Applying a Code of Ethics or Code of Conduct.

Codes of Ethical Conduct: A Bottom-Up Approach

Ronald Paul Hill • Justine M. Rapp

Received: 18 January 2013 / Accepted: 12 December 2013 / Published online: 1 January 2014

� Springer Science+Business Media Dordrecht 2013

Abstract Developing and implementing a meaningful

code of conduct by managers or consultants may require a

change in orientation that modifies the way these precepts

are determined. The position advocated herein is for a

different approach to understanding and organizing the

guiding parameters of the firm that requires individual

reflection and empowerment of the entire organization to

advance their shared values. The processes involved are

discussed using four discrete stages that move from the

personal to the work team and to the unit to the full

company, followed by the board of directors’ evaluation.

The hoped-for end product is dynamic, employee-driven,

codes of conduct that recognize the systemic and far-

reaching impact of organizational activities across internal

and external stakeholders. Operational details for and some

issues associated with its implementation are also provided.

Keywords Code of conduct � Employee-driven approaches � Bottom-up development

Corporation, Be Good! Frederick (2006)

That managers and employees are capable of both ethical

and unethical behaviors due to individual and internal

corporate culture factors cannot be denied (Ashforth and

Anand 2003; Treviño and Weaver 2003; Treviño et al.

2006). Over the last decade, as diverse organizational

stakeholders began exerting more pressure on firms to

eliminate unethical conduct, the field of management has

witnessed a proliferation of research on ethics and ethical

behavior in organizations (Elango et al. 2010; Gopala-

krishnan et al. 2008; O’Fallon and Butterfield 2005; Tre-

viño et al. 2006).

However, recent ethical failures, as well as continuous

ethical challenges that organizations face, have led scholars

to conclude that predicting ethical dilemmas is difficult a

priori: ‘‘It is only, when we look back on our conduct over

the long run that we may find ourselves guilty of moral

laxity’’ (Geva 2006, p. 138). What underlies this particular

situation is the inability of organizational elites to monitor

and implement initiatives within today’s complex business

entities (Martin and Eisenhardt 2010; Uhl-Bien et al.

2007). Accordingly, more dynamic approaches to business

ethics is needed, one that spans ‘‘both the individual and

organizational levels’’ of concern (Gopalakrishnan et al.

2008, p. 757).

As a consequence and in reaction to neoclassical eco-

nomics, managers and their employees are expected to go

beyond dictates imposed by the law and marketplace to

fulfill larger responsibilities (Stark 1993). This expectation

is accomplished through adoption of a stakeholder per-

spective that is infused with empathy for people, groups,

and communities that may be impacted by the actions of

business firms (Nash 1981). For-profit entities must

broaden their missions so that their overall contributions to

society are factored into their strategies to achieve this

level of success, with the inclusion of noneconomic goals

as an important component (Andrews 1989). The end result

is shared moral culture that engenders trust within and

R. P. Hill

Villanova School of Business, 800 Lancaster Avenue, Villanova,

PA 19095, USA

e-mail: [email protected]

J. M. Rapp (&) School of Business Administration, University of San Diego,

5998 Alcalá Park, San Diego, CA 92110, USA

e-mail: [email protected]

123

J Bus Ethics (2014) 123:621–630

DOI 10.1007/s10551-013-2013-7

among the constellation of individuals and organizations

that make up their interactive system (Feldman 2007).

Therefore, the main purpose of this paper is to explore

how ethical behavior in businesses is driven by individual

actions and interactions, and how it is subsequently

amplified through team, unit, and ultimately organizational

actions. While the emphasis is on the importance of indi-

vidual behavior and ‘‘bottom-up’’ dynamics, we recognize

the important role top leaders play in this process. More

specifically, we argue that business leaders represent a

crucial element in this process, since they are responsible

for conditions that enable ethical behavior to occur, and, as

importantly, for removal of obstacles to ethics development

in the organization.

Current Practices

At its most fundamental level, the purpose of codes of

ethics is to help managers to avoid hazards associated with

the immoral actions (Rosthorn 2000), and reap rewards that

emanate from moving toward a moral ideal (Garcia-Marza

2005). In a study analyzing thirty-nine ethics codes by

Fortune 500 companies (Sanderson and Varner 1984), the

authors found the predominance of content related to issues

surrounding federal laws (75 %), conflicts of interest

(70 %), and political contributions (72 %), with the

remainder addressing concerns related to customers,

accounting records, and antitrust issues. The most notable

finding from this assessment, however, is the purely law-

based or legal themes in the articulation of these codes of

ethics.

However, scholarship has revealed that few businesses

have created adequate processes for uncovering and artic-

ulating wider values (see Nash 1981). For example, Sch-

wartz (2002) found a lack of consistency and standards

among existing ethical codes, calling for a systematic

approach in code development addressing the inclusion of

six fundamental moral standards (see also Zadek 1998).

Irrespective of this call, such oversight is exacerbated by

internal cultures that value traditional markers of success

originating with top management (Chonko et al. 2002).

A second predominant concern regarding the majority of

codes of ethics within organizations is the engrained top-

down structure of implementation. As such, executive

dictated approaches disproportionately favor positions of

organizational elites relative to the majority of employees

who operate in the proverbial trenches. As a result, man-

agers often attempt to guide ethical conduct by eliciting a

set of moral codes that are presented to rank-and-file

workers as given rather than negotiated (Feldman 2007).

