Ethical codes and their raison d'être

Ethical codes and their raison d'être

Monday, 4 march 2019 | Redacción CEU

CSR has become fashionable. These initials mean more than a simple proposal, they are a commitment to society. In recent years, the business environment has begun to become aware of the importance of taking care of the things that surround it. Only by paying attention to the internal and external life of the company to the same extent are firms able to respond to the corporate, social and environmental challenges that lie ahead. Many companies have understood that, as part of a Corporate Social Responsibility strategy, they need to develop their own ethical framework. What are ethical codes? What are they for? What are the guarantees that ensure they will be fulfilled?

 

The report Expectations and Trends in Spanish Companies in 2019, carried out by the firm of global professional services called BDO, concludes that 75% of Spanish companies have already implemented ethics codes as a general standard to guide the decisions they adopt. This study has collected the opinions of more than 300 executives of firms that have more than 100 employees. It should be noted that these companies which were analyzed also have bet on plans on energy efficiency (73%), corporate responsibility (69%), sustainability (68%) and anti-corruption policies and fight against fraud (66%), although with a lower degree of implementation.

What are ethics codes for?

Although they are not made in writing, companies are always guided by several principles, values, ethical guidelines and models of conduct that are essential as they conduct their business activity. As BDO's study shows, in many cases, companies decide to create their own ethical codes in which these fundamentals are reflected. This action is aimed at enabling all the employees of companies to be able to access them and share the same goals and formulas to achieve them. It is a kind of road map that describes the desired behavior of the members within the organization. In other words, an ethical code points out what a company expects from the professionals who work in it.

The compliance of ethical codes is not linked to a legal imperative. Therefore, ethical codes should not allude to what the regulation already regulates, but to other aspects that remain outside it and could complete it. Having said that, it may seem that ethical codes are just a declaration of intentions, but their actual implementation favors the following aspects:

  • The promotion and support of regulatory compliance in companies
  • An agile and easy decision making
  • The resolution of the possible conflicts and dilemmas that arise in the workday routine
  • The knowledge of the different behavior patterns: what actions are forbidden, what the most appropriate behaviors in certain situations are, what the company expects of its employees, ...
  • The establishment of impartial criteria that help the members of the company to carry out their work safely and without uncertainty
  • The generation of trust among population and, therefore, the boost of a good brand reputation
  • The recruitment of clients, employees, investors, distributors, ...
  • The promotion of a climate of job satisfaction and the loyalty of the members of the company

 

Ethical codes and their raison d'être

A true commitment

As a general rule, the compliance with ethical codes is not subject to external verification. However, when both managers and employees start being part of a company, they accept the moral commitment to comply with its corresponding ethics code. Likewise, the company assumes the responsibility of ensuring compliance with the models of conduct and values which are set in its ethical framework; being itself responsible for fulfilling this mission, that is, responsible for its self-regulation.

The effective compliance of ethical codes is the great challenge of these companies. On the one hand, they can implement reinforcement mechanisms that help monitor and confirm whether the application of this ethical framework is real or not. In these cases, they can count on the help of internal compliance teams and external audits which can be carried out by consultants, NGOs or  religious or academic institutions. On the other, companies must promote a corporate culture that fits the proposed model, otherwise they will be following the opposite way to their goal, and it will be difficult for the ethical framework to take shape within the company.

The people who are ultimately responsible for the compliance of ethical codes are those who occupy a position of advantage over the rest. It is important to highlight the idea that the values, principles and rules of conduct which are exposed in ethical codes must be accomplished by all the members of the companies, not only for a part of them. The commitment of those who are in a higher hierarchical position must be greater, if it is possible. At no time the criteria which are presented in them could be applied arbitrarily. If this is the case, their ethical framework will lose credibility and, consequently, the trust of their employees and society broadly speaking.

The elaboration of an ethical code is not in itself a guarantee of the compliance with the values and principles which are defended in it. But it is a first step in the consciousness on the social responsibility of companies. At The CEU IAM Business School, we are aware of the fact that the leaders who will be responsible for promoting their business in a global and changing scenario must also have strong values and a deep sense of ethics. That is one of the reasons that has led us to design our International MBA: a program that takes place in Asia, Europe and North America and in which professionals from more than 30 countries participate, representing all continents.

 

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