What Should be Included in a Code of Ethics?

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The Code of Ethics is a formal statement that encompasses all of the company’s values and beliefs while keeping everyone aligned with the organization’s goals. The goal is to help the team adhere to values such as honesty, integrity, respect, trust, responsibility, and citizenship by setting an ethical code of conduct. When a code of ethics is properly drafted, it forms the foundation upon which a company can create further impact.

The changing business environment that we find ourselves in today requires a code of ethics to also address the way the company will deal with internal and external threats. People should not be surprised that businesses continue to receive a bad rap when it comes to shareholder and stakeholder responsibilities. While society continues to question the validity of putting profits before people, a code of ethics can help to foster trust between what a company says and what it actually does.

A code of ethics should be specific and concrete. Too much vague language opens the door to interpretation. Not every company chooses to be precise since a broader statement can strategically address corporate culture, responsibility, quality of products, and employee treatment. It is important that employees, managers, and shareholders are all in agreement regarding this statement. Without total buy-in, it becomes impossible to achieve complete unity. As a result, this document becomes yet another formal check-the-box document.

CONSTITUTING A CODE OF ETHICS

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The creation of a strong code of ethics is driven by several factors. Among them is the reduction of ethical dilemmas in the organization. A dilemma arises when right and wrong are in conflict with one another. Often, we see this in management, especially when trying to help our team. Take the restaurant industry as an example.

Every manager in the foodservice industry knows that servers, kitchen staff, hosts, and busboys earn wages that put them in a challenging financial position. Managers have been known to comp meals (pay for the meal) to their employees during difficult shifts to keep morale up and productivity high. As the cost of living continues to rise, this is an especially useful tool for employees who struggle to eat between paychecks. Managers are faced with a dilemma since comping too many meals ultimately costs the company money (profits) and often impacts other areas of the restaurant as well. Some examples are the cost of food, inventory, and waste.

Corporate or franchise controllers would account this to mismanaging priorities (stockholders) while social welfare would account it to being in the interest of employees (stakeholders). It’s here a code of ethics comes in handy. In order to be able to impact both social and financial commitments, companies should be very specific regarding how they will address social concerns for employees, as well as how they will take care of stakeholders.

GLOBALIZATION AND A CODE OF ETHICS

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The US is not the only country struggling to create a code of ethics that covers all aspects of what a company wants to do. Business integration across national borders has made this more important than ever. This has, however, created new measures for managers to consider.

Diverse cultures and diverse attitudes and beliefs make it difficult to establish a sense of community and cohesiveness. An organization can gain key insight into strengthening its code of ethics by engaging in conversations with managers who understand the nation they are operating in, or by engaging in open communication with external organizations.

HOW DOES A DIGITAL OR DISTANCE ORGANIZATION CREATE AN ETHICS CODE?

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COVID-19 has undoubtedly changed the way businesses create and manage teams. As a result, organizations must come up with new ways for teams and employees to communicate. It is much more complicated to run a business from afar since the locus of control is shifted. As a result, the code of ethics becomes a major concern for managers and how they can maintain alignment within their organizations.

To make this process easier for managers and team leaders, hiring and team selection are essential. In these hybrid roles, it is imperative to hire individuals with a high sense of duty, honor, and character. A properly designed environment where managers can lead from a decentralized perspective will also ensure that over communications and micromanagement are kept to a minimum. In addition to reducing efficiency and productivity, there’s a risk of over-managing a distance team. All employees should be able to maintain high levels of accountability and ethical conduct even from a distance with a very specific code of ethics. This becomes meaningless if the right people are not hired, trained, or put in place. It also loses effectiveness if managers resist organizational change.

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David is currently a Masters's Student and presently living here in Japan with his wife. Life-long learner and entrepreneur. Life is a gift, so live it well.

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David Eric Schenaker

David Eric Schenaker

David is currently a Masters's Student and presently living here in Japan with his wife. Life-long learner and entrepreneur. Life is a gift, so live it well.

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