What we mean by code of ethics? Explain how can high ethics standards maintained in an organization?

Many observers assert that the organization should play a major role in ensuring that its managers act ethically in managing the firm.

The organization's participation is understandable, given that the organization is ultimately responsible for the consequences of the decisions that its managers make. Although a company is ultimately responsible, surprisingly few organizations have traditionally provided managers with specific guidelines concerning ethics in decision making. At the core of many companies' efforts is the development of a corporate code of ethics.

Johnson & Johnson's credo, one example of a corporate code of ethics. Like many codes, J&J credo specifies its values and beliefs concerning its relationships and responsibilities toward its different constituents (i.e. customers, employees, community, and shareholders). The credo also states J&J's objectives concerning each constituency and norms of behavior such as "supporting good works and charities" and " encouraging civic improvements ".

"J&J has a credo, a living document that applies to any activity here," says Juan Cedeno, senior environmental engineer at the local plant. The credo describes J&J's commitment to customers, employees and communities. One line describes its approach to the environment, including energy: "We must maintain in good order the property we are privileged to use, protecting the environment and natural resources."

Ideally, a code of ethics (code of conduct) should provide employees with direction in dealing with ethical dilemmas, clarify the organization's position regarding areas of ethical uncertainty, and achieve and maintain overall ongoing conduct that the organization views as ethical and proper.

For example, a code of conduct might contain policies addressing the following specific areas:

* Confidentiality

* Conflicts of interest

* Accepting gifts

* Supporting equal employment rights

* Environmental issues

* Product and workplace safety

Yet, all too often, even with policies in place, codes of conduct do not achieve their purposes. Codes can be ineffective for several reasons. Many ethics codes tend to be legalistic, focusing more on explaining the strict legalities and illegalities of doing business than on tackling the more difficult and complex question of ethics and values. Many codes tends to focus on conflicts of interest and infractions that employees commit against the company that affect profits, rather than on infractions committed by the company that affect the community and other constituencies.

However, organizations have achieved effective "living " codes of ethics, typically by following a multistep implementation strategy. They first translate values and beliefs into specific ethical standards of behavior. Some standards may exist in the code itself; often even more specific standards for particular situations are developed.

Besides translating the code into behavior standards, companies with effective ethics codes have determined the actions to be taken when code violations occur, communicated the penalties to employees, and implemented the penalties to ensure cods compliance.

Xerox Corporation, for example, has dismissed employees both for violations that are serious (taking bribes) and for those that are relatively insignificant (petty cheating on expense accounts). These actions were taken to communicate the company's commitment to the code and the importance of maintaining ethical behavior.

Many organizations also periodically conduct ethics seminars to keep employees sensitive to the place of ethics in the company and to help them develop skills in handling ethical dilemmas. Many companies with effective ethics programs emphasize the importance of setting realistic performance objectives for subordinates. Setting unreasonable goals promotes the use of unethical behavior to achieve those objectives, Especially when the performance goals are linked to rewards.

Establishing the position of ethics advocates often recommended action. The ethics advocate is normally a top -level executives whom, in a sense, serves as the organization's full-time ethical conscience. The advocate evaluates the organization's actions from an ethical perspective and vigorously and openly questions the ethical implications of proposed plans of action.

Other companies have gone even further in their efforts to be good corporate citizens, hiring lawyers and consultants to act as watchdogs over their activities.