One of the main challenges confronted by corporate management is “to create a corporate culture that encourages and recognizes integrity”. Executives, as such, should start at the top addressing basic workplace decisions not having legal compliance connotation but are an integral part of corporate culture (Ghosh, 2008). The creating of ethical corporate culture in an organization presupposes clear themes of ethics, social and business institutions. In the same theme, fair practices in business are related to the rules and norms of morality. In recent years business and corporate environment have been considerably changed. In the first instance, organizations evolved to assume tremendous proportions with flexible and discretionary powers in many areas of social life. Secondly in most of the developed democracies, because of people’s reaction to harmful impacts of the industrial society as well as narrow-minded practices by managers, the theme of social and ethical responsibility of businesses became acknowledged and in some respects endorsed in law. (Leavitt 2004, p. 31)
Role of Managers and Code of Ethics
Corporate responsibility of any business contributes significantly towards its strategy formulation. Stakeholders, nowadays, mostly favor the resource based view as the fundamental basis of a strategic paradigm. A vital element for businesses in today’s competitive environment is their response towards societal expectations forming the basis of legitimacy and acceptability by members of society including its customers. It should be noted that any good business practice is based on setting standards by the management related directly to the societal expectations. (Maxwell 2003, p. 125)
Good business practice is the outcome of ethical behavior in the business inculcated mainly due to ethical corporate culture based primarily on a code of ethics. A code of ethics “represents a consensus among practitioners concerning the standards of conduct that apply to professional activities. These standards must address the most important ethical issues that arise in practice and set out guidelines for professional conduct”. (Seigel 2000, p. 42) A company with an effective code of ethics forms the basis of its ethical behavior and supports it in accomplishing set objectives and therefore survives for a longer period of time. A business, therefore, has to make sound ethical decisions avoiding all types of deception and dishonesty by displaying a strong commitment towards the societal expectations. These ethical decisions should also be supported by the vision and mission of the business (Harrison 2005, p. 165).
A code of ethics is the set of guidelines in writing established or determined by the organization for its workers as well as management to support them in performing their actions as per ethical standards, values, and moral principles. At any give point of time, there exists a generational gap to the code of ethics and as such different meanings are interpreted that perplexes a response by business. These gaps should be removed so that everyone in the organization will be able to comprehend them and act with harmony in a desired way. Rules of conduct are always applied through ethics or at times by different conduct committees. A code of ethics strives to formulate principles related to conduct in an organization that supports in understanding nature of behaviors and also decision-makers. Objective of the code is to provide organizational members elaborative guidelines to make ethical choices in their conduct of work (Pava 1999, p. 61).
Business leaders, however, cannot assume that by just developing and distributing a code of ethics to the members of organization, they would have provided sufficient guidelines needed to establish the ethical corporate culture necessary for generating ethical behavior. It is entirely not possible that each and every scenario involving decision making in an organization can be addressed within code of ethics. It is necessary that the code of ethics should be continuously monitored for determining whether they are usable and comprehensible guidelines for executing ethical business decisions. It is among the basic responsibilities of the managers that they view the code of ethics as workable tools that should be refined and evaluated for the purpose of encouraging ethical principles and practices effectively. While developing and improving ethical behavior, business leaders should also evaluate the expectations, risks, and what to do about people in an organization. Leaders must provide opportunities to discuss concerns or ask question. Moreover, business leaders must take prompt action when problems occur to ensure confidentiality and a reprisal-free environment (Curtis, 2000).
Business managers in almost all organizations strive to encourage defined ethical practices and defy unethical practices not only to ensure the required moral conduct but to gain any business advantage existing in having employees and potential customers considering organization as ethical. Establishing, developing, distributing and constantly improving the code of ethics is one common step taken by managers to create an ethical corporate culture in workplace to guarantee ethical behavior within business (McCall 2000, p. 125).
Ethical Policies in an Organization to Cultivate Ethical Corporate Culture
An ethical policy in an organization is designed for supporting the business or organization itself to identify the overall impact of the actions and policies not only in environment but in society. These policies also prescribe a spectrum of guidelines and objectives that restrict the impact its activities have on the internal environment cultivating a robust ethical corporate culture to guarantee ethical behavior in the organization. An ethical policy of the organization contains specific aims and objectives that cover all or some of the areas like: human rights, general trade activities, genetic modification, social enterprise, ecological impact, social welfare (Audi 2008, p. 136).
The ethical policy of an organization supports in providing guidance for all decisions, activities and services. Prior to making any decision, the issue of ethics should be considered. The examples of some of the ethical practices include not accepting any type of advertising from unethical organizations and businesses and the second example is using hundred percent recycled copying papers. An ethical policy should narrate the commitment of organization to best practice and establish ethical considerations a major primary decision making element in every activity of the organization. Managers and leaders are primarily responsible for the formation and implementation of ethical policies (Chesher 2003, p. 212).
Another significant step that can be taken by the managers for developing ethical behavior is to establish a special department or office with the specific responsibility of making it certain that unethical practices are avoided in the organization. A corporate ethics office established in the organization can play a significant role in defining and implementing a code of ethics. The ethics office is in fact a tangible sign to each and every employee that management of the organization is serious in encouraging and supporting ethical practices in the company. A good manager utilizes ethical theoretic concepts in routine work as well as the procedures and policies of organizations are infused by it. As such, managers and leaders are responsible for the formation and implementation of ethical policies. Another way to view fundamental elements of ethical policies in an organization is to consider as ethical as any particular issue that implies material influence on human option of the accomplishment of community or organizational purpose. An ethical policy should provide a specific way for observing and communicating about any organization that addresses and revolves the critical arguments, questions, and actions that significantly benefit or harm those affected and involved by its activities. It seems quite reasonable to assume that an appropriate structure would involve related elements. It should also identify that the organization, in fact, operates in an ethical corporate environment to develop appropriate ethical behavior leading to increase in trust and confidence of customers, improving brand image, and remaining competitive in the market. (Chesher 2003, p. 187-195)
Conclusion
A detailed discussion has been made in the paper to justify the opinion that ethical corporate culture guarantees ethical behavior within a business. For supporting arguments, the significance of ethical corporate culture, the role of managers in developing a code of ethics, and highlights of ethical policies have also been presented.
(1918 words)
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