CODES OF ETHICS AND

BUSINESS CONDUCT
LESSON 4

HUINDA, BIORE, SEPRADO, AUTOR

 LESSON 4 GROUP

A u t o r B i o r e H u i n d a S e p ra d o

The Need for Ethical Codes of Ethics & Codes of Ethics & What The Notion of
Organizational Culture Specific Philippine is Corporate Culture? Organizational Culture
& Creating Corporate Samples & Creating an Ethical
Codes of Ethics Corporate Culture
 Explain what codes of ethics and codes of
corporate conduct are;

Give examples of corporate codes of ethics

in some Philippines firms;
OBJECTIVES:
Explain the meaning of corporate ethical
culture; and

Explain how ethical cultures can be created

in business organizations.
codes
ethics
What is ethics?
• Considered as “legalistic” and “more likely to talk about ethics or the reputation of the
company”
• Written documents which attempt to state the major philosophical principles and
articulate the values embraced by the organization – it articulates ethical parameters of
the organization (what is acceptable and what is not)
• Policy documents defining responsibilities of the organization to stakeholders and
articulating the conduct expected of employees.
• An instrument to enhance social responsibility and clarifies the norms and values the
organization seeks to uphold.
 A code of ethics is a guide of principles designed to
help professionals conduct business honestly and with
integrity.
Compliance-Based Code • Breaking the code of ethics can result in termination
of Ethics or dismissal from the organization.
• In some industries, including banking, specific laws
Compliance-based codes of ethics
govern business conduct. In others, a code of ethics
not only set guidelines for conduct
may be voluntarily adopted.
but also determine penalties for
violations.
Value-Based Code of
Ethics
It addresses a company's core value
system and may outline standards of
responsible conduct.
Code of Ethics Among
Professionals
Financial advisers registered with a
state regulator are bound by a code
of ethics known as fiduciary duty.
This is a legal requirement that
requires them to act in the best
interest of their clients.
One good example comes from the CFA Institue (CFAI), the grantor of the
Chartered Financial Analyst (CFA) designation and creator of the CFA exams.
CFA charterholders are among the most respected and globally recognized
financial professionals. According to the CFAI's website, Members of CFA
Institute, including CFA charterholders, and candidates for the CFA designation
must adhere to the following code of ethics (found here):
Act with integrity, competence, diligence, Practice and encourage others to
respect and in an ethical manner with practice in a professional and ethical
the public, clients, prospective clients, manner that will reflect credit on
employers, employees, colleagues in the themselves and the profession.
investment profession, and other
participants in the global capital markets. Promote the integrity and viability of
the global capital markets for the
Place the integrity of the investment ultimate benefit of society.
profession and the interests of clients
above their own personal interests. Maintain and improve their
professional competence and strive
Use reasonable care and exercise to maintain and improve the
independent professional judgment competence of other investment
when conducting investment analysis, professionals.
making investment recommendations,
taking investment actions, and
engaging in other professional
activities.
 FOUR TYPES OF ORGANIZATIONAL
CULTURE
Clan Cultures are family-
like, with a focus on
mentoring, nurturing, and
“doing things together.”
> Tom's of Maine, CEO Tom
Chappell
Hierarchy Cultures are
structured and controlled,
with a focus on efficiency,
stability and “doing things
right.”
> McDonalds
Adhocracy Cultures are
dynamic and entrepreneurial,
with a focus on risk-taking,
innovation, and “doing
things first.”
> Facebook, CEO Mark
TYPES Zuckerberg
OF ORG.
CULTURE Market Cultures are results
oriented, with a focus on
competition, achievement,
and “getting the job done.”
> General Electric, CEO Jack
Welch
CARL SKOOGLUND (2003)
• former ethics director of Texas
Instruments
• argues that "Ethical managers
must know what is right, value
what is right, and do what is
right“ - also called the "3
Principles" that every company
must have
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• It sets the general expectations and

standards for employee behavior and ethical
conduct.
• Employees are required to disclose annually
any business and family related transactions
to ensure that potential conflicts of interest
are brought to management attention.
• Ayala maintains fair dealings with its
stakeholders, customers, employees and
business partners.

