Ethics code will only work when employees see that
organizational actions are in line with the ethical policies. Codes of conduct become
structurally embedded when directors successfully create and act in accordance
to the organization’s culture using the code. According to Adam and Rachman
(2004), ethical policies can shape an individual’s behaviour by discussing the
core values with each other, thus making the members realise that taking the
right action will often require them to have conversations with other
individuals. Furthermore, Petersen and Krings (2008) argued that codes of
conduct significantly reduced “employer discrimination”, however only when the
ethical policies are part of a society and has approval from a higher level.
Ethical policies have a significant impact on the managers behaviour in terms
of their role, as having such policies implemented forces the managers to
behave “ethically right”. The “moral actions” of a manager usually have the
greatest influence on employees, this is supported by Adam and Rachman (2004)
who argued that ethical policies are more effective when managers and corporate
boards abide by the rules and set the right tone, rather than providing ethical
training to employees.
However, it is not always necessary for these polices to work
as some ethical policies can fail if they are rejected by the culture of a firm.
For example, Enron’s ethical policies failed due to a number of reasons such
as; the company not being socially responsible to their stakeholders, betrayed
their investors and employees regarding their real financial status, despite
stating in their report that they aim to implement code of conduct to respect
others, assurance to non-discrimination, protecting the environment, human
health and natural resources etc. Perlow and Williams (2003) argued that having
ethical policies implemented may not always work if individuals feel like they
cannot communicate openly about wrongdoing.
Usually members of a corporation respond to visible and clear
impartiality, so when executives’ or workers’ actions violate the codes of
conduct and no
consequences are observed, the code will fail. Researchers,
Nitsch, Baetz & Hughes (2005) observed that frustration, cynicism, and
anger develop when code violations go unpunished. Perceived unfairness or unequal treatment also causes low trust in
organizations and weakens members’ commitment to the code (Kickup, 2005).
Similarly, Glenn and Van Loo’s (1993) study has shown that
codes of ethics appear to be less influential than the individual’s strong
personal value system. This is further supported by Michael Schtuartz (2002)
who argued that ethical codes are a management system designed to control the
organisation by formulating policies. This shows that in the absence
of ethics codes, individuals might behave differently. In relation to
this, Simon Critchley (2007) argued that everyone are moral individuals and
that there is always this demand on us as moral actors.
Overall, codes of conduct are seen as an important tool in
creating and establishing an ethical environment. Nevertheless, there is slight
agreement in research and in literature on the extent of how usefulness the codes
of conduct are and the influence they have on shaping an individual’s ethical behaviour,
with some scholars suggesting that codes of ethics has significant impact on
ethical perceptions, judgements and behaviour, while others are more sceptical,
suggesting that the foundation of ethics is in the mind of the person, through
the personal value system.