According to Trevino and Weaver, (2003) ethical policies canshape an employee’s behaviour positively thus influencing ethical decisions inan organisation. This is further supported by Manley (1991) who stated thatcodes of conduct are employed in firms to help workers feel more positive abouttheir company.
Although some companies have suchpolicies to promote good behaviour other firms such as Lehman brothers play anactive part to guide their employees to behave ethically, with a generalconsensus of employees across organisations favouring to work for company’s whoare committed to values and ethics. This shapes the experience of theindividuals involved as it creates a anatmosphere were values are meaningful and aligned with those of staff, peopleare more motivated to work for you (Jenkin, 2018)This is further supported by Solomon and Hanson (1985) whoargue that codes of conduct are vital for providing guidelines, stability, anda point of focus for everybody in the organization. Prior findings by Murphy, Smith, Daley (1992) and Somers (2001) conducted in United States show that awarenessof unethical activity is less prevalent in corporations that have implementedcodes of conduct. This provides evidence to support the proposition thatemployees in organisations who had adopted corporate codes of conduct weresignificantly more aware of wrongdoing than were employee in organizationswithout codes of ethical conduct. However,according to Montoya & Richard (1994) insome situations individuals can make wrong decisions which can be associatedwith the individual’s morals.McDonald and Nijhof (1999) developed a framework forimplementing an ethical policy curriculum designed to inspire individuals tobehave morally and responsibly in organisations which could increase theethicalness in the employees ‘actions and behaviour’. However, communicating codes of conduct from theupper echelons of order can sometimes lead individuals to flout the policy.
Trevino and Weaver (2003) found that in highly centralized organizations,mandated codes were found to be ineffective because employees rejected theattempts at top-down control. Creating ethical policies does not ensure thatethical behaviour will occur; rather, ethical decision-making and the code mustbe a part of the corporate culture and not mandated from the executivesuite. Ethics code will only work when employees see thatorganizational actions are in line with the ethical policies. Codes of conduct becomestructurally embedded when directors successfully create and act in accordanceto the organization’s culture using the code. According to Adam and Rachman(2004), ethical policies can shape an individual’s behaviour by discussing thecore values with each other, thus making the members realise that taking theright action will often require them to have conversations with otherindividuals. Furthermore, Petersen and Krings (2008) argued that codes ofconduct significantly reduced “employer discrimination”, however only when theethical policies are part of a society and has approval from a higher level.
Ethical policies have a significant impact on the managers behaviour in termsof their role, as having such policies implemented forces the managers tobehave “ethically right”. The “moral actions” of a manager usually have thegreatest influence on employees, this is supported by Adam and Rachman (2004)who argued that ethical policies are more effective when managers and corporateboards abide by the rules and set the right tone, rather than providing ethicaltraining to employees. However, ethicalpolicies can fail if rejected by the culture of an organization. For example, Enron’s ethicalpolicies failed due to a number of reasons such as; the company not beingsocially responsible to their stakeholders, betrayed their investors andemployees regarding their real financial status, despite stating in theirreport that they aim to implement code of conduct to respect others, assurance tonon-discrimination, protecting the environment, human health and naturalresources etc.
Perlow and Williams (2003) argued that having ethical policiesimplemented may not always work if individuals feel like they cannotcommunicate openly about wrongdoing.Organizationalmembers react to clear and visible justice, so where managers’ or employees’behaviours violate the code and no consequences are observed, the code willfail. Nitsch,Baetz & Hughes observed that frustration, cynicism,and anger develop when code violations go unpunished (2005). NS1 Perceivedunfairness or unequal treatment also causes low trust in organizations andweakens members’ commitment to the code (Kickup, 2005).Similarly, Glenn and Van Loo’s (1993) study has shown thatcodes of ethics appear to be less influential than the individual’s strongpersonal value system. This is further supported by Michael Schtuartz (2002)who argued that ethical codes are a management system designed to control theorganisation by formulating policies. This shows that in the absenceof ethics codes, individuals might behave differently. In relation tothis, Simon Critchley (2007) argued that everyone are moral individuals andthat there is always this demand on us as moral actors.
Overall, codes of conduct are seen as an important tool increating and establishing an ethical environment. Nevertheless, there is littleagreement in the literature on the extent of usefulness of codes and theinfluence they have on behaviour, with some scholars proposing that a code ofethics has a significant influence on ethical perceptions, judgements andbehaviour, while others are more sceptical, suggesting that the foundation ofethics is in the mind of the person, through the personal value system.
