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The code of ethics refers to a collection of guidelines which are developed to chalk out the acceptable behaviors for members of a particular community. The term community here refers to any set of people, be it association, group, organization, professionals etc. Such codes of ethics help those organizations to develop a framework to work with. It sets up the standards for everybody in the organization to behave in a manner aligned with the organizational culture. These are specially referred when there is some issue related to the question that how should one behave in a particular situation.
A code of ethics has several positive impacts on the organization. In the first place it provides a framework to the employees of the organizations that tells them that what are the appropriate set of behavioral responses in the organization and the ones expected from the employees in various situations. Secondly, it serves as the guideline or the boundary while developing strategies, especially the ones developed to deal with dilemma issues.
Furthermore, its prime purpose benefit is that it, if implemented properly, fosters ethical culture in the organization. It helps in setting up the culture of integrity, truthfulness and caring in the company. Last but not the least, having such code of ethics in place in an organization; make it more credible to the outside world. This includes prospective customers, prospective employees, and of course the investors.
Besides all these, they may be certain limitations to the code of ethics too. First of all, ethical perspectives vary from culture to culture. In an organization with people from diverse backgrounds, laying out of a code of ethics applicable on all of them requires a thorough study of these cultures. Furthermore, the code of ethics cannot be made as straightforward as some company policy, thus, there is always the chance of its misuse, through manipulated interpretation of its clauses.
To sum up, code of ethics serves as beacon light for the performance of the organization.
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