The board of directors is responsible for implementing the mission and vision statements of an Organization which could incorporate in itself the ethical values in the culture of the Organization. However, to connect the same, it shall be essential to comprehend the concept of Code of ethics. Code of ethics is those principles that guide the professionals to undertake their business or profession in an ethical manner that blends honesty with integrity. Code of ethics in an Organization refers to the universal adherence of the principles across the Organization and therefore it shall help the management to guide them doing the right things. This set of ethics when defined as a code, could be imposed upon an Organization by the Board of Directors by way of Organizational mission and vision statement that regards in itself the overall Organizational values. This in turn, could help the employees be guided towards the ethical path even without giving any answers to the ethical issues in a direct manner.
Code of ethics could therefore serve an important value if it could be incorporated in the HR policies under due guidance of the Board of Directors to govern unethical behavior apart from a definite program of Corporate Governance to take care of the legal issues pertaining into the Organizational activities. For example, Business firms have to operate profitably or they will not survive over the long term; that is their economic performance. Here, the code of ethics helps in sorting out the ethical dilemmas for the leaders undertaking this activity. Further, various types of audits could be conducted to ensure its application in the Organization in the following ways with due interference from the Board of Directors:
Draw up on ethical code in the system
Familiarize employees with the ethical code
Ensure implementation
Formation of Ethics committee
The value could also be comprehended with the fact that there has been an urgent call for laws that enforces ethical codes. In this regard, we already have Sarbanes-Oxley Act that came into existence in response to the public outcry for the financial misconduct of the Public companies as faced by the shareholders and public. Accordingly, this Act became part of the US Federal law that emphasizes upon the Corporate responsibility, transparency in business and the Auditing accountability of the Public companies, as an expansion of the already existing accounting acts that govern the activities undertaken by the Public companies. Putting into force this act by the Board of Directors does not mean that the codes of ethics are no longer necessary. Rather it shall complement the current existence of the codes in a major way. As a matter of fact, when abiding by this act, most of the part of code of ethics is formally covered in it but for the further enhancing of a Corporate image and for the implementing the strategies of Corporate Social Responsibility, putting Code of Ethics into practice shall be essential.
Corporate Governance could also be taken in high regards in an Organization to support the Code of Ethics. There are many cases where the law coincides with the Business ethics or ethical behavior of Organizations or individuals for e.g., in case of Business ethics, Corporate Governance is about maximizing value subject to meeting the corporation’s financial and other legal and contractual obligations. It is the need for board of directors to balance the interests of shareholders with those of other stakeholders in order to achieve long-term sustained value. It is about nurturing enterprise while ensuring accountability in the exercise of power and patronage by firms.
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