1|P a g e Intoday’scompetitivebusinessworld,theintensityofcompetitionhasincreased substantially between organisations. Many times, the management of companies rely on unethical and immoral way to generatea competitive advantage in the industry. These incidentshighlighttheimportanceofcorporategovernanceandbusinessethicsin companies. Corporate governance policies are a set of rules, policies and procedures which guide and control the operations of a company (Harlalka, 2012). These policies assist companies in making a balance between the interests of their stakeholders. The senior executive officers in a company play a crucial role in ensuring that they comply with ethical and corporate governance policies while taking business decisions (Solomon, 2016). They have to implement a Code of Ethics in the business to continuously monitor its operations in order to avoid unethical practices. The purpose of this essay is to outline the Code of Ethics (Value statement) of a start-up software company based in Germany called Cosmos Pvt Ltd. This essay will evaluate various factors which are included in the Code of Ethics of the company to ensure that the management conducts their operations in ethical manner. Lastly, as the CEO of the company, various actions will be evaluation to ensure the implementation and monitoring of the code of ethics. A Code of Ethics is referred to a guide in the organisation which contains principles that are designed to assist professionals in conducting the business honestly and with integrity. This document outlines the mission and values of the company to understand how professionals are supposed to approach business issues and challenges (Davidson and Stevens, 2012). This document is an overview of the ethical principles and core values of the organisation based onwhichitsmanagementmakesbusinessdecisions.Itisan‘ethicalcode’which encompasses principles from different areas such as business ethics, employee code of conduct and a code of professional practice. The senior-level executives of a company are responsible for preparing the code of ethics of the company. With the popularity of corporate governance policies, the importance of outlining a code of ethics has become a significant part of businesses (Solomon, 2016). It is also the case with start-ups which have just started their operations. Start-ups face competition from large enterprises along with small businesses, it requires the managerial personnel to ensure that they choose ethical ways to manage the operations of the company. In Germany, the government encourage
2|P a g e companies to adopt a code of ethics and comply with the same in order to ethically manage their operations. The code of ethics or value statement of Cosmos Pvt Ltd focuses on embracing diversity in theworkplaceandencouragingitsmemberstomaintainhigheststandardswhile discharging their duties. Integrity is a key element which is central to protecting the reputation of corporations (Soltani and Maupetit, 2015). The value statement of Cosmos focuses on giving back to the community in which the company serves. All the members of the start-up dedicate one day in a month to give back to the community by working with local charities and volunteering.The start-up is honest and transparent towards its stakeholders. The company focuses on protecting the data of its clients who use its software and maintain transparency to ensure that relevant factual information is received by them within appropriate timeframe. Another key element is that the company focuses on protecting the sensitive information of its customers and employees. All the sensitive data of clients and employees are stored with high security, and utmost care is taken by the executives to ensure that this data is not accessible to third parties. The value statement highlights the effective communication between the start-up and its members to ensure that they are able to disclose their issues to the management. In Germany, authorities impose fines around €100 million and in many cases more on companies if they engage in corruption-relatedactivities(Lexology,2018).Corruptioninvestigationshavebecome frequent in Germany due to which the company has implemented these policies to avoid corruption in its operations and promote integrity. Continuous and timely disclosures are a key part of the value statement of corporations in which the start-up reveals information regarding the actions taken by the management towards maintaining balance between its stakeholders (Chapple and Truong, 2015). The start-up discloses information regarding conflicts of interest which affects its stakeholders. The company has also committed to treating others with respect. It is important that the company must have mutual respect towards its stakeholders in order to understand their issues and implement appropriate policies to address them. Treading others with respect include encouraging diversity in the workplace. German legal system recognises gender equality as a fundamental right based on which discrimination in the workplace for reasons such as religion, age, disability, sexual orientation, gender or race is considered a crime.
