Code of Ethics

This research paper aims towards determining the effects of corporate policies on employee's ethics. The concept of employee's ethics at workplace is now new but its importance has been significantly increased from the past few years especially after some corporate scandals which result in huge loss for the organizations. These include financial loss and damage to the reputation. If a scandal about any organization gains media attention then it not only causes financial loss like sudden decrease in stock price but also spreads bad word-of-mouth about the organization. It also shakes customers trust and confidence on the company which could result in decrease in potential business. Corporate policies in the organization are made to guide behavior of employees and help to avoid misconduct at work. The important aspect is that these policies should be made according to the laws of the industry in which the firm is operating and employee's point of view should be taken into account before formulation of policies. Unethical behavior breaks the code of conduct of an organization thus violating it rules, and measures like creating awareness on ethical matters to workers should be done in order to stop or minimize workplace issues.

The corporate governance policies should cover both organizational and stakeholders perspectives. An effective corporate governance system is essential for organizational growth and development and benefits customer, employees, investors, vendors and society-at-large. People are considered to be the most important asset in any organization and if employees in a company are happy and satisfied then their productivity will be increased which would be beneficial for the company. Nowadays, most of the companies have started training and awareness programs for the employees so no one can claim ignorance for any misconduct. If the management of any organization recognizes the importance of corporate governance at workplace and implements the policies successfully, then it will not only smooth the business operations but also will help to retain skilled and committed employees, which is essential for the growth and development of the company. The role of senior management is very important in this regard because if they set highest ethical standards for themselves then they would be able to communicate the corporate governance policies to the employees.

HR professionals must play a substantial part in developing, maintaining and updating ethical programs. HR department plays three critical roles with respect to ethics including determining employee's loyalty, providing consistent information and assessing perceptions about ethical behaviors in an organization. Many universities in the world are now considerably focusing on the teaching of ethics, so that the students after completion of their studies can integrate their knowledge into the workforce, realizing the value of ethics at work place. Also companies would be able to avoid the most commonly heard scandals and can attract more clients and customers.

Ethics at workplace also include professionalism and loyalty with the organization, further there should not be any harassment and discrimination at work so that every employee feels comfortable and secure at job. There should exist, an element of mutual respect among the employees.

A very important aspect of business ethics is that a client should not be misled at any stage, avoiding the use of "deceptive marketing" for the promotion of their products. Truth in advertising is very essential part of business ethics. A high degree of ethics in dealing with customers is required as they are the sole reason for business, making ethical business practices the foremost priority. In the long run, a company can produce huge amount of profit from a customer who experiences a fair treatment in business. Thus, it fosters in building up and sustaining an organization's reputation.

Review of Related Literature

According to Prof. Rashidah Abd Rahman, Faculty of Accountancy, University Technology MARA, Malaysia "As a moved to rebuild the trust on the governance systems, initiative on improving the corporate governance systems has been formulated world wide. Proactive measures have been taken by the regulators to put forward recommendations and regulations on corporate governance. Continuous efforts developed simply to guide corporations into achieving necessary high standards of corporate behavior". Most of the top leading companies of the world have started formulating corporate governance systems which guides employee's behavior at work. The goal is to develop transparent governance system and viable policies to ensure proper lines of accountable responsibility and effective risk management procedures. Good governance is formal and informal decision making and the process of which the decision is made. Therefore, good governance structure should possess characteristic such as participatory, consensus oriented, accountable, transparent, responsive, effective, and efficient, inclusive and follow the rule of law (Quinsumbing, 2007).

The important challenge for the organizations in today's modern business world is to implement corporate governance policies successfully and at the same time maintain the sustainability of the corporation. There are scenarios in the corporate world where organizations have to take harsh decisions, for instance an employee who is excellent at work and effectively developing the business of the company, if he violates the company's code of conduct which demands disciplinary action, including dismissal from the company than this will be a very difficult decision for the management because if they fire the employee then that could result in business loss but if they try to retain that employee and not follow the company policy then that can create frustration among other employees which will hurt the organization in the long run. The important thing is that decisions should be made in the best interests of the company. The company's interests should be above from any personal or business interests. There is a moral obligation of employees to avoid conflicts between personal interests and the company's interests and all applicable laws and regulations should be followed to make sure that no one in the organization is violating company's code of conduct.

According to Fisher (2004) "The responsibility of corporation is a set of obligations the corporations has to protect in a society in which they function". In case of multinational companies which are operating in many countries at the same time, it is the prime responsibility of the organization to formulate corporate governance policies by considering the societal and cultural norms.