Ethics & Compliance

The concept of ethics comes from the Greek word” Ethos” that means both an individual’s character and a community’s culture. Ethics are principles and values an individual uses to govern his activities and decisions. In an organisation, a code of ethics is a set of principles that guide the organisation in its programs, policies and decisions for the business. The ethical philosophy an organisation uses to conduct business can affect the reputation, productivity and bottom line of the business. Ethics in business matters because there is much evidence to prove that unethical behavior can cost the company its reputation, affect its share price, lower its share price and lower its profits. Some of the scandals in business world have had their origin in scant regard to morality. Ethics has become a part of business because it has been realized that ethics and profits go together. In the long run good ethics is good business.

The ethics that leaders in an organisation use to manage employees may have an effect on the morale and loyalty of workers. The code of ethics leaders use determines discipline procedures and the acceptable behavior for all workers in an organisation. When leaders have high ethical standards, it encourages workers in the organisation to meet the same level. Ethical leadership also enhances the company’s reputation in the financial market and community. A solid reputation for ethics and integrity in the community may improve the company’s business.

Ethical behavior among workers in an organisation ensures that employees complete work with honesty and integrity. Employees who use ethics to guide their behavior adhere to employee policies and rules while striving to meet the goals of the organisation. Ethical employees also meet standards for quality of their work, which can enhance the company’s reputation for quality products and services.

Leaders and employees adhering to a code of ethics create an ethical organizational culture. The leaders of a business may create an ethical culture by exhibiting the type of behavior they had like to see in employees. The organisation can reinforce ethical behavior by rewarding employees who exhibit the values and integrity that coincides with the company code of ethics and disciplining those who make the wrong choices.

A code of ethics, also called a code of conduct or ethical code, set out the company’s value, ethics, objectives and responsibilities. A well written code of ethics should also give guidance to employees on how to deal with certain ethical situations. Every code of ethics is different and should reflect the company’s ethos, values and business style. Some codes are short, setting out only general guidelines, and others are large manuals, encompassing a huge variety of situation.

The code of ethics is a set of behavioral rules employees should follow to ensure the company’s values are reflected in all business dealings. Regardless of the size of the business, clearly defined codes and closely monitored transactions should keep your company from violating laws and make it a place where employees feel comfortable doing the right thing.

Business Values typically are expressed in terms of how the company performs its day-to-day interactions with suppliers, employees and customers. A primary objective of the code of ethics is to define what the company is about and make it clear that the company is based on honesty and fairness. Another commonly defined value is respect in all interactions, regardless of the circumstances.

Principles are used to further support the business values by including operational credos employees should follow. Customer satisfaction, business profitability and continuous improvement are key factors in documenting business principles. Corporate responsibility to the environmentally friendly use of natural resources is another business principle that often is found in code of ethics.

Manager support of the values and principles may be documented in the code of ethics. Open door polices for reporting ethics violation can be included in the code, along with a process to anonymously report any code of ethics issues. To reflect how seriously management considers the code, some business display the code of ethics with management signatures in prominent areas, such as the break room, where employees will see it on a daily basis.

Another component is a statement regarding each employee’s personal responsibilities to uphold the code of ethics. This may contain information regarding both the legal and moral consequences if an employee violates the code. The requirement to report any violators is normally a component of the ethics code’s personal responsibility. This is meant to show that it is not sufficient to merely adhere to the values and principles but to help ensure every employee supports the code of ethics by reporting violators.

There is no universal set of ethical principles that exists and what is right and what is wrong often depends on the situation. The increasing realization of this had led to a change in thinking about the effective approaches to getting firms and their employees to behave ethically. Initial approaches were based on “compliance”, the creation of rules and systems that people and companies had to follow. But rules are hard to draft and quickly become out of date while systems can tie people up in bureaucracy and hamper business efficiency. This has led to the evolution of the belief that although some level of compliance will always be necessary, it is more important to instill ethical “values” into the corporate body and the employees that inhabit it. To do this successfully,
Organisation must have a vision about why they exist and that ought to be shared by everyone connected with the company.