Codes of ethics are popular tools for attempting to reduce employee ambiguity about what’s ethical and what’s not.38 A code of ethics is a formal document that states an organization’s primary values and the ethical rules it expects managers and nonmanagerial employees to follow. Ideally, these codes should be specific enough to guide organizational members in what they’re supposed to do yet loose enough to allow for freedom of judgment. Research shows that 97 percent of organizations with more than 10,000 employees have written codes of ethics. Even in smaller organizations, nearly 93 percent have them.39 And codes of ethics are becoming more popular globally. Research by the Institute for Global Ethics says that shared values such as honesty, fairness, respect, responsibility, and caring are embraced worldwide.40

The effectiveness of such codes depends heavily on whether management supports them and ingrains them into the corporate culture, and how individuals who break the codes are treated.41 If management considers them to be important, regularly reaffirms their content, follows the rules itself, and publicly reprimands rule breakers, ethics codes can be a strong foundation for an effective corporate ethics program.42

Tim Cook has been CEO of Apple Inc since 2011. Although it’s an extremely successful company, Apple is viewed by some as the epitome of greedy capitalism with no concern for how its products are manufactured. Cook, who was named one of the 100 Most Influential People in Business Ethics by Ethisphere, has increased the company’s focus on supply chain ethics and compliance issues. It was the first technology company to join the Fair Labor Association, which means that organization can now review the company’s labor practices within the supply chain. In addition, at a recent annual stockholders’ meeting with investors and journalists, Cook, who was challenged by a spokesperson from a conservative think tank to explain how the company’s sustainability efforts were in the best interests of shareholders, bluntly and clearly said that Apple wasn’t just about making a profit and that “We want to leave the world better than we found it.”43

Doing business ethically requires a commitment from managers. Why? Because they’re the ones who uphold the shared values and set the cultural tone. Managers must be good ethical role models both in words and, more importantly, in actions. For example, if managers take company resources for their personal use, inflate their expense accounts, or give favored treatment to friends, they imply that such behavior is acceptable for all employees.

Managers also set the tone through their reward and punishment practices. The choices of when to reward with pay increases and promotions send a strong signal to employees. As we said earlier, when an employee is rewarded for achieving impressive results in an ethically questionable manner, it indicates to others that those ways are acceptable. When an employee does something unethical, managers must punish the offender and publicize the fact by making the outcome visible to everyone in the organization. This practice sends a message that doing wrong has a price and it’s not in employees’ best interests to act unethically! (See Exhibit 3–3 for suggestions on being an ethical leader.)

Yahoo! used an off-the-shelf online ethics training package, but employees said that the scenarios used to demonstrate different concepts didn’t resemble those that might come up at Yahoo! and were too middle-American and middle-aged for the global company with a youthful workforce. So the company changed its ethics training! The new ethics training package is more animated and interactive and has more realistic storylines for the industry. The 45-minute training module covers the company’s code of conduct and resources available to help employees understand it.44

Like Yahoo!, more and more organizations are setting up seminars, workshops, and similar ethics training programs to encourage ethical behavior. Such training programs aren’t without controversy; the primary concern is whether ethics can be taught. Critics stress that the effort is pointless because people establish their individual value systems when they’re young. Proponents note, however, that several studies have shown that values can be learned after early childhood. In addition, they cite evidence that shows that teaching ethical problem solving can make an actual difference in ethical behaviors;45 that training has increased individuals’ level of moral development;46 and that, if nothing else, ethics training increases awareness of ethical issues in business.47