(Part 1 of an ongoing series)
As an international business ethics speaker, ethics consultant and author, I find it important to revisit this topic as it is so vital in today’s business climate. Business ethics is coming into greater prominence with organizations especially as there is renewed emphasis on corporate social responsibility.
As opposed to a decade or so ago, and especially in light of the aftermath of the pandemic and the hybrid workplace, values such as trust and respect, truth and inclusion have never been more important.
Why is a Code of Ethics in Business Important?
Executive leaders have come to understand that at no point in corporate history, have they been under as much scrutiny. It isn’t a matter of bragging about intention but of following through with actions. Whether the issue is a goal of zero carbon footprint, a commitment to gender and racial equity or transparency in pricing, the digital resources available to monitor those commitments are only getting more thorough in checking veracity.
A code of ethics is essential for maintaining a path toward ethical goals. The elements contained in that code should be more specific rather than general and “feel good.”
As an example, if the organization has had past challenges in regard to sexual harassment and abuse, what measures have been specifically put into place to monitor the effectiveness of the program? Is communication throughout the company open and honest? Are individuals free to speak their minds? Is there obvious favoritism and nepotism?
In addition, how are complaints registered and what absolute safeguards are in place to ensure that there is both protection for the person making the complaint and an assurance that there will be no repercussions? If the organization has had problems with racial discrimination, LGBTQ+ issues or religious intolerance, how are corrective actions being measured?
Going from a specific ethical code for individuals, how is the organization handling broader ethical concerns? For example, if the organization represents that it is moving toward an all-electric fleet of vehicles to minimize carbon emissions, how has it been complaint toward that goal?
Why is a Code of Ethics in Business Important?
Frankly, as a business ethics speaker, ethics consultant and author with an intense interest in corporate social responsibility, I will share that a code of ethics is meaningless unless the attitude in the C-suite exactly matches that of the HR department and the hourly workers. A code of ethics is unchanging.
If the senior vice president of manufacturing has been found to be a sexual harasser, and there is a corporate code of ethics policy prohibiting such behavior, it should be expected that the consequences will be equal to a line worker.
In another example, there were recently unlawful acts of bribery in the pharmaceutical industry. A remote, foreign sales office, against “company policy” were found guilty of bribing a European healthcare facility. This eventually resulted in major fines and jail sentences. Interestingly, there was no firm code of ethics in place.
As an international business ethics speaker, ethics consultant and author, I can easily point to similar violations involving corporate governance irregularities, acceptance of vendor gifts, the disclosure of proprietary information and numerous safety violations that resulted in injuries. Generally speaking, when unethical acts are uncovered e.g., receiving improper gifts from vendors, linked behaviors surface such as wide-spread cheating on expense reports and the abuses of meals and alcohol.
In each case, the code of ethics was weak or non-existent.
It comes down to accountability
A code of ethics in business is important because all of it leads to organizational accountability.
- Who is accountable?
- How is accountability measured?
- What does the organization do when there is a violation?
- Why does accountability matter?
Accountability, especially ethical accountability usually goes directly to the heart of reputation.
It is a proven fact, that in 2022 employees, shareholders, management and in fact, all stakeholders strongly desire to work for an organization where others take pride and are accountable in their work.
Reputation is one of those elusive parameters that, once lost, is so difficult to replace. Ethical breakdowns are breakdowns in accountability. Breakdowns in ethical accountability can lead to outcomes that manifest itself throughout an entire industry.
If the four questions I pose above cannot be answered in an ethical sense, guaranteed there is a crisis about to happen in your company. In fact, every code of ethics should easily answer those questions – it is everyone in the organization; everyone is ethically accountable.
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