Code of Ethics Essay

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Ethics

There are many factors that go into creating a code of ethics for an organization. At its simplest, a code of ethics should be a "collection of principles and practices that a business believes in and aims to live by (Spiro, 2010). The code should have a certain degree of clarity, because it ideally will serve as a reference point for employees and for other stakeholders. Yet there are many challenges when it comes to creating a code, because both the field of ethics and today's organizations have a high degree of complexity.

Challenges

Kaptein and Wempe (1998) provide a helpful guide to understanding many of the issues that organizations face when creating codes of ethics. First, the code needs to have an underlying consistency that can be understood by the audience. Second, the code cannot be so vague that it means nothing. Many codes of ethics are too vague to have any genuine use in resolving ethical dilemmas. The most important element of a code of ethics, one that many companies overlook, is that the code must genuinely address the issue of ethical dilemma. Obeying the law -- something discussed in many codes -- is not an ethical dilemma. That is a baseline behavior, and is self-evident. An ethical dilemma is a situation where there is conflict between moral requirements. It is either a situation where you have to choose between two choices, where there will be some form of suffering no matter what choice is made. Sartre described it in terms of a scenario where there are conflicting obligations (McConnell, 2014). If the situation can be resolved -- such as the case where a supervisor asks you to break the law, which is a situation where the law is overriding, then it is not a true dilemma. But there are many instances where managers must genuinely choose between two competing, mutually exclusive obligations. If the code of ethics does not help resolve such situations, then the code is not adequate.

Basic Premises

The first basic premise of a code of ethics is that the organizational code will, to a large extent, supersede any local or individual interpretations of ethics. This is a necessary component, because employees are effectively agents of the shareholders, and therefore should behave in the manner the shareholders prefer. Codes of ethics, values, mission statements and vision statements are all part of the organizational culture, something that should apply to all employees. The second basic premise is that diversity should not dilute the code, but neither should the code run roughshod over diversity. There is a lot of room for common ground in a code of ethics -- basic shared values such as trustworthiness, respect and responsibility (Schwartz, 2002). But there are other values that maybe are not as universal. When writing a code of ethics for the organization, understanding which value are universal and which are not is essential to clarity. Consider that another value Schwartz (2002) writes about is fairness. There are a lot of interpretations of fairness -- fairness of outcome, fairness of opportunity, etc. We all value fairness, but that is a word that means different things to different people. So the code of ethics, when written, should reflect that reality, and offer up some clarity with respect to the terminology.

The final basic premise is that there has to be managerial buy-in (MindTools, 2014). A code of ethics that exists on paper only is worthless. Senior management needs to conduct itself, visibly, in line with the code. Moreover, the code of ethics should be embedded into the organization's culture and structure. If not, then the code will not be guiding anybody.

The Organization

The organization I will create a code of ethics for is a fictitious luxury brand. The company is vertically integrated, with its own manufacturing facilities and retail network, but it uses third-party logistics providers. The code of ethics therefor needs to have a general philosophical component, and it also needs to take into consideration that there is a retail operation and a manufacturing operation.

Purpose of the Code

The purpose of the Code of Ethics is to provide a philosophical underpinning to the ethics embedded in the corporate culture, as well as to provide practical guidance for managers within the company, especially with respect to common situations where an ethical dilemma may arise.

Guiding Principles

It is understood that corporations are exposed to criticism for their ethics on the basis of outcomes, so a consequentialist view is necessary.

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The company must therefore undertake ethical decision-making that reflects the decisions that will bring about the outcomes that we wish to have. This is no different than any other element of strategic decision-making -- you take the actions that you believe will deliver the desired results. Therefore, ethical decision-making will be guided by the course of action most likely to bring about the desired outcomes.

Employees

The code of ethics will apply to all employees of the company. Subcontractors will also be bound by this code of ethics, as their behavior will reflect back on the company. The intended audience of the code is all stakeholders of the organization. A copy of the code will be provided to all employees as part of their new hire package, and the code will also be made available to the public on the company's website.

Core Values and Key Definitions

There are several core values that the company will uphold. The first is that the company are honesty, respect, social justice and environmental justice. Honesty is self-evident in that members of the company should be honest in their communications with each other, with customers, and with suppliers. All members of the company should treat each other with respect, and should treat all with whom they come into contact. The value of respect applies even when the member is off-duty, because one's personal conduct can and will reflect back on the company. A key issue in honesty and respect is a commitment to never engage in bribery, even when it is considered a local custom.

Social justice is a complex issue. For the purposes of this code, social justice refers to paying employees a living wage, including employees of subcontractors. Labor standards will reflect those of the home office at a minimum. The company is also committed to respecting union rights, and proving opportunities for advancement for talented employees. As a matter of values, we believe in the concepts of health care for permanent workers, as guided by local standards, and also in supporting an appropriate work-life balance.

Environmental justice is another complex concept. For the purposes of this code, environmental justice reflects the philosophy of leaving the world in the same condition in which we found it. The company is committed to minimizing waste, and eliminating pollution. We also seek to reduce out impact on the climate, aiming to minimize our carbon footprint. In nations where water usage is an environmental issues, minimizing water waste will be another policy. As a general rule, environmental standards applied to company activities will be those of the home office, even where those are above and beyond the local standards.

Training and Education

An important component of any code of ethics is its implementation, as reflected in education and training. The company will provide training on the core values and ethical code of conduct during the onboarding process, and a copy of the code booklet will be provided to all new employees. Existing employees will also receive a copy of the code, and training sessions will be organized so that they can understand the code at the time it is introduced. The training sessions will be around 1 hour in length, featuring a brief introduction to the code, followed by some role playing to highlight examples of how to apply the code in everyday work situations. The code, and videos of example situations, will be provided on the company intranet, along with a FAQ. There should be an annual or bi-annual refresher course in order to ensure that employees continue to have high awareness of the company's code of ethics.

Enforcement and Reporting

An ethics report will be compiled internally. Individual supervisors at all levels are responsible for investigating and reporting issues. There will be an individual in charge of third-party contractors, as they will need a higher standard of supervision on ethical issues. Employees found to be violating the code, depending on the violation, will receive remedial education on the company's code of ethics, or written warning. Accumulation of written warnings can result in dismissal. Major violations can result in immediate dismissal.

An internal report will be prepared. Three members of the senior management team will form the ethics committee, and they will review on an annual basis the reported compiled by junior staffers. The committee will determine what course of action, if any, is required to maintain the company's high ethical standards.

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