CODE OF ETHICS: FUNCTIONS, LIMITATIONS AND REMEDIES

Code of Ethics
A code of ethics according to Rossouw and Van Vuuren (2004:216) is a document
which spells out morally acceptable behaviors for members of a particular group,
association, profession or organization. Codes of ethics have also been defined as
guidelines to the moral principles or values used by organisations to steer conduct, both
for the organisation itself and its employees, in all their business activities, both
internally and externally (Morland, 2006:22).
A code of ethics therefore defines the moral standards or guidelines that need to be
respected by all members of an organization in their decisions and actions (Rossouw
and Van Vuuren (2004:216) as well as lay down the ground rules for ethical behaviour in
an organization (Trevino and Nelson, 2011:227).
Functions of moral codes
Moral codes serve a number of important functions be it within or outside the
organization, and the following are some of them:
Rossouw and Van Vuuren (2004:216) states that moral codes in ethics are useful for
raising ethical awareness and expectations by means of establishing standards of
morally acceptable behaviour within the organization. Thus, moral codes of conduct will
make members of the organization aware of the expected standard of behaviour as well
as ensuring that they are committed to following basic ethical guidelines in the course of
doing their work.
Here, a code of conduct envisaged to provide explicit guidance to employees so that
they know what is expected of them in terms of ethical behavior hence acts as a
benchmark. For example, codes of ethics can be given to new employees upon
induction and this serves as a way to ensure employees understand the importance of
ethics and that their jobs require adherence to the company's standards.
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Secondly, a code of ethics can be used to promote fairness by preventing unethical

behaviour on the part of employees (Rossouw and Van Vuuren (2004:216). This
proposition is premised on the fact that, by merely having moral code of ethics in place,
the organization is essentially telling its members of staff what is acceptable and what is
not hence any deviation will not be tolerated by the organization.
A code of ethics according to Rossouw and Van Vuuren (2004:216) can also be used to
promote organizational integration and coordination by rallying people around specific
ethical values that will strengthen commitment to the organization. Thus, by
understanding and sharing certain core values, an organization can achieve integration
and more coordination since everybody will be pulling in the same direction.
Larmer (2002) notes that a business with a code of ethics is likely to be viewed more
favourably by its stakeholders. On the other hand, Rossouw and Van Vuuren (2004:217)
indicate that by having a moral code of ethics in place, an organization can enhance its
reputation amongst its various stakeholders so long as it addresses or satisfy some of
their concerns. Thus, from a stakeholders point of view moral codes of ethics will seek
to satisfy their needs, pacify their concerns, promote an organisations reputation,
deflect any government interference, and pre-empt any legal action against a company
(Rossouw and Van Vuuren (2004:217).
A code of ethics according to Rossouw and Van Vuuren (2004:221) can also be used to
enforce ethical standards by disciplining those in breach of ethics. Thus, every member
of staff will be aware of the consequences or sanctions for disregarding provisions
within the moral code.
Limitations of moral Codes
As already noted, having a code of conduct provides a number of important functions.
However, the key difficulty with moral codes involves translating high sounding
principles into practical guidelines (Morland, 2006:22). The following are some of the
limitations pertaining to moral codes.
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Inequality
Rossouw and Van Vuuren (2004:224) state that codes of ethics sometimes tend to
silence dissenting voices in an organization. As the purpose of a code is to enforce
uniformity in moral behaviour, it follows that by its very nature a code of ethics will tend
to silence alternative moral views. Thus, by excluding certain views from the code, this
brings some sort of inequality and injustice on those who might have had valid moral
viewpoints but are not accommodated.
Cumbersome
Rossouw and Van Vuuren (2004:224) note that codes can sometimes be cumbersome,
contradictory and difficult to apply. Thus, in such situations, people will fail to apply the
code where ethical decision making is required.
Counterproductive
In some cases, codes of conduct might be counterproductive. Thus according to
Rossouw and Van Vuuren (2004:224) this happens where there is a discrepancy
between the professional and actual behaviour of an organization. Here, the point is that
without proper guidance, different parts of the organisation may interpret the code
differently, ultimately devaluing it.
Finally, Morland (2006:227) indicate that codes are often regarded with skepticism both
by

internal and external stakeholders. They are perceived as window-dressing, as

public relations exercises that have no real effect on business as usual. To the extent
that there is merit in these charges, codes may actually contribute to the dissociation of
ethics from business practice.
Remedies for moral codes
The institute of Business Ethics (www.ibe.org.uk) among other remedies lists the
following as some of the steps to ensure that a code of ethics works alright. The first
thing is to secure commitment of top management. The argument is premised on the
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fact that without the absolute and public commitment of top management, a code will
not be taken seriously by employees.
Next is to gain organisational agreement on the primary purpose of a code. Is the code
mainly for the benefit of employees, or is it to be directed at those with a "stake" in the
organisation, including non executive directors, shareholders or even customers? Thus,
you need to be clear on the major objectives and the changes that a code may imply.
Thirdly, identify and define existing sources of values within the organisation. Consult
existing codes, legal guidelines, policy memoranda and founding statements, and
involve both managers and employees in their evaluation.
The next step is to prepare a draft code whereby you seek employee input at all stages,
encourage a climate which enables discussion of, and challenge to, the principles of the
code without undermining it. Included in the draft code among other things will be an
introduction explaining its purpose, the need for it, and expectations about its use, a
clear definition of the organisation's mission and objectives and guidance on handling
relations with each of the organisation's constituencies: employees, shareholders,
customers, suppliers, the outside community etc.
Once the draft is finished circulate it widely within the organisation and take comments
seriously .Consultation should be wide and feedback and comments should be sought.
This will have the additional benefit of reinforcing awareness of the code. If a significant
amount of revision is necessary then a further circulation should follow.
Finally, once the code is finalised, devise an implementation strategy and circulate the
code widely. The implementation strategy must be both dynamic and continuous.
Incorporate the code into induction, staff training and management development
programmes bearing in mind that implementation, like the preceding processes, may
well benefit from a project management champion who can drive implementation
forward with purpose, sensitivity and consideration.
References

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Larmer, R.A. (2002) Ethics in the Workplace: Selected Readings in Business Ethics, 2nd
edition, Belmont: Thomson Learning.
Morland, M.P. (2008) Business Ethics as Practice: Ethics as the Everyday Business of
Business, Cambridge: Cambridge University Press.
Rossouw, D., Vuuren, L. (2004). Business Ethics, 3rd edition, Cape Town: Oxford
University Press.
Trevino, L. K. and Nelson K.A. (2011) Managing Business Ethics: Straight Talk About
How to Do It Right, 5th edition, Massachusetts: John Wiley & Sons, Inc.
www.ibe.org.uk [online] accessed on 23 January 2012

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