Ethical conduct is of paramount importance, especially for an educational organization like EDMC. Having carefully reviewed its Code of Business Ethics and Conduct (hereinafter the Code of Conduct or the Code), I propose the following System of Inquiry for ensuring ethicality and integrity of EDMC employees’ behavior in all work-related situations. Firs of all, the questions with regard to why, how, when, and by whom it is used will be answered. Secondly, possible problems associated with its implementation as well as implications for organizational development will be discussed.
Why The Code of Conduct was developed in order to ensure compliance with relevant legal regulations as well as maintain “the highest moral, legal, ethical and financial reporting standards” (Code of Business Ethics and Conduct, 2007, p. 7). It was created with the broad goal of enhancing the welfare of all stakeholders dependent on the success of EMDC. The Code should contribute to the realization of EMDC values, such as excellence in education, culture of learning and collaborative decision-making, as well as it vision and mission, which is to meet employers’ needs through producing qualified graduates.
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At the same time, EMDC aims at profitable growth. At a first glance, pursuance of broad social agendas and emphasis on ethics is counterproductive, since competition in the business world is stiff and requires swift and determined action that sometimes has to be taken without regard for or even in spite of ethical considerations. However, experience has shown that “ethics and profits are not mutually exclusive in principle and in practice” (Cooke, 1991, p. 251). Moreover, Somers (2001) argues that “firms with codes of ethics might be more concerned with profitability than are firms without such codes” (p. 194).
Thus, there are good reasons why EDMC designates each of its employees as “a trustee of our reputation as a legally and ethically responsible member of the community in which we conduct our business” (Code of Business Ethics and Conduct, 2007, p. 21). Every EMDC manager and officer is seen as representing their company in all business situations. In such a case, ethical behavior of each individual employee becomes the foundation of the company’s public image.
EDMC has established a clear framework for resolving ethical issues. It has created Corporate Compliance Website and Hotline where employees can receive all the necessary information. Employees are encouraged to ask questions about the Code’s policies and procedures in order to understand the overall intent of the Code as well as specific policies. Corporate Human Resources Department oversees the Code’s implementation, with the assistance of Law Department and Internal Audit Department. All EMDC employees have to sign the appendix to the Code titled “Code of Business Ethics and Conduct Acknowledgement” where they ascertain that they have read and understood the document.
All employees of EMDC have to observe the Code in their daily interactions with internal and external stakeholders. In case a suspicion of violations of the Code exists, employees are encouraged to report such suspicions on the conditions of anonymity; any form of retaliation against such a person is not tolerated by EMDC.
One of the main features of an effective Code of Conduct is its applicability to all employees in all work-related situations, be it a receptionist or senior manager. Only in such a case the organization of work practices will be perceived as fair by everyone, and all workers will develop strong alignment with organization’s vision, mission and ethics. Somers (2001) observes that “the highest levels of commitment were observed in those organizations with codes of ethics” (p. 194). In order to ensure such commitment, EMDC specifies that the Code “applies equally to EDMC directors as well as employees at all levels” (Code of Business Ethics and Conduct, 2007, p. 7).
Problems of Implementation
Any change in any organization is likely to meet resistance. Even if in the long run a Code of Conduct turns out to be a development welcomed by everyone, a lot of work is required from senior management at the initial stages of its implementation. Senior management should first of all communicate the changes openly and effectively: in a situation like this, they “should meet with all managers and staff to explain reasons for the change, how it generally will be carried out and where others can go for additional information” (McNamara, 1999, “How is organization-wide change best carried out?”, para. 2). It is true that “communicating with employees during times of change — and recognizing them as primary stakeholders — is critical to an organization’s success and survival” (Gillis, 2004, p. 30).
Secondly, senior managers should become leaders by example in implementing the Code of Conduct. They should refer to it in their decisions and actively apply it to the resolution of problems which arise. In other words, senior managers should “share their perspective and be open” (Haneberg, 2007, pt. 2). However, EMDC delegates the responsibility for implementing the Code to all employees if the company: all “officers and managers are responsible for communicating and implementing the policies contained in the Code within their specific areas of supervisory responsibility” (Code of Business Ethics and Conduct, 2007, p. 7).
Implications for Organizational Development
It is not counterintuitive to suggest that ethical organizations are more successful than those which have not elaborated on their own Code of Conduct, although this statement might be hard to support by empirical findings. Ethical organizations encounter lesser problems in the process of establishing lasting and productive relations with all concerned stakeholders, such as customers, suppliers, regulatory authorities, and local community. A certain uniformity of work practices allows external clients as well as employees themselves to expect the same approach to decision-making and problem-solving in different situations.
The term EMDC itself employs is “ethical risk”. As Cooke (1991) notes, “any firm that creates an internal environment that either discourages ethical behavior or encourages unethical behavior is at risk” (p. 251). Thus, ethical risk should be analyzed and handled in the same manner as other types of risks, the only difference being that firms have more control over their internal environment than external environment. Promoting observance of a codified set of ethical rules is the first step towards eliminating ethical risk, and a culture of honesty and accountability is conducive to organizational success.
Trevino, Butterfield and McCabe (1998) stress the importance of two factors that have potential to shape employees’ behaviors and attitudes: ethical climate and ethical culture. The notion of ethical culture has been briefly discussed above, while the concept of ethical climate merits further reflection. Cullen, Parboteeah and Victor (2003) suggest nine types of ethical climate organizations can have, along three axis of analysis (egoistic, benevolent and principled) and three loci of analysis (individual, local, and cosmopolitan): egoistic-individual climate (focus on self-interest), egoistic-local climate (focus on company interest), egoistic-cosmopolitan climate (focus on efficiency), benevolent-individual climate (focus on welfare of individuals), benevolent-local climate (focus on welfare of groups inside the organization), benevolent-cosmopolitan climate (focus on welfare of external stakeholders), principled-individual climate (focus on personal morals), principled-local climate (focus on organizational rules and regulations), and principled-cosmopolitan climate (focus on external laws and codes).
EMDC Code can be seen as a promoting combination of several typologies of ethical climate. On the one hand, the emphasis is on complying with legal regulations (principled-cosmopolitan type). Simultaneously, the mission of EMDC is to promote the welfare of all stakeholders it is dealing with (benevolent-cosmopolitan climate). Finally, EMDC recognizes that there are no universal answers to all ethical dilemmas, therefore it trusts its workers to act in an ethical fashion in accordance with their individual moral codes (principled-individual type). Despite the fact the Code of Conduct cannot be seen as establishing a particular type of climate at EMDC, it is still rather effective in promoting ethical and moral behavior and compliance.—————————————————————————–
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