B.L. Ochman from EthicsCrisis.com asks a very important and valid question: Are Corporate Ethics Codes Bunk? The short article is an interesting read and points out a few of the major shortcomings of most Ethics Codes:

“Building codes, health codes, fire codes have teeth. Violating them results in legal penalties. But nothing at all seems to happen to those who violate corporate or association codes of ethics, not even a slap on the wrist. If corporate ethics codes are to hold any meaning, they’ll need the force of law behind them. Otherwise. what’s the point?”

I think the statement that ‘nothing at all seems to happen’ is a bit too general, but the point is still quite fair. For Ethics Codes to have any real power or deterrence, clear repercussions must be specified and carried out in the event of a violation.

Often corporations start out with a lot of momentum–they draw up a comprehensive Code of Ethics, issue a press release, and pat themselves on the back. A few weeks go by and though the Code is now posted on the corporate website and available for the whole world to download and peruse, knowledge of its existence within the corporation quickly gets pushed to the side. Perhaps a violation prompts a reference to the Code, but following its corresponding instructions seems like an awful distraction to an already busy workday. Employees start to look the other way, and business as usual returns to business pre-Code.

Critical to the success of implementing an Ethics Code in a corporation is the level and depth of upfront training provided to employees, strength of subsequent and consistent ethics audits, and the extent of support for the initiative from the corporation’s leadership.

TAGS: Code of Ethics | Ethics | Fraud | Corporation

Just a quick pointer to one of Michael Standaert’s recent posts: Is CSR Really Taking Shape in China?