A study carried out by Lee and
Yoshihara (1997) was designed to analyse the ethical behaviour of Korean and
Japanese business executives after implementing codes of conduct. The results
portrayed a vital factor showing that employees were willing to change and
embrace the morals and values of the firm after knowing that the executives
also follow the ethical policy. This shows how an employee’s ethical behaviour
can change after knowing how much importance the ethics code is to the business
executive’s personal values. LINK
IT TO MCDONALDS OR Another COMPANY!

Usually, managers and directors
will act ethically as a result of their internalized moral core values. 
Whilst establishing behavioural standards in corporations and written codes of
conduct to help strengthen moral values and encourage ethical organizational
behaviour, it is important to know that everyone will behave and act
differently to the specific guidelines within specific workplace areas.
Codes of conduct would also
affect the public for example, McDonalds is perceived by the public to be
ethically and socially concerned which is honoured and respected by other
individuals who have no knowledge of its actual working.

According to Jamal and Bowie, (1995) codes of conduct promote ethical
behaviour in organisations. In order for companies to build a sustainable
employee culture it is essential to set the expectations for employee
behaviour. For example, the codes of conduct for Lehman Brothers corporation,
an investment bank which went bust during the financial crisis in 2008. Their ethical
policies were designed to transform their culture by guiding the executives
during the crisis to make strategic decisions and communicate effectively with
the employees.NS1 

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According to Trevino and Weaver,
(2003) ethical policies can shape an employee’s behaviour positively thus influencing
ethical decisions in an organisation. This is further supported by Manley
(1991) who stated that codes of conduct are employed in firms to help workers
feel more positive about their company.

Although some companies
have such policies to promote good behaviour other firms such as Lehman
brothers play an active part to guide their employees to behave ethically, with
a general consensus of employees across organisations favouring to work for
company’s who are committed to values and ethics.This is further supported by
Solomon and Hanson (1985) who argue that codes of conduct are vital for
providing guidelines, stability, and a point of focus for everybody in the
organization. Prior findings by Murphy et
al (1992) and Somers (2001) conducted in United
States show that awareness of unethical activity is less prevalent in
corporations that have implemented codes of conduct. This provides evidence to
support the proposition that employees in organisations who had adopted
corporate codes of conduct were significantly more aware of wrongdoing than
were employee in organizations without codes of ethical conduct. However, according to Montoya & Richard
(1994) in some situations individuals can make
wrong decisions which can be associated with the individual’s morals.Having adopted such policies reminds
employees of their accountability and the consequences of their actions. The responsibility
falls onto individuals to seek advice before taking action and to ensure that
they comply with the principles outlined in company’s codes of conduct. NS1 

McDonald and Nijhof (1999)
developed a framework for implementing an ethical policy curriculum designed to
inspire individuals to behave morally and responsibly in organisations which
could increase the ethicalness in the employees ‘actions and behaviour’.  However,
communicating codes of conduct from the upper echelons of order can sometimes lead
individuals to flout the policy. Trevino and Weaver (2003) found that in highly
centralized organizations, mandated codes were found to be ineffective because
employees rejected the attempts at top-down control. Creating ethical policies
does not ensure that ethical behaviour will occur; rather, ethical
decision-making and the code must be a part of the corporate culture and not
mandated from the executive suite. 

Ethics code will only work when
employees see that organizational actions are in line with the ethical
policies. Codes of conduct become
structurally embedded when directors successfully create and act in accordance
to the organization’s culture using the code. According to Adam and Rachman
(2004), ethical policies can shape an individual’s behaviour by discussing the
core values with each other, thus making the members realise that taking the
right action will often require them to have conversations with other
individuals. Furthermore, Petersen and Krings (2009) argued that codes of
conduct significantly reduced “employer discrimination”, however only when the ethical
policies are part of a society and has approval from a higher level. Ethical
policies have a significant impact on the managers behaviour in terms of their
role, as having such policies implemented forces the managers to behave
“ethically right”. The moral actions of a manager usually have the greatest
influence on employees, this is supported by Adam and Rachman (2004) who argued
that ethical policies are more effective when managers and corporate boards
abide by the rules and set the right tone, rather than providing ethical
training to employees.

However,
codes of conduct can fail if it is rejected by the culture of an organization.
For example, Enron’s ethical policies failed due to
a number of reasons such as; the company not being socially responsible to
their stakeholders, betrayed their investors and employees regarding their real
financial status, despite stating in their report that they aim to implement
code of conduct to respect others, assurance to non-discrimination, protecting
the environment, human health and natural resources etc. Perlow and Williams
(2003) argued that having ethical policies implemented may not always work if
individuals feel like they cannot communicate openly about wrongdoing.

Organizational
members react to clear and visible justice, so where managers’ or employees’
behaviours violate the code and no consequences are observed, the code will
fail. Nitsch, Baetz & Hughes observed that frustration,
cynicism, and anger develop when code violations go unpunished (2005). NS2 Perceived
unfairness or unequal treatment also causes low trust in organizations and
weakens members’ commitment to the code (Kickup, 2005).

Similarly, Glenn and Van Loo’s
(1993) study has shown that codes of ethics appear to be less influential than
the individual’s strong personal value system. This is further supported by
Michael Schtuartz (2002) who argued that ethical codes are a management system
designed to control the organisation by formulating policies. This shows that in the absence of
ethics codes, individuals might behave differently. In relation to this,
Simon Critchley (2007) argued that everyone are moral individuals and that
there is always this demand on us as moral actors.

Overall, codes of conduct are seen as an important tool
in creating and establishing an ethical environment. Nevertheless, there is
little agreement in the literature on the extent of usefulness of codes and the
influence they have on behaviour, with some scholars proposing that a code of
ethics has a significant influence on ethical perceptions, judgements and
behaviour, while others are more sceptical, suggesting that the foundation of
ethics is in the mind of the person, through the personal value system. NS3 Need
to change.

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