Usually, managers and directors will actethically as a result of their internalized moral core values. Whilstestablishing behavioural standards in corporations and written codes of conductto help strengthen moral values and encourage ethical organizational behaviour,it is important to know that everyone will behave and act differently to thespecific guidelines within specific workplace areas.
Codes of conduct would also affect the public forexample, McDonalds is perceived by the public to be ethically and sociallyconcerned which is honoured and respected by other individuals who have noknowledge of its actual working. According to Jamal andBowie, (1995) codes of conduct promote ethical behaviour in organisations. Inorder for companies to build a sustainable employee culture it is essential toset the expectations for employee behaviour. For example, the codes of conductfor Lehman Brothers corporation, an investment bank which went bust during thefinancial crisis in 2008. Their ethical policies were designed to transform their cultureby guiding the executives during the crisis to make strategic decisions andcommunicate effectively with the employees.NS1 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 such policies topromote good behaviour other firms such as Lehman brothers play an active partto guide their employees to behave ethically, with a general consensus ofemployees across organisations favouring to work for company’s who arecommitted to values and ethics. This shapes the experience of the individualsinvolved 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 et al (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 whenemployees see that organizational actions are in line with the ethical policies.
Codes of conduct become structurally embedded when directors successfullycreate and act in accordance to the organization’s culture using the code.According to Adam and Rachman (2004), ethical policies can shape anindividual’s behaviour by discussing the core values with each other, thusmaking the members realise that taking the right action will often require themto have conversations with other individuals. Furthermore, Petersen and Krings(2009) argued that codes of conduct significantly reduced “employerdiscrimination”, however only when the ethical policies are part of a societyand has approval from a higher level.
Ethical policies have a significantimpact on the managers behaviour in terms of their role, as having suchpolicies implemented forces the managers to behave “ethically right”. The moralactions of a manager usually have the greatest influence on employees, this issupported by Adam and Rachman (2004) who argued that ethical policies are moreeffective when managers and corporate boards abide by the rules and set theright tone, rather than providing ethical training to employees. However,ethical policies can fail if rejected by the culture of an organization.
For example, Enron’s ethical policies failed due to a number of reasons suchas; the company not being socially responsible to their stakeholders, betrayedtheir investors and employees regarding their real financial status, despitestating in their report that they aim to implement code of conduct to respectothers, assurance to non-discrimination, protecting the environment, humanhealth and natural resources etc. Perlow and Williams (2003) argued that havingethical policies implemented may not always work if individuals feel like theycannot communicate 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). NS2 Perceivedunfairness or unequal treatment also causes low trust in organizations andweakens members’ commitment to the code (Kickup, 2005).
