Ethical Climate in Organisation

1633 Words Feb 21st, 2011 7 Pages
1.0 Introduction

In modern business environment it is imperative to have an ethical climate. Traditional commerce is fundamentally based upon performance and profit. With the ever changing workforce, it is imperative that organisations open themselves up to reorganisation, including the application of ethical and moral decision-making, and incorporating interest of ethics in the corporate structure. According to Victor and Cullen (1988 cited by Cohen 1993, p.343) organisational norms and values are means to show how ethical problems should be addressed, creating an ethical climate which has a powerful impact on employees capacity to do the right things. However, the degree to which organisation encourages ethical practices varies
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Codes of Conduct
The foundation of any company’s ethics program is its set of values. The key mechanisms for expressing those values are ethics codes, also known as codes of conduct and standards of business. Code of ethics is important for a company to know whether it is in compliance with rules and regulation or it maintains its aims and objectives. It states issues such as theft, bribery, discrimination and sexual harassment.
Executives need to have individual ethics, in the first place. They need to have their own personal code of values and align it with the organization code of ethics. For example, executives need to be honest, that is, they cannot enter into fraudulent transactions and mislead everyone. In other words, the organization code of ethics should encompass individual ethics, with the former prevailing over the latter
This is why the organization code of ethics should be addressed to executives as well as the common employees. Executives should ‘walk the talk’, that is, be ethical themselves and encourage other employees to follow the right path.
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ii. Conflict of Interest Guidelines
Conflict of interest refers to a situation in which a person has a duty to more than one person or organization, but cannot do justice to the actual or potentially adverse interests of both parties. The Enron scandal has highlighted the importance of having strict conflict of interest standards in place. New employees should fully understand the conduct and…