Managing Conflict of Interest - Organisation for Economic Co ...

Codes of Conduct in the Private Sector 179Cultivating an Ethics-Based Corporate CultureCultivating an ethics-based corporate culture involves more thanestablishing guidelines and policies. As Figure 1 below illustrates, awell-written code of conduct and standard sound policies and practicesregarding corporate social responsibility and employee recognitionare just the “tip of the iceberg” and may not prove effective ifbelow the surface the corporate culture is parochial, highly authoritarian,hierarchical, centralized, or challenged by low individualism/“communal” proclivities geared toward preserving social harmonyand avoiding conflict.An ethics-based corporate culture should include a zero-tolerancepolicy for misconduct, guided by a clear articulation of thecompany’s values and supported from the top down. This supportincludes buy-in from leadership in adhering to these values as well aspolitical endorsement from a range of internal stakeholders. Ethicscan be further instilled via a robust internal control system, whichalso provides rewards as necessary. As with any new corporate practice,it is advisable to manage the change process carefully.ConclusionRecent high-profile corporate ethics scandals provide a somberreminder of the link between a company’s ethics and its bottom-lineprofitability and sustainability. One need look no further than theheadlines foretelling the downfall of Enron, Worldcom, HIH, andTitan. Apparently, the bigger they are, the harder they fall.In contrast, promoting good governance will ultimately promotegood business, as an ethically run company makes choicesthat are not compromised by the past, encourages others, improvesrelationships with colleagues and business partners, reduces costs,increases long-term profits, and increases confidence in businessdealings.ADB/OECD Anti-Corruption Initiative for Asia and the Pacific