This document discusses the importance of institutionalizing ethics within organizations. It defines institutionalizing ethics as formally integrating ethics into daily business practices, policies, decision-making, and culture at all levels of the organization. It recommends three key ways to institutionalize ethics: establishing a code of ethics, appointing an ethics committee, and including ethics training in management development programs. Institutionalizing ethics helps counter unethical behavior and creates an environment where ethical decisions are fostered.

1. SCHOOL
MANAGEMENT
)

2. Institutionalization Ethics
•Abstract
• The institutionalization of ethics is an important task for
today's organizations if they are to effectively counteract
the increasingly frequent occurrences of blatantly
unethical and often illegal behavior within large and often
highly respected organizations. This article discusses the
importance of institutionalizing organizational ethics and
emphasizes the importance of several variables
(psychological contract, organizational commitment, and
an ethically-oriented culture) to the institutionalization of
ethics within any organization

3. Abstract
(Cont..)
• .... Institutionalizing ethics may sound ponderous, but
its meaning is straightforward. It means getting ethics
formally and explicitly into daily business life. It
means getting ethics into company policy formation
at the board and top management levels and through
a formal code, getting ethics into all daily decision
making and work practices down the line, at all levels
of employment. It means grafting a new branch on
the corporate decision tree — a branch that reads
“right/wrong”.

4. • Business ethics are increasingly addressed
in seminars and at conferences. Managers,
especially top managers do have a
responsibility to create an organizational
environment that fosters ethical decision
making by institutionalizing ethics. This
means applying and integrating ethical
concepts with daily actions.

5. This can be accomplished in three ways:
 by establishing an appropriate
company policy or a code of ethics,
 by using a formally appointed ethics
committee, and
 by teaching ethics in management
development programmes;

6. • The most common way to institutionalize
ethics is to establish a code of ethics, much
less common is the use of ethics board
committees. Management development
programmes dealing with ethical issues are
very seldom used, although companies
such as Allied Chemical, International
Business machines, and General Electric
have instituted such programmes.

7. •The publication of a code of ethics is
not enough. Some companies require
employees to sign the code and
include ethics criteria in the
performance appraisal. Moreover,
certain firms connect compensation,
and rewards to ethical behaviour.

8. • Managers should also take any opportunity
to encourage ethical behaviour and
publicize it. On the other hand, employees
should be encouraged to report unethical
practices. Most important, managers must
be a good example through ethical
behaviour and practices.

9. •A code is a statement of policies,
principles, or rules that guide
behaviour. Certainly, codes of ethics
do not apply only to business
enterprises; they should guide the
behaviour of persons in all
organizations and in everyday life.

10. •Simply stating a code of ethics is not
enough, and the appointment of an
ethics committee, consisting of internal
and external directors, is considered
essential for institutionalizing ethical
behaviour.

11. The functions of such committees may
include:
 holding regular meetings to discuss
ethical issues.
 dealing with grey areas.
 communicating the code to all
members of the organization
checking for possible violations of the
code

12.  enforcing the code
 rewarding compliance and punishing
violations,
 reviewing and updating the code, and
 reporting activities of the committee to the
board of directors.

13. Factors that raise Ethical standards:
• The two factors that raise ethical standards
the most according to the respondents in
one study are 1) public disclosure and
publicity and 2) the increased concern of a
well-informed public. These factors are
followed by government regulations and by
education to increase the professionalism
of business managers.

14. • Another factor that could raise ethical standards
is the teaching of ethics and values in business
and other schools and universities.
• Another way of encouraging ethical corporate
behaviour is through whistle blowing that is
making known to outside agencies what are
considered unethical company practices.
• There is even a whistle blower website that
discusses whistle blowing issues including legal
issues and protection.

15. • The contractor for the rocket in the
Challenger Space Shuttle pointed out the
problems with the O-rings that became
ineffective at low temperatures. His fears
and concerns were largely ignored by the
management and eventually led to the
Challenger disaster

16. Different Ethical standards of various
Societies:
• Any person in business government a university
or some other organization is aware that ethical
as well as legal, standards do differ particularly
among nations and societies. For example,
certain nations with privately owned companies
permit corporations to make contributions to
political parties, campaigns and candidates.

17. • In some countries, payments to government
officials and other persons with political influence
to ensure the favourable handling of a business
transaction are regarded not as unethical
bribes but as proper payments for
services rendered. In many cases payments
made to ensure the landing of a contract are
even looked upon as a normal and acceptable
way of doing business.