Code of Ethics & Corporate Culture

Code of Ethics

• A code of ethics serves as a guiding set of principles.
• This helps professionals conduct business with honesty and integrity.
• A code of ethics document outlines:
  • The mission and values of the organization
  • How professionals should approach problems
  • Ethical principles based on the organization's core values.
• American ethical codes were initially referred to as "credos".
• In the 1980s, these codes were considered "legalistic".
  • They focused more on the company's reputation.
  • They demonstrated concern for issues like affirmative action (Benson, 1989, p.308).
• Codes include guidelines describing desirable behaviors
• They also include guidelines prohibiting certain behaviors (Nijjhof et al., 2003).

Corporate Culture

• Corporate culture encompasses the beliefs and behaviors, that determine how employee and management interact.
• It also impacts how outside business transactions are handled.
• A company's culture reflects:
  • Dress code
  • Business hours
  • Office setup
  • Employee benefits
  • Turnover
  • Hiring decisions
  • Treatment of clients
  • Client satisfaction
  • Various aspects of operations.
• Political, social, economic, and technological forces reshape the cultural landscape (Unsunier and Lee, 2005; Craig and Douglas, 2006)
• Economic and physical environments are important for business organization.
• Cultural environment has special importance and relevance.
• Humans have opportunities of choices and alternatives as a family and social entity.
• Humans invent and have unrestricted growth in time.
• Humans are capable of speech and communication.
• This demonstrates social ability, progress, collaboration, and the capacity for ethical behavior through speech.
• Knowing the meaning of words signifies culture; human language is open.

Concepts of Organizational Culture

• Barnard is considered the originator of the concept of corporate culture.
• The second half of Barnard's Functions of the Executive highlights:
  • Creating a shared vision or purpose
  • Generating common meanings
  • Enhancing commitment
  • Increasing an individual's “capacity to be dominated by organizational personality” (Barnard, 1938)
• Consensus among culture scholars is that organizational culture:
• Involves belief and behavior
• Exists at different organizational levels
• Manifests in structures, control and reward systems, symbols, myths, and human resource practices (Pettigree, 1979; Schein, 1992; Kotter and Heskett)
• According to (Allaire and Firsirotu, 1984) organizations and culture considers culture as a component of an integrated social system:
  • Includes a social structure to maintain orderly social life
  • Adaptation mechanics
  • Society's equilibrium within its physical environment.
• Culture was defined to represent the collective qualities of a specific human group.
• These qualities are passed down through each generation (Kotter and Heskett, 1992).

Need for Ethical Organizational Culture

• Shiva (1988) argues that modern science is fundamentally reductionist.
• Reductionist nature influences economic structures based on exploitation, profit maximization, and capital accumulation.
• Reductionist science contributes to the increasing ecological crisis.
• Perez Lopez (1991) explains the theory of human action.
• Explains how the human person in business organization has motives determining achievement of learning with others.

Creating corporate codes of ethics

• Adopt a code of ethics
• Provide ethics training
• Hire and promote ethical people
• Correct unethical behavior
• Take a proactive strategy
• Conduct a social audit
• Protect whistle-blowers
• Empower the guardians of integrity
• Assure commitment from the top (Sauser and Sims, 2013)