Wednesday, August 20, 2003

Addressing ethics and behavior is important

In business, as in life, knowing exactly the right course of action can be challenging.

To guide employees, every organization should have a code of ethics that defines appropriate and correct behavior. According to the Georgia Society of CPAs, a well-written code clarifies the values and principles of an organization and helps employees understand how these cornerstones support everyday decision-making.

For example, some codes in organizations, where people work closely to deliver a product or service, are likely to emphasize teamwork and mutual respect. In a business that thrives on creative solutions, creativity and innovation may be emphasized as predominant values.

For organizations interested in creating a code of ethics, the society suggests the following steps.

To demonstrate the organization's commitment to creating and implementing a code of ethics, the effort should be led by an individual on the senior management team.

However, the process must be an inclusive one, drawing upon ideas, input and support from individuals at all levels of the organization and representing a wide range of functional areas.

Typically, a code of ethics has two components.

The first section, which sets the tone, is often a preamble and states the organization's aspirations and overall mission. The second section specifically outlines guidelines or principles to which members of the organization are expected to adhere.

It's important that the code be written in language and a style that employees can easily understand, avoiding legal jargon and empty generalizations. It also should include wording that indicates all employees are expected to conform to the behaviors specified in the code.

When appropriate for the employee population, the code should be translated into other languages.

A code of ethics should be tailored to fit your organization's specific line of business.

Consider identifying different kinds of ethical problems your employees are most likely to encounter and be sure that they are addressed in the code. Include examples that reflect real-life situations.

To gain maximum support of the new code, employees should be given a role in drafting it.

Additionally, before adoption, the code needs testing and validation with a sample of employees drawn from all levels and different functional areas.

Promoting your code of ethics sends the message that ethics is a critical issue-one which shapes the organization's culture.

Send the code to all employees, partners, suppliers, customers, and other relevant stakeholders. It's a good idea to require that employees sign the code.

You may also want to distribute it to employees in a portable form, such as a brochure or a handy laminated card. Also consider framing and displaying your organization's code or sharing it publicly by posting it on your Web site.

For the greatest effectiveness, the code of ethics should be integrated into policies and procedures throughout the organization.

A good practice is to introduce the code in company training and orientation programs. You might also consider making adherence to the code obligatory by including it in employment contracts and linking it with disciplinary procedures.

Employees need to be made aware that having a code of ethics can strengthen the environment in which they work, as well as protect the company legally.

It is crucial that leaders set a good example and live the code to its fullest, referring to it whenever appropriate, (i.e., during employee performance reviews).

The code should include the phone number or e-mail address of a contact person in the organization who can provide interpretations.

You might also consider establishing an ethics "hotline" employees can call to ask questions or report suspected unethical activities.

CPAs point out that a code of ethics is a living document and thus should be reviewed annually for relevancy.

Changes in society, the organization, and the environment within which the organization operates need to be reflected in the code.

Be sure to establish a system for regularly updating your codes of ethics.

The GSCPA is the premier professional organization for CPAs in the state of Georgia. With over 10,500 members throughout the state, the purpose of the GSCPA is to promote the study of accountancy and applicable laws, provide continuing professional education, maintain high ethical and work standards, and provide information and accounting issues to the membership and the public. For more information, access our web site at www.gscpa.org.

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