A code of ethics highlights an organization's key ethical issues and identifies the overarching values and principles that are important to the organization and its decision making. The code frequently includes a set of formal, written statements about the purpose of the organization, its values, and the principles that guide its employees' actions. An organization's code of ethics applies to its directors, officer, and employees. The code of ethics should focus employees on areas of ethical risk relating to their role in the organization provide guidance to help them recognize and deal with ethical issues, and provide mechanisms for reporting unethical conduct and fostering a culture of honesty and accountability in an organization. The code of ethics helps ensure that employees abide by the law, follow necessary regulations, and behave in an ethical manner.
A code of ethics cannot gain company-wide acceptance unless it is developed with employee participation and fully endorsed by the organisation’s leadership. it must also be easily accessible by employees, shareholders, business partners, and the public. The code of ethics must continually be applied to a company’s decision making and emphasised as an important part of its culture. Breaches in the code of ethics must be identified and treated appropriately so that its relevance is not undermined.
Establishing a code of ethics is an important step for any company, and a growing number have done so. Figure 1-2 shows that almost 80 percent of surveyed companies have developed a code of ethics and are very satisfied with it.