The Methods Used to Implement an Ethical Code of Conduct and Employee Attitudes

Abstract

In the process of implementing an ethical code of conduct, a business organization uses formal methods. Of these, training, courses and means of enforcement are common and are also suitable for self-regulation. The USA is encouraging business corporations to self regulate with the Federal Sentencing Guidelines (FSG). The Guidelines prescribe similar formal methods and specify that, unless such methods are used, the process of implementation will be considered ineffective, and the business will therefore not be considered to have complied with the guidelines. Business organizations invest enormous funds on formal methods. However, recent events indicate that these are not, by themselves, yielding the desired results. Our study, based on a sample of 812 employees and conducted in an Israeli subsidiary of a leading multinational High-Tech corporation headquartered in the US, indicates that, of the methods used in the process of implementation, one of the informal methods (namely, the “social norms of the organization”) is perceived by employees to have the most influence on their conduct. This result, when examined against employee tenure, remains relatively stable over the years, and stands in contradistinction to the formalistic approach embedded in the FSG. We indirectly measure the effectiveness of the percieved most influential implementation process methods by analyzing their impact on employee attitudes (namely, “personal ethical commitment” and “employees’ commitment to organizational values”). Our results indicate that the informal methods (“manager sets an example” or “social norms of the organization”) are likely to yield greater commitment with respect to both employee attitudes than the formal method (“training and courses on the subject of ethics”). The personal control method (“my own personal values”) differs significantly from all the other methods in that it yields the highest degree of “personal ethical commitment” and the lowest degree of “employees’ commitment to organizational values.”