For a firm to become a highly ethical organization, it must have several key elements: role models; corporate credos and codes of conduct; reward and evaluation systems; and policies and procedures. Explain briefly each of these elements.

Question

What will be an ideal response?

Answer 1

Leaders are role models in their organizations. Leaders must walk the talk; they must be consistent in their words and deeds. The values as well as the character of leaders become transparent to organization employees through their behaviors. When leaders do not believe in the ethical standards that they are trying to inspire, they will not be effective as good role models. Being an effective leader often includes taking responsibility for ethical lapses within the organization-even though the executives themselves are not directly involved. Corporate credos and codes of conduct are mechanisms that provide statements of norms and beliefs as well as guidelines for decision making. They provide employees with a clear understanding of the organization's policies and ethical position. Such guidelines also provide the basis for employees to refuse to commit unethical acts and help to make them aware of issues before they are faced with the situation. For such codes to be truly effective, organization members must be aware of them and what behavioral guidelines they contain. It is entirely possible for a highly ethical leader to preside over an organization that commits several unethical acts. A flaw in the organizations reward structure may inadvertently cause individuals to act in an inappropriate manner if rewards are seen as being distributed on the basis of outcomes rather than the means by which goals and objectives are achieved. Many situations that a firm faces have regular, identifiable patterns. Leaders tend to handle such routine by establishing a policy or procedure to be followed that can be applied uniformly to each occurrence. Such guidelines can be useful in specifying the proper relationships with a firm's customers and suppliers.