Compliance vs Integrity

Code of Ethics
Dr. Ritesh Mehta Kumar
Code of ethics
• A code of ethics is a written set of expectations that an organization
has for its employees to conduct business in an honest manner. Ethics
are values and principles that govern behavior or conduct. A
company's code of ethics is important for a business setting because it
sets the expectations that a person working for the business is just
and fair. This instills a sense of trust and confidence amongst the
stakeholders of the business. Stakeholders are any person or entity
that holds an interest in the business. It also helps to protect the
company from things such as liability and criminal suits and keep
negative media at bay.
• A code of ethics functions to maintain integrity in regards to a
company's public interactions and makes sure they participate in fair
business practices, which can essentially protect the company's
reputation. Its purpose is to have universal compliance so that
employees will make good decisions in the workplace. A code of
ethics is different from a code of conduct in that a code of ethics is a
broad accountability document that outlines professional standards
for employees while they are engaged in business practices, whereas
a code of conduct serves as a guide for an employee to conduct
themselves on a day-to-day basis
Code of ethics example
• The following language is an example of what would be found in a
code of ethics document:
• Respect and honesty are an essential part of our core values.
Documenting all transactions to ensure transparency is a part of being
competent and taking accountability for your work. Failure to do so is
considered poor and improper work ethic. Maintain integrity by being
fair and objective at all times—no one customer should feel they are
receiving less than the other. We are bound by the operational laws of
the national organization. Lawlessness will not be tolerated under any
circumstances.
Compliance based code of ethics
• Unlike general ethics policies which may be little more than values
statements, compliance-based business ethics have some rules
attached to them, either by law or as company policy. In either case,
employees are obliged to comply with those rules. Some of these
laws, like Securities and Exchange regulations, apply only to publicly-
traded companies. Others, such as occupational safety and health
laws, apply to public and private companies. Compliance-based is not
the only category of business ethics; values-based ethics comprise
another category.
Value or Integrity based code of ethics
• Integrity is an intricate and important part of all business ethics in
which scholars and practitioners confirm that its presence is
necessary to attain various ethical goals of business.
• Integrity is a lot of things to a lot of people and organizations, but its
basic premise is based on honesty.
• Integrity “emphasizes moral consistency, personal wholeness, and
honesty”.
• The meaning of integrity is seldom agreed on and sometimes even
contradictory in nature
• Integrity is defined as “harboring positions of consistency and
durability manifested in a correspondence between authentic values,
espoused values, and behavior, also persisting in adverse situations”.
• All in all, it means to define a set of personal values based on honesty
and to adhere to these values in all situations regardless of how
adversarial an encounter may become.
A comparison of the two
• A compliance based organization is one that establishes rules and
conduct with penalties for disobedience. The repercussions of non-
compliance keep employees in line.
• Fear appears to be the driving motivator in the adherence of
compliance-based ethics. In American companies, reduced sentencing
guidelines were the major factor in adopting ethical programs in nearly
all of the Fortune 500 companies.
• The incentive not to go to jail or to go to jail for less time is a strong
motivator to have an ethical program but is certainly not one that will
be believed in by employees. This is merely crisis-driven government
response in these organizations
• Integrity based ethics programs produce employees that are more
prone to being committed to their organizations, more aware in an
ethical sense and more willing to report problems ethical in nature.
• Ethical programs based on integrity allow firms to monitor: employee
misconduct, employee comfort levels with reporting misconduct if
employees believe they are being treated fairly, and if employees feel
pressure to overlook certain matters.
• From the results of this monitoring system, organizations can identify
integrity based ethical related countermeasures that will produce
positive results [13] .
• Another facet of integrity based ethical program is the incentive
principles interwoven into the foundation. Rewarding ethical behavior
by recognition and financial awards sends a message that ethical
behavior is an organization’s way of life.