The Need For Effective Organizational Ethics Programs

By Tracy MacDonald
Apr 2018

Ethics are defined as a set of values and principles that guide a person in decision making as well as in their daily activities. An organizational code of ethics refers to the principles and values that govern the actions, decisions, policies, and programs. Ideally, organizations and corporations are continually viewed as moral agents tasked with the responsibility of proving proper conduct to the company’s stakeholders (“Good Governance Program”, 2004). In effect, it is imperative that businesses operate under specific laws and regulations to ensure that the employees of the company are guided on how to react and manage ethical issues, as well as understand the formal restraints in the company’s structure. On the other hand, it is also necessary that the managers of the company can determine the goals they seek to meet when they design an organizational ethics programs. Among the key attributes of such a program is that it should be action-oriented, specific, timely and relevant (“Good Governance Program”, 2004). Ideally, a good program is one that can achieve the desired organizational outcomes, as well as blend well with the needs of the organization. Therefore, the aim of this essay is to establish the importance of ethical programs in organizations.

It is imperative that each business is guided by a unique ethical character. Establishment of an ethical character emanates from the development of an effective, ethical program which seeks to foster appropriate risk management, compliance, promote the development of value-adding activities, as well as ensure better company reputation (“Good Governance Program”, 2004). Ideally, it is the core of business ethics goals to make sure that all these objectives as stated are achieved in the company. Further, an organization with an effective, ethical program relays that the company is a responsible business enterprise, with the capability to meet its responsibilities in the community it operates. Therefore, through the development of an effective, ethical program, a company can relay its social responsibility capacity, which in turn influences the general business outlook in the society. This is reflected in the company’s core values, core purpose, and possible future goals.
It’s an organization’s duty to ensure that proper ethical behavior is implemented in the workplace, both from its leaders and the employees. This is because ethical behavior helps an organization to increase its productivity. This is proven where if its leaders are ethical, the employees have ethical behavior such as loyalty, honesty, and discipline. In effect, the morale of the company employees is increased leading to a boost in production. The employees feel they are being treated justly and equitably hence they work efficiently with morale and dedication to the customers (Brock, 2008). An organization where customers are treated properly encourages customer loyalty and attracts new customers to the organization. This is because the customers prefer to deal with an organization that has a reputation for proper and ethical behavior. An increase in customers and customer loyalty leads to an increase in production hence profit increase to the organization. A recent example of an organization that failed to implement a proper ethics programs is Wells Fargo. It was discovered that their employees were creating fake accounts on behalf of their customers without their knowledge (Egan, 2018). A situation like that is the worst case of poor ethics on an organizational level, resulting in a public relations nightmare for a company that customers are supposed to trust with their finances. They did not only lose their customers trust, they lost their stakeholders trust, a misstep that will be very costly to recover from. Not accounting for the legal cost of the federal regulations and customer lawsuits.
Running an ethical organization is important because it communicates to the stakeholders and investors that the organization is organized. This is reflected from the clear-cut objectives, missions, visions and a set target they want to achieve (Morris, 2005). Thus, when ethical behavior becomes a culture and a norm within the organization, they build upon goodwill where every potential investor will want to be associated with. It is because of this that small and medium-sized organizations opt to implement ethical behavior during the initial stages of entrepreneurship to minimize and prevent the risks that occur in the late future and to also develop an early stage of ethical behavior and conduct within the workplace.
Moreover, ethical programs help an organization prevent unnecessary legal lawsuits and unnecessary costs. Lawsuits result from unethical behavior emanating from poor conduct like fraud, misappropriation of finances, tax evasion and skimming (Morris, 2005). Such practices may lead to legal action against the organization which makes the organization incur unwanted costs. Other than unwanted costs, the organization may lose investors who are the main source of capital that is used to run the operations of the company. As a result, most investors prefer to be associated with a company that has good reputation and goodwill, enforced through adherence to their ethical programs. In any case, if a company’s reputation is ruined it may lack the necessary funds to operate its daily activities, therefore effective ethical programs ensure that such behavior is restricted and controlled.
It is the moral obligation of every organization to make sure that ethics is maintained in the workplace, by creating a culture that nourishes it. This can be attained through implementation of ethical programs. They help the organization and its leaders run and control the organization since it helps promote and foster a lot of relationships in the organization such as employee relation, customer relations investor relations. Through this relationship, a company progresses and grows. Therefore, ethical programs are very vital to a company if implemented during the initial stages of the organization. It also is to be maintained and updated throughout the organization’s lifecycle.

 Brock, J. (2008). Employee Perceptions of Organizational Ethics Programs After the Implementation of Sarbanes Oxley: A Longitudinal Study of Employees in the Contiguous (p. 6). Proquest.
 Egan, M. (2018). 5,300 Wells Fargo employees fired over 2 million phony accounts. CNNMoney. Retrieved 7 February 2018, from
 Good Governance Program. (2004). Retrieved 7 February 2018, from
 Morris, G. (2005). The importance of ethics programs. Retrieved 7 February 2018, from

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