – is when an individual considers themselves better than another person. This is often the source of the other six deadly sins listed above.

Reasons Ethical Breaches Occur

1. Occasionally, an organization will employ somebody who does not adhere to the company’s ethical code, and this person needs to be let go.
2. An unethical organizational culture – is one where the need for profit overrides ethical behavior. Pressure to make money can make employees act unethically. To correct this type of behavior, entrepreneurs should:
   • Set the tone by being an ethical leader
   • Establish and enforce policies and show zero tolerance for unethical behavior
   • Educate and recruit for strong ethics
   • Separate related job duties so the temptation to cheat is eliminated
   • Reward those who act ethically
   • Get rid of secrecy in the workplace by allowing employees to talk about any issue with anyone above or below them in the chain of command
3. Moral Blindness – is a term used to describe the employees’ lack of acknowledgment of the ethical implications of their actions. Common rationalizations are:
   • “Many people do it.”
   • “If they were me, they would do the same.”
   • “I can not afford to be ethical right now.”
   • “I am not worried about the consequences of my decision.”
   • “My job is to produce results, not uphold ethical values.”
4. Competitive Pressures-Under immense competitive pressure, some managers view dangerous and unethical options as a way to keep their business afloat. And when employees’ jobs compete with others, they may be pushed to do things that go against their ethics.
5. Opportunities pressures are when employees or managers feel the temptation to do something unethical to get ahead. Sometimes, company culture rewards these actions, leading people to underestimate the cost of doing wrong.
6. Globalization of business-business practices considered unethical in our country may be perfectly legal and acceptable in other countries. Because of this, international businesspeople often find themselves caught between conflicting cultural values and expectations.

The Causes of Ethical Breaches and the Features of Ethical Cultures

1. The intense pressure of unrealistic goals or deadlines
2. Not receiving proper training or not knowing that an act is unethical
3. Exploitative labor practices, like forced labor and excessive working hours.
4. The health and safety of our working conditions.
5. Discrimination and harassment
6. Fraud or theft
7. Gift-giving and bribes

Ethical Culture Characteristics

1. Leaders both support and exhibit ethical behavior.
2. All company leaders should communicate with their team regularly.
3. The organization’s goals and strategies include ethical considerations.
4. Ethics is an important part of performance management.
5. A company’s ethics are considered during the initial selection criteria and throughout the selection process.

Creating an Ethical Standard

A study has shown that smaller companies are less likely to have ethics programs than large companies. Still, entrepreneurs can encourage employees and others to become familiar with the following ethical tests for judging behavior.

• The Utilitarian Principle – States that the best option is the one that provides the most good for the most significant number of people.
• Kant’s Categorical Imperative – States that we should always act in such a way that our actions could be universal laws or rules of behavior.
• The Professional Ethic – Only take actions that a panel of professional colleagues who are not interested in the outcome would view as proper.
• The Golden Rule – Treat others how you want to be treated.
• The Television Test—Would you feel comfortable justifying your actions to a national TV audience, along with your colleagues?
• The Family Test—Would you be able to explain to your children, spouse, and parents why you comfortably took this action?

Key Takeaways

There is no one perfect way to run a business ethically. The best thing you can do is to be aware of the many different ethical considerations that come up in business and to make sure you have the plan to deal with them.

Ethics are the moral principles that guide our behavior. They provide guidance on what is right and wrong, and help us to make decisions that are in line with our values.

When it comes to business, there are a number of different ethical considerations that come into play. These can include things like how we treat our employees, the environment, and our customers.

Some of the common causes of ethical breaches are intense pressure, unrealistic goals, and lack of training.

Organizations can take steps to create an ethical culture by involving leaders, setting goals, and considering ethics during performance management.

The Utilitarian Principle, Kant’s Categorical Imperative, The Professional Ethic, The Golden Rule, and The Television Test are all ways that we can judge whether our actions are ethical.

In conclusion, it is important to be aware of the many different ethical considerations that come up in business. By being mindful of these issues, we can make sure that we are making decisions that are in line with our values.

FAQs

Business ethics are the moral principles that guide our behavior as we conduct business. These principles guide what is right and wrong and help us make decisions that align with our values.

By defining acceptable behaviors outside of the state's purview. Businesses establish business ethics to encourage moral behavior among their workforce and win over important constituencies like customers and investors. An organization will frequently see a payoff in steady or increased revenues when it has a positive reputation in the market, attracts and keeps a loyal customer base, and keeps a talented workforce.

One of the downsides of business ethics is that they can limit a company's ability to maximize profits. Having factories in developing countries, for example, can reduce costs. This is because businesses can use practices such as child labor and low wages to maximize profits.

There are many different types of business ethics theories, but what distinguishes a company are its corporate social responsibility practices, transparency and trustworthiness, fairness, and technological practices.

The primary goal of business ethics is to equip people with the tools they need to deal with moral quandaries. Ethical business decisions have consequences such as a satisfied workforce, high sales, low regulatory costs, more customers, and high goodwill.

What is a formal ethical statement?

Is a formal statement of a firm's values and the ethical guidelines that employees are expected to follow?

Is a formal statement of a principle or rule that members of an organization must follow?

What are formal statements that describe what an organization expects of its employees?