According to Trevino and Weaver, (2003) ethical policies can
shape an employee’s behaviour positively thus influencing ethical decisions in
an organisation. This is further supported by Manley (1991) who stated that
codes of conduct are employed in firms to help workers feel more positive about
their company.

Although some companies have such
policies to promote good behaviour other firms such as Lehman brothers play an
active part to guide their employees to behave ethically, with a general
consensus of employees across organisations favouring to work for company’s who
are committed to values and ethics. This shapes the experience of the
individuals involved as it creates a an
atmosphere were values are meaningful and aligned with those of staff, people
are more motivated to work for you (Jenkin, 2018)

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This is further supported by Solomon and Hanson (1985) who
argue that codes of conduct are vital for providing guidelines, stability, and
a point of focus for everybody in the organization. Prior findings by Murphy, Smith, Daley (1992) and Somers (2001) conducted in United States show that awareness
of unethical activity is less prevalent in corporations that have implemented
codes of conduct. This provides evidence to support the proposition that
employees in organisations who had adopted corporate codes of conduct were
significantly more aware of wrongdoing than were employee in organizations
without codes of ethical conduct. However,
according to Montoya & Richard (1994) in
some situations individuals can make wrong decisions which can be associated
with the individual’s morals.

McDonald and Nijhof (1999) developed a framework for
implementing an ethical policy curriculum designed to inspire individuals to
behave morally and responsibly in organisations which could increase the
ethicalness in the employees ‘actions and behaviour’.  However, communicating codes of conduct from the
upper echelons of order can sometimes lead individuals to flout the policy.
Trevino and Weaver (2003) found that in highly centralized organizations,
mandated codes were found to be ineffective because employees rejected the
attempts at top-down control. Creating ethical policies does not ensure that
ethical behaviour will occur; rather, ethical decision-making and the code must
be a part of the corporate culture and not mandated from the executive
suite. 

Ethics code will only work when employees see that
organizational actions are in line with the ethical policies. Codes of conduct become
structurally embedded when directors successfully create and act in accordance
to the organization’s culture using the code. According to Adam and Rachman
(2004), ethical policies can shape an individual’s behaviour by discussing the
core values with each other, thus making the members realise that taking the
right action will often require them to have conversations with other
individuals. Furthermore, Petersen and Krings (2008) argued that codes of
conduct significantly reduced “employer discrimination”, however only when the
ethical policies are part of a society and has approval from a higher level.
Ethical policies have a significant impact on the managers behaviour in terms
of their role, as having such policies implemented forces the managers to
behave “ethically right”. The “moral actions” of a manager usually have the
greatest influence on employees, this is supported by Adam and Rachman (2004)
who argued that ethical policies are more effective when managers and corporate
boards abide by the rules and set the right tone, rather than providing ethical
training to employees.

However, ethical
policies can fail if rejected by the culture of an organization. For example, Enron’s ethical
policies failed due to a number of reasons such as; the company not being
socially responsible to their stakeholders, betrayed their investors and
employees regarding their real financial status, despite stating in their
report that they aim to implement code of conduct to respect others, assurance to
non-discrimination, protecting the environment, human health and natural
resources etc. Perlow and Williams (2003) argued that having ethical policies
implemented may not always work if individuals feel like they cannot
communicate openly about wrongdoing.

Organizational
members react to clear and visible justice, so where managers’ or employees’
behaviours violate the code and no consequences are observed, the code will
fail. Nitsch,
Baetz & Hughes observed that frustration, cynicism,
and anger develop when code violations go unpunished (2005). NS1 Perceived
unfairness or unequal treatment also causes low trust in organizations and
weakens members’ commitment to the code (Kickup, 2005).

Similarly, Glenn and Van Loo’s (1993) study has shown that
codes of ethics appear to be less influential than the individual’s strong
personal value system. This is further supported by Michael Schtuartz (2002)
who argued that ethical codes are a management system designed to control the
organisation by formulating policies. This shows that in the absence
of ethics codes, individuals might behave differently. In relation to
this, Simon Critchley (2007) argued that everyone are moral individuals and
that there is always this demand on us as moral actors.

Overall, codes of conduct are seen as an important tool in
creating and establishing an ethical environment. Nevertheless, there is little
agreement in the literature on the extent of usefulness of codes and the
influence they have on behaviour, with some scholars proposing that a code of
ethics has a significant influence on ethical perceptions, judgements and
behaviour, while others are more sceptical, suggesting that the foundation of
ethics is in the mind of the person, through the personal value system.

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