Should Companies be Required to Have and Follow A Code Of Ethics Essay

Should Companies Be Required to Have and Follow a Code of Ethics


Growth in business causes an increase in the number of investors. Organizations also prepare to expand by employing new workers. When organizations hire more workers and expand in size, they have higher possibilities of engaging in unethical practices and behaviors in doing their businesses. Certain objectives that have been set by the organization or company to serve as its guiding principles are countered by the unethical behaviors.

There are companies that have created ethical codes to communicate ethical issues that are likely to be faced by the employees as they perform their duties.  Board members and senior managements decide on the core values and roles of the company after debating them actively. This is followed by the establishment of ethical codes, responsibilities, expectations, and behavioral standards of the company (Pittman para).

Organizations ought to define principles and guiding values in relation to business operations as well as external stakeholders’ interaction. They ought to come up with behavioral standards of establishing whether the concerned people are adhering to the set codes (Pera 144-145). This topic aims at arguing that firms ought to establish and adhere to ethical codes.

Organizations should establish and adhere to ethical codes since this improves business relations. There are specifications of ethical values that determine the relationships between a firm and different stakeholders including the government and the employees (Masters 321-325). Adhering to these guidelines enables a firm to establish a lasting relationship with external stakeholders including the other companies. This is very important because the way feedbacks and queries from customers as well as negotiations are handled by a company depend on its ethical values. Therefore, following ethical codes establishes a friendly and professional relationship between a firm and stakeholders. This leads to long term dealings.

Order Now

As guidelines, ethical codes steer a company forward in the business environment where it operates. As such, a company should establish an ethical code because it provides the necessary information for effective and efficient operations. For instance, the visions, objectives and mission of the company are included in its ethical code. This enables a company to always follow the right business track (Pera 145).

Ethical codes are vital because they enable a firm to ensure that its regulations and rules are adhered to. On highlighting ethical codes, employees are prohibited from inappropriate actions (Pera 144-145). The implication of this is that the employees and managers depend on the established codes to meet the company’s expectations. Employees can engage in different vices that include embezzlements, fraud, and lying. They may also fail to satisfy operational standards of the company.

Establishment of ethical codes enables the employees to determine what they are expected to do by the company. As such, they avoid the vices. Ethical codes therefore, play a vital role of enhancing comprehension among workers regarding bad behaviors while explaining consequences that they will suffer for engaging in such behaviors. Ethical codes also explain the reasons why the firm needs the employees to behave ethically. Unethical act or behavior of an employee can compel the company to limit such employee’s liability using the ethical codes.

The top management’s accountability depends on the ethical code of the company. The expectation of the company is that the management will observe honesty, integrity, effectiveness and transparency in its daily operations (Hansen 17-19). As such, companies with ethical codes are secure and safer because their employees know that they are accountable for what they do. Thus, ethical codes establish balances and checks for the employees’ conduct. Managers’ actions can affect the behavior of the employees negatively (Code of business conduct, the coca cola company 8-13).

Ethical codes in the corporate world assist preventing unethical behaviors. They also prevent the existence of conflicting interests between a company and its employees (Reynolds 13-17). The decision-making process of the employees is also affected because using the ethical codes; workers determine whether they should engage in certain 12actions since they are aware of the consequences.

Conclusion and Recommendation

Ethical codes are a vital element in a company because they facilitate the maintenance of ethical environments in the business sector. The employees, society and management’s expectations are established by ethical codes. They also create enforcement mechanisms that are used in cases of noncompliance. As such, ethical codes ought to be applied and adhered to because they offer protection to organizations from some actions of the employees. Therefore, it is important for companies to develop and to follow ethical codes because they enable them to operate properly and to earn confidence and trust of different stakeholders including business partners, investors and the government (Flynn 15).

This paper was written by one of our writers at Premium Essays. Get similar papers with us by placing an order now. We are the best online company offering academic services globally.


Works Cited

“Code of business conduct” the Coca-Cola Company. April 2009. Web 3/10/2013

Flynn, Gabriel. Leadership and Business Ethics. Dordrecht: Springer, 2008. Print.

Hansen, Don R, Maryanne M. Mowen, and Don R. Hansen. Managerial Accounting. Mason, OH: Thomson/South-Western, 2006. Print.

Masters, L A, Harold R. Wallace, and Lauri Harwood. Personal Development for Life and Work. Australia: South-Western Cengage Learning, 2011. Print.