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Sep 26, 201212:17 PMOpen Mic

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Defending the Code: Using ethics to improve organizational performance | submitted by Denis Collins

Defending the Code: Using ethics to improve organizational performance | submitted by Denis Collins

Ethical dilemmas arise because situations are ambiguous. What bothers one person’s conscience may not bother another person’s conscience. An organization’s code of ethics minimizes ethical ambiguities by communicating clear ethical guidelines for employees to apply when making decisions. The code serves as the organization’s conscience, should be integral to the organization’s communications strategy, and serves as an annual assessment tool for continuous improvement.

A code of ethics briefly describes broad ethical aspirations. Unlike codes of conduct, which are typically designed by legal experts and can number many pages, a code of ethics typically consists of a few inspirational principles or values to guide behavior that could fit on a business card – values such as respecting all owners, customers, employees, suppliers, community members, and the natural environment.

Purpose and importance of codes

A code of ethics fulfills multiple purposes. Ethics codes do the following:

  • Demonstrate managerial concern for ethics: First impressions matter a great deal. Discuss the organization’s code of ethics with new employees to establish ethical expectations.
  • Convey a particular set of values and obligations: Codes clarify appropriate behaviors and provide employees with clear and consistent moral guidance. They articulate and reinforce a moral consensus, rather than just one person’s opinion, and legitimize dialogue about ethical issues when challenging situations arise.
  • Meet legal requirements and industry trends: The New York Stock Exchange and NASDAQ require that all listed firms must have a code of ethics for directors, officers, and employees.
  • Positive impact on employee behaviors: Researchers report that organizations with codes of ethics have higher levels of employee commitment and greater tolerance for diversity.

Code of ethics content

A code of ethics expresses the principles that define an organization’s ideal moral essence. Keep the language simple and avoid legalese or professional jargon. The best codes are easy to understand and inspirational, something that unites employees regardless of their particular religion, ethnicity, gender, or geographic location.

The tone of an ethics code is very important. Providing employees with a list of prohibitions – things they should not do – can feel oppressive rather than inspirational. Make the code of ethics an affirmative statement of how employees should act, not how they should not act. For instance, instead of “do not lie,” codes should note the importance of “honesty.”
What values are stated in ethics codes? An extensive scholarly review of corporate codes of ethics, global codes of ethics, and the business ethics literature found the following six values continually expressed: trustworthiness, respect, responsibility, fairness, caring, and citizenship. These universal values are foundational in all societies.

Effective code communication

The benefits of having a meaningful code of ethics are innumerable. Yet many companies do not effectively communicate their code of ethics and conduct to employees. Codes cannot be effective if employees are unaware they exist, or if rumors spread that the code was created merely to appease legal or regulatory authorities.

Ethical hypocrisy, the gap between an organization’s formal ethical proclamations and its actual behavior, damages employee morale. Moral confusion arises when the code of ethics declares employees must be honest while a supervisor expects an employee to lie to a customer about a missed delivery deadline.

Develop a strategy for communicating the code of ethics and conduct to all employees and key constituents. Assign the responsibility to a particular person who can champion the cause. Elements of the communication strategy include:

  • Connect the code to the organization’s strategy
  • Mention the code of ethics in job announcements
  • Introduce the codes during employee orientation
  • Annually distribute the code of ethics with a letter signed by a high-level executive emphasizing the importance of applying the codes on a daily basis
  • Display the code of ethics in newsletters, highly traveled areas, and on stationery and websites
  • Discuss the codes during ethics training workshops
  • Mention the code of ethics in correspondences with suppliers and customers
  • Evaluate employees on code adherence in performance appraisals
  • Link code adherence to promotions and merit raises
  • Annually assess how well the organization embodies the code

Annual code assessment

The last phase of implementation is probably the most important – use the code as an organizational assessment tool. Make the code of ethics a living document by annually assessing how well the organization and its employees live up to it. Then use the employee feedback as the basis for continuous improvement changes in organizational policies and practices.

A 10-step process for assessing an organization’s ethical performance based on its code of ethics, which can be accomplished within 60 to 90 minutes, includes:

Step 1: Form small groups around common job tasks and have participants read the organization’s code of ethics. If none exists, inform participants that organizational members are expected to treat owners, company property, employees, customers, suppliers, the government, and the natural environment with utmost respect and integrity.

Step 2: Each group member independently evaluates how well the organization meets each of its ethical aspirations using a five-point Likert scale.

Step 3: Each group member independently highlights one weak area and writes down strategies and action steps that can be taken to improve that score.

Step 4: Group members share their survey scores with each other and determine similarities and differences.

Step 5: Each group member shares a story about the survey item with the highest score. What happened during the past year that exemplifies why the organization is doing so well in that category?

Step 6: Each group member shares a story about a survey item with a low score.

Step 7: Each group member shares a strategy and action steps that would improve the low score, and integrates ideas and suggestions from other group members to develop a more detailed continuous improvement plan.

Step 8: The group summarizes its scores and suggestions for improvement, and submits the information to the facilitator for the purpose of continuous improvement follow-up.

Step 9: The facilitator forwards the information to the responsible manager.

Step 10: Management or the facilitator updates employees about progress made regarding the suggested improvements.

Step two requires that a code of ethics be transformed into a five-point Likert scale survey for employee assessment purposes. This is relatively easy to do. For instance, assume that an organization’s code of ethics expresses five core values:

  • Operate with integrity and respect
  • Provide, promote, and celebrate legendary service
  • Use superior communications
  • Embrace continuous improvement
  • Actively engage in self-management

    The exhibit below transforms the code of ethics into a Likert scale survey instrument that examines whether employees embody each core value. The survey can further differentiate the actions and behaviors of managers and non-management employees because of their different responsibilities and activities. The ensuing three assessment prompts gather specific praiseworthy and blameworthy examples, and suggestions for improvement.

Exhibit: Code of Ethics Survey

Living Up to the Values Statement

Instructions: Please use the 1-5 scale below to assess how well each of the following statements exemplifies employee behaviors and actions. The more honest you are the more helpful the information we will receive. First assess the behavior of managers, and then the non-management employees.
1=Strongly Disagree; 2=Disagree; 3=Neither Agree nor Disagree; 4=Agree; 5=Strongly Agree







Operate with integrity and respect






Provide and promote legendary service (meet and exceed customer expectations)






Use superior communications (are professional, courteous, and prompt)






Embrace continuous improvement (become more productive and efficient)






Actively engage in self-management (assess their performance daily)






Subtotal – Add the five scores and divide by five:

Assessment of Managers
1) Provide an example of how employees live up to the code of ethics.
2) Provide an example of how employees fall short of the code of ethics.
3) How can the company improve the shortcoming noted in No. 2?



Employees arrive at the organization possessing a wide variety of ethical perspectives. They need a common ethical reference point. Aligning personal values with those expressed in an ethics code creates a unique bonding experience that crosses hierarchal levels and minimizes organizational politics.

Make these codes meaningful and effective by using them as assessment tools. Have employees annually evaluate how well organizational members live up to these codes. In the spirit of continuous improvement, gather employee suggestions for addressing weak areas and then make appropriate changes in organizational policies and practices to improve ethical performance.

Denis Collins is a professor of management at Edgewood College. This article is based on Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance (John Wiley & Sons, 2009). Email:

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Dec 2, 2015 06:25 am
 Posted by  Anonymous

People are not perfect. Some are wise than others.In interviews, they give false positives. Nothing can be further from the truth these days when high ranking managers stole their exams when they were in College. Your point will make sense in a "Sober society" but there is no sober society at all!

Ignatius Regio

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