3|P a g e Cosmos also avoid discrimination in the workplace when it comes to the hiring of new employees or giving growth opportunities to existing workers. Awareness regarding these policiesisspreadamongallworkers,andtheycaneasilyapproachthetoplevel management if they face any issue relating to discrimination in the workplace as per the value statement of the start-up (Kim, Kang and Ahn, 2013). The start-up also focuses on fair pay for equal work based on which all employees receive fair compensation for their work which also includes employee benefits. A duty is imposed on the CEO of the start-up to ensure effective compliance with the Code of Ethics of the company. If the senior level executives did not support the value statement of the company, then it becomes difficult for others to comply with these policies as well. The role of the CEO of the enterprise is to ensure that its operations are managed in an ethical manner; the CEO plays a crucial role in order to ensure that these policies are implemented and monitored in the start-up (Garcia-Sanchez, Rodriguez-Dominguez and Gallego-Alvarez, 2013). CEO has a duty to communicate with employees to increase awareness regarding the code of ethics of the company. The CEO engages with employees andraiseawarenessbetweenthemtobecometheir‘ethicalidol’.Withoutethical leadership, it is difficult for a company to comply with corporate governance and business ethics principles. The CEO continuously monitors the actions of middle and low-level managers and their attitude with employees to ensure that they did not promote unethical behaviour in the workplace. Supporting context and culture is another important job of the CEO to ensure that employees from other cultures did not face discrimination (Shin, 2012). The CEO must hold parties accountable for discriminatory behaviour in order to teach a lesson to everyone that discrimination will not be tolerated in the company. A good example is an action taken by the CEO of Google by firing a senior developer of the company who sends a discriminatory memo in the workplace. Along with being an ethical idol for everyone, the CEO must also ensure that appropriate training and education facilities are available for employees that assist them in complying with the code of ethics. Employees have different values and beliefs and it important that they must match with the value statement of the company in order to promote the collaborative working environment. Training and education assists employees in learning about key business policies in the company which they have to understand in order to
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4|P a g e discharge their duties in ethical manner (Harkrider et al., 2012). It also assists them in learning about the cultural aspects of other employees which avoids stereotyping and discriminatory behaviour in the workplace. Moreover, the CEO must implement policies for monitoringandaccountabilityofpartiesfortheirunethicalactions.Monitoringand accountability are key elements of good corporate governance which enable employees in reporting queries to the management and resolve them within appropriate framework (Solomon, 2016). Along with employees, the managerial personnel also held accountable for their unethical behaviour in the organisation. In conclusion, the importance of a code of ethics or value statement has increased substantially between corporations as the number of cases involving unethical behaviours increases. The case of Cosmos which is a Germany based start-up software company is taken to understand the key elements of the code of ethics of the organisation. The company focuses on integrity and promoting diversity in the workplace. The member engages in community development activities, and transparency is maintained regarding protection of data of clients and employees of the company. The company communicates with its members, and it respects others to avoid discrimination between employees. The CEO of the company plays a crucial role in the implementation and monitoring of the code of ethics. The CEO communication and raise awareness regarding these policies in the company and become an ethical idol for others. The CEO provides support to employees from different cultures, and training facilities are given to employees as well so that they familiarise themselves with the value statement principles. The CEO also monitors the compliance with ethical policies and hold the parties accountable for their actions based on which the start-up is able to effectively comply with its code of ethics.
5|P a g e References Chapple, L. and Truong, T.P. (2015) Continuous disclosure compliance: does corporate governance matter?.Accounting & Finance,55(4), pp.965-988. Davidson, B.I. and Stevens, D.E. (2012) Can a code of ethics improve manager behavior and investor confidence? An experimental study.The Accounting Review,88(1), pp.51-74. Garcia-Sanchez, I.M., Rodriguez-Dominguez, L. and Gallego-Alvarez, I. (2013) CEO qualities and codes of ethics.European Journal of Law and Economics,35(2), pp.295-312. Harkrider, L.N., Thiel, C.E., Bagdasarov, Z., Mumford, M.D., Johnson, J.F., Connelly, S. and Devenport, L.D. (2012) Improving case-based ethics training with codes of conduct and forecasting content.Ethics & Behavior,22(4), pp.258-280. Harlalka, M. (2012) Corporate Governance & Business Ethics.Management Prudence,3(1), p.13. Kim, Y.S., Kang, S.W. and Ahn, J.A. (2013) Moral sensitivity relating to the application of the code of ethics.Nursing ethics,20(4), pp.470-478. Lexology. (2018)Anti-corruption and bribery penalties in Germany. [Online] Available from: https://www.lexology.com/library/detail.aspx?g=1ae8467c-61fc-407e-93a3-0db521f9046e [Accessed on 28thNovember 2018]. Shin, Y. (2012) CEO ethical leadership, ethical climate, climate strength, and collective organizational citizenship behavior.Journal of Business Ethics,108(3), pp.299-312. Solomon, J. (2016)Corporate governance and accountability. 6thed. New Jersey: John Wiley & Sons. Soltani, B. and Maupetit, C. (2015) Importance of core values of ethics, integrity and accountability in the European corporate governance codes.Journal of Management & Governance,19(2), pp.259-284.