Q. 3: How can organizations institutionalize ethics?

Discuss with help of

real life cases.

Ethical business practices do more than create a good name for a company. They tell employees,
suppliers, investors and shareholders they are associating with a trustworthy company that will protect
their interests and make decisions not based solely on profit. Ethics reaches to every corner of a
business and requires that employees and everyone who represents the company or acts on its behalf
understands the policies and rules regarding ethical behavior. Ethics should be part of the corporate
culture and modeled at the highest levels of the organization.

Corporate Policies
Most people learn the difference between right and wrong at an early age. But sometimes the
difference between right and wrong in a business setting isn’t black and white. A company should
establish guidelines for ethical behavior and identify the proper course of action in situations that might
have several possible outcomes. Train employees on the policies, and provide periodic updates when
situations arise that suggest a policy might be unclear or needs to be reinforced.

Ethics Training
Establish annual ethics training for employees to ensure they understand the corporate ethics policies
and know how to respond if presented with a situation that might compromise the company. Scenario-
based training involving employees, suppliers, management and others in hypothetical situations is an
excellent way to learn how to respond ethically to situations where there are several possible outcomes.
Give employees a printed or downloadable ethics manual for reference during the training and
throughout the year.

Ombudsman
Even with clearly defined ethics policies, employees may face situations involving unethical behavior but
don’t want to get a co-worker or supervisor in trouble. Or an employee might be afraid that reporting
unethical behavior could jeopardize his job. Corporations can reinforce ethics policies and encourage
employees to abide by ethical standards by providing an ombudsman to discuss sensitive situations with
them, advise them on the proper course of action and protect them from retaliation.

Industry Recognition
Look for opportunities for recognition among industry peers as an ethical business. Ethisphere, which
recognizes the “World’s Most Ethical Companies” each year, uses a rating system to capture a
company’s ethical performance. It found that companies that make the cut have greater return on
investment than those that don’t. Having a designation as an ethical business can attract employees and
investors and earn positive press for your company. In turn, it helps strengthen the corporate image,
build equity in the brand and position the company favorably on Wall Street and in the marketplace.

Suggestions
 Make a formal presentation.
 Make the Code available publicly.
 Train Code “ambassadors.”
 Train new employees on the Code.
 Require employee signatures.
 Make the Code accessible to clients.

Case Study
The Pakistan Microfinance Network (PMN), an industry association for microfinance in Pakistan,
developed a Code of Conduct for Consumer Protection for the country’s microfinance sector. Each PMN
member became a voluntary signatory to the Code in early 2009. PMN’s strategy is to disseminate the
Code of Conduct to three types of stakeholders:

1. The staff of its member organizations,

2. The clients of its member organizations, and
3. Pakistani policymakers.

In order to reach MFI staff, the Code was translated into Urdu (Pakistan’s national language) and into
the four provincial languages. PMN produced the Code in poster form, for display in members’ branch
offices.

Beyond these efforts, PMN ensures that member MFIs internalize the Code by:

1. Holding an official launch event during which all members signed on to the Code.
2. Encouraging members to complete the Smart Campaign’s Getting Started Questionnaire, a self-audit
of current client protection practice.
3. Offering a short training module on consumer protection for its member MFIs to use when training
their staff. Training topics include: the core values of client protection; its importance for the
Pakistani microfinance industry; what client protection means for MFI staff; and the business case
for client protection.
4. Hosting various sector roundtable events that include issues on client protection and responsible
finance.

Great Code of Conduct?

A code of conduct defines how a company’s employees should act on a day-to-day basis. It reflects the
organization’s daily operations, core values and overall company culture. As a result, every code of
conduct is unique to the organization it represents. Yet many companies struggle with how to write a
great code of conduct and, as a result, their codes fall short.

Writing a great code of conduct requires a thorough understanding of the company, its culture and
vision. But no matter the company, all great codes of conduct share certain characteristics.

A great code of conduct is:

Written for the reader. It is easy to understand and doesn’t include any technical or legal jargon.

Comprehensive. It covers all important details that may impact the daily lives of employees and answers
common questions that arise.
Supported by leadership. It has been acknowledged and approved by the company’s senior
management team. This is often demonstrated in the form of a foreword written by the CEO or
President.

Accessible. It is available to all employees, current investors and potential investors.

Visually appealing. It follows a style that is clean and reflective of the organization.

Few Examples
The Coca-Cola Company
A quick glance at the Coca-Cola Code of Business Conduct reveals a clear, unifying theme: integrity. This
theme acts as the foundation for every component of the code of conduct, including rules about the use
of company assets, use of information, conflicts of interests and dealing with external
stakeholders/partners. By embedding one of its core values into its code of conduct, Coca-Cola is able to
demonstrate its strong commitment to the business standards it has developed.

The company’s code of conduct also includes addenda that outline necessary definitions, disciplinary
action standards and additional resources that may benefit employees. Coca-Cola’s code of conduct is
well organized and designed, easy to understand and comprehensive.

Starbucks
The Starbucks Standards of Business Conduct begins by outlining the principles and values that
Starbucks aims to uphold as a company. The document then dives into detailed descriptions of
organizational expectations with respect to the work environment, business practices, intellectual
property and community involvement. In many instances, the company indicates where or who
employees can refer to for assistance or more information.

Starbucks’ code of conduct also answers several questions that employees can reference when facing
uncertainty. These short Q&A sections help readers understand how they should act in certain
situations and why that behavior reflects the standards created by Starbucks. Additionally, Starbucks has
included a unique ethical decision-making framework to assist employees when they are faced with
ethical dilemmas in the workplace.

Microsoft
Like Coca-Cola, Microsoft’s Standards of Business Conduct have been drafted around one central
theme: trust. The company emphasizes that trust is an important aspect of its operations, including with
customers, governments, fellow employees, investors and representatives. The code of conduct also
offers a process to help employees make difficult decisions that reflect Microsoft’s values and standards.

Microsoft provides its employees with a visually appealing and easy-to-read document that is reflective
of the organization’s values. The company highlights that the responsibilities covered in the code of
conduct apply to all employees of the company, including directors, executives and members of the
Board of Directors.

Unilever
Unilever’s Code of Business Principles and Code Policies is comprehensive and easy to understand. The
document discusses the company’s values and defines the organization’s approach when combatting
corruption, engaging with external stakeholders, working with other people and protecting company
information.

Within each section of the code, Unilever has included lists of “Musts” and “Must Nots” that employees
can refer to for clarification about the company’s expectations.