I NTEG RITY LONG TERM VISION EMPOWERING COMMITMENT TO

L E A D E R S H I P N A T I O N A L
DEVELOPMENT
what is
corporate
culture?
Define “corporate” and “culture” separately.

CORPORATE
• formed into an association and endowed
by law with the rights and liabilities of an
individual
• formed into a unified body of individuals
Corporate Culture is rooted in an
organization's goals, strategies,
structure, and approaches to labor,
customers, investors, and the
greater community. As such, it is
an essential component in any
business's ultimate success or
failure.

It has profound influence on

CULTURE (COLERE)
all aspects of human • the customary beliefs, social forms, and
behavior, thus, is a human material traits of a racial, religious, or
reality and resides in human
communities. social group
• the set of shared attitudes, values, goals,
and practices that characterizes an
institution or organization
Following are several main principles that business owners
should consider in order to create a healthy corporate
culture:
Business owners who set poor examples in areas
such as lifestyle, dedication to quality, business or
personal ethics, and dealings with others
(customers, vendors, and employees) will almost
Prevailing corporate culture begins at the
certainly find their companies defined by such
top.
Bloodlines shouldcharacteristics.
be irrelevant in daily operations.
"Successful businesses
The wise business ownerconstantly place 'you
will hire workers arewill
who no
Treat
treat
all employees
different'
clients expectations
equally.
on family well
and fellow employees members they
and dedicate
themselves to masteringemploy“.
the tasks for which they
Hiring decisions should
are responsible. After all, "good reflect desired
attitude" is an
corporate
essential culture.
component of any healthy corporate
Business owners who culture.
discuss problems realistically
Two-way communication
with their workforce is employees'
and enlist essential. help in
solving them will likely be rewarded with a healthy
internal environment.
 the notion of
organizational
structure
The importance of creating a shared vision or purpose, the necessity of
generating common meanings and enhanced commitment, and the virtues of
increasing individuals’ capacity to be dominated by organizational personality.
 C H A R LE S IRVING BARNARD

• Father of the concept of corporate culture.

• Bernard's analysis of organizational culture gave

less emphasis on their more rational and
cognitive aspects.

Functionalist View
• consider culture as a component to
maintain an orderly social life, adaptation
mechanisms and society's equilibrium
with its physical environments.
 Function of cultures:

Social glue - most common

view of culture.
1 2 • sometimes
3 4
called as
Other approaches used to integration approach
describe the function of • all cultural members are
culture. said to share the same
c• u l culture
t u r e a sas toolc u l t u r e a s c u l tview
u r e of
a sculture.
culture as
social glue regulator of compass c o n t r o l
• culture as building block
s o c i a l
• holds members mechanism.
• culture as need r e satisfier
lations together.

Culture as serving the common good: promotes the

effectiveness of the organization and well being of stakeholders.
the need for
e t h i c a l
organizational
c u l t u r e
Why does ethical organizational culture important?
ORGANIZATIONAL CULTURE

Is a system of shared assumptions, values and beliefs that governs

how people behave in organizations. An organization with a positive
culture helps employees learn and grow in their jobs and careers.
An organization with an ethical culture provides a culture that
promotes ethical behavior among the members of the organization.
 Creating Corporate Codes Of Ethics
Creating an Ethical Corporate Culture
• An organizational culture that is grounded in moral character is the ideal corporate
culture. In which, positive moral values are ingrained throughout the organization.
Four Stylistic Markers – describe organizations exhibiting “a culture of character” (refer to
page 38)
Creating Corporate Codes of Ethics
There were fourteen (14) suggestions for creating Codes of Ethics in business
organizations (refer to page 38)
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Organizational Culture
Is a system of shared assumptions, values and beliefs
that governs how people behave in organizations. An
organization with a positive culture helps employees
learn and grow in their jobs and careers. An
organization with an ethical culture provides a culture
that promotes ethical behavior among the members of
the organization
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