CGVE/U5 Topic 3 The Regulatory and voluntary actions
First step in a corporate is to set vision statement. In order to act with integrity the next step will be to define its values and set priorities. The corporate values thus made are communicated as code of conduct or code of ethics. There are 3 phrases, code of ethics, code of conduct and code of practice which are used rather loosely one in place of another.
The means of these are:
Codes of ethics:
Codes of Ethics are statements of values and principles which define the purpose of the company. These principles are written as credos or guiding principles. For example credo of M/s Johnson and Johnson and ITC Ltd., are given in this book. Code of ethics state ‘this is who we are and this is what we stand for’.
Codes of practice:
Codes of Practice and interpretation are examples of corporate values and principles. Generally, codes of practice act as guide to decision making managers. In other words, code of practice is ‘this is how we do things here in our company’.
The practices followed by the employees are illustrated or discussed. Code of Ethic relies on guidelines and thumb rule is to seek advice. Codes of practice take a view ‘we do in a particular way because of our character’.
Codes of conduct:
Codes of Conduct are statement or rules given what one must do or one must not to in a company. These are different from codes of ethics. Codes of conduct state ‘this is how we expect an employee to behave or conduct himself’.
Typical codes conduct is set of rules listed as laws of the company prohibiting some actions. Penalties for violation of rules are detailed. Potential conflicts and resolutions are given with guidance. It is view of ethics showing what is not to be done and consequence for wrong work.
The PHC Chamber of Commerce and Industry developed a code of ethics for Indian business asking to be truthful and realistic in stating claims, responsibility to customer needs and concerns, fair treatment of all stakeholders fairly; respect, protect and promote the environment and community interests.
The text of the code is given below:
Code of Ethics:
It is believed that the best way of promoting high standards of business practices is through self-regulation. Business should be conducted in a manner that earns the goodwill of all concerned through quality, efficiency, transparency and good values.
This Code has been designed as a voluntary guideline to achieve these objectives:
- Be truthful and realistic in stating claims.
- Be responsive to customer needs and concerns.
- Treat all stakeholders fairly and with respect.
- Protect and promote the environment and community interests.
Code of Ethics (Explanatory Statement):
Every business endeavour is characterised by objectivity and commitment of its practitioners. Business, therefore, has to maintain the highest standards of behaviour so that its actions and decisions result in overall benefit to industry, employees, customers, shareholders and society in general.
In the pursuit of the requisite standards, business should serve its constituents in a manner befitting the fair image of the business community, including the performance of the following functions:
- State only what can be achieved. Goods and services provided must confirm to the commitment as promised to the customers. Business must be realistic and truthful in stating claims.
- The customer must be given the best possible service and treated with respect and fairness. All actions must be directed to meet customer needs and requirements.
- Fairness in business should extended to all constituents of business. Interests of all constituents must be protected with respect and dignity.
- Business must understand and respect the needs, concerns and welfare of the community and society. It should use knowledge and experience for up-gradation of the quality of life. All business endeavors must combine the qualities of private excellence for public good.
- Any practices that do not embody the above process cannot be considered objective, are adverse to the interests and fair image of business and society, and are in disharmony with this Code. It is believed that the best way of promoting high standards of business practices is through self-regulation. This Code has been designed as an instrument of self-regulation to serve as a voluntary guideline towards a better quality of life and higher standards of business practices.
Building a Value System:
Values, ethics and moral principles are essential in a work place. Each organisation adopts or follows a set of these. It is essential that the values, ethics and moral principles are well defined put in simple words so that all in the organisation understand and follow.
If there are confusions or high sounding words or differ in actions then building a value system becomes confusion, cumbersome and reason for ethical behaviour may evaporate.
The problems in building a good value system are:
(1) Codes differ from actual:
Corporate will have good values as practiced. When codes as written are seen, they differ considerably. In the codes high sounding principles and words are used. Codes confuse and clash. When asked for explanation the phases used are ‘Just happens’.
(2) Codes for decoration on bookshelf:
In many organisation one finds on CEO book shelf in his chambers. TQM codes, ethics codes duly printed and bound in nice books and kept. These are decorations and not for reference or use. Something similar to a good wall painting. These are used as image enhancing articles and no use for ethical standards in the organisation.
(3) Codes concern with duties and responsibility of employees:
Duties and responsibilities of employees is given importance and reasons are given. These codes are used as source of catching or controlling the employees. The corporate try to protect top brass from its employees by codes.
(4) Codes become a source of control:
The codes are used to harass employees or some sections. Some kind of punishment is given showing the code book. The codes become a source of control by top management.
(5) No effective programme:
The organisation with an effective ethical training and follow up programme will be able to build up a value system in the organisation. Regular reviews and follow up actions will help to build a value system.
(6) Building a value system:
To build a value system in an organisation the top man or entrepreneur should have value system built up for him since his child hood. The value systems go by parents, home and school education, friends, social surroundings.
The values acquired since childhood are etched in the mind and act as guiding principles. To build character parents have to teach spiritual qualities.
Box 9.4 gives ways to cultivate nine spiritual qualities in children:
Walk the Talk:
After making codes of ethics, codes of practice and codes of conduct the company employees all together have to standby what is written and bring them into day to day working. This is called walk the talk. Only talk or only walk will not give the desired results in building ethical standards in a commercial organisation. The emphasis is given to the top and middle management to walk the talk.
Generally confusion is created that the three codes detailed above are mixed up in an organisation or use words that have wrong or many meanings. The codes should be worded in simple language so as to remove confusion. Do not copy codes of other companies. This will not bring any good result. The codes should be on what is to be done, be appropriate and not in conflict with statement of guiding principles and ethics of the company.
An ethical culture can develop with mutual trust, mass contact and popularity of top leaders in the company. The sincerely of top management in its declared ethical codes is seen by all employees. Employees do not believe that is written on a paper on its declared face value.
What mileage the management wants of ethics campaign depends on its sincerity. Teaching should start to young workers and managers. An ethical team can be built where in a company all members dream together, work together and progress together in changing times.
Build a solid ethical culture. Everything one does is a part of it. Compliance management is a cultural phenomenon. It is not enough to have formal policies and programmes. To get results, concerns for ethics and legal compliance must be taught practiced and put into place into the culture of the organisation.