These codes of ethics, along with written policies and

statements, offer little helpful guidance (Badaracco and

Webb 1995), and they typically are viewed as too broad

and too superficial (Andrews 1989). They also may fail to

grasp that norms of behavior do not implement themselves

(McNamee and Fleming 2007), and that ethical expecta-

tions not well integrated into managerial decision-making

are unlikely to have much impact (see Geva 2006).

Chonko et al. (2002) summarized the codes of con-

duct—ethics training—internal evaluation continuum as:

(a) primarily reactive rather than proactive, (b) short-term

oriented, (c) descriptive versus reflective, and (d) focused

on individual behavior over collective impact. As noted,

explanations for shortcomings are located in faulty reward

systems that stem from leadership failure to advocate for

moral principles. However, problems are as likely to

originate in a lack of understanding of the dynamic,

interactive, and systemic nature of organizational life (see

Frederick 1995, 1998). In this regard, the development of a

code of ethical conduct should create dialog that values

contributions of all involved parties and recognizes the

overlapping and competing interests and actions that lead

to inevitable conflicts over resource allocations (Hill et al.

2007).

This background shows the importance of participation

in the development and operationalization of moral stan-

dards for healthy ethical climates in businesses (also see

Schwartz 2002). In this vein, a code of ethics must orient

participants to ways in which idiosyncratic self-interests

and altruistic tendencies drive behavior as they intersect

with the organizational power bases, internal mores, and

conflicting objectives that make up bioeconomic systems

(Hill and Watkins 2009). Employing Ethical Climate The-

ory as a frame, this ‘‘mosaic’’ includes beliefs, attitudes,

intentions, and behaviors that capture the complexity

associated with workings of companies (Martin and Cullen

2006). To this end, developing a code of ethics must build

from persons to groups to firms so that differences in values

are uncovered and appropriately addressed (Nash 1981).

As a consequence, we advocate for a bottom-up

approach in the development of organizational ethics

codes, as scholarship finds that many formal statements of

values are ignored unless they are the product of the

company as a collective (DuFrene 2001; Nielsen and

Massa 2013). Of course, this call has occurred previously

and as a way to create co-ownership of the resulting ethical

statements and enhance worker compliance (Brakel 2007).

Such processes are built upon the belief that ‘‘a sense of

moral rightness comes not from the indoctrination of

abstract principles, but from attunement to the way in

which moral beliefs and practices must be rooted naturally

in the very conditions of human existence’’ (Buchholz and

Rosenthal 2001, p. 25). Accordingly, we seek to add to this

conversation by advancing an easy-to-operationalize con-

ceptual framework outlining both the processes involved

622 R. P. Hill, J. M. Rapp

123

and potential considerations in undertaking such a bottom-

up approach to code development.

Conceptual Development: A Bottom-Up Approach

The Process

In reaction to either perceived or real difficulties in eval-

uating a universally understood and practiced code of

ethics (DuFrene 2001), this paper explores an alternative

that seeks to empower members of organizational com-

munities to reflect on and express individual and joint

moral aspirations for firms. Our conceptual development

favors an ‘‘ascendant’’ rather than ‘‘descendant’’ approach

as described by Enderle (1996, p. 51) in his plea for dis-

cussions ‘‘at all levels of economic actors.’’ We believe this

discussion to be a necessary continuation of and a contri-

bution to growing literature asking for examination of the

relationships between employee and management (Graen

and Scandura 1987).

The process put forth here begins with exploration and

development of personal codes of conduct that influence

workers’ relationships to their job functions. Next, formal

groupings of employees come together to negotiate moral

ideals that they would hold each other accountable for and

that drive combined efforts for professional success. The

subsequent task includes cross-group discussion and

cooperation that further refines their ethical mandates, as

consensus-building continues to permeate across business

units. The final step is presentation to the governing board

for ratification and final approval.

Figure 1 provides a visual representation consistent with

negotiations permeating the entire company. In this illus-

tration, there are four layers in the firm hierarchy whereby

associated teams interact laterally until all organizational

layers have codes fully vetted. When lateral negotiations

are completed, the interactions move vertically with the

same expectations for conclusion. Final outcome should be

a worker-specified and approved code of ethics that con-

siders the systemic impact of firm activities on all

constituencies.

Fig. 1 Visual representation of complete audit

Codes of Ethical Conduct 623

123

The Role of Third-Party Consultants

One of the most integral components within a bottom-up

development process is to establish the role for a trusted

third-party or consultant to support various corporate units

as the process moves up the organizational hierarchy.

Through the four stages, the role of either moderators or

mediators are integral to aiding the completion of the most

appropriate and relevant codes of ethical conduct. While

extant scholarship on group dynamics often specifies a

separation of roles within groups (Strijbos et al. 2004), the

process outlined here provides a higher likelihood of

emotional connection to issues at hand, as well as a sub-

stantially larger stake in their successful usage. Thus, a

third-party consultant trained in group negotiations and

familiar with the industry at hand is needed to serve as

external control (see Fisher 1972).

In stages one and two, we suggest the need for moder-

ation, led by third-party individuals who are charged to

monitor discussions, ask critical questions, and seek the

opinions of others (de Wever et al. 2008), thus playing a

significant role within early stages of code development. In

addition, the moderator is only to facilitate conversation

and aid in developing the most appropriate end product, not

to engage in content creation or influence in company

decisions (Fisher 1983). This final tenet is necessary, as the

code of ethics developed from this process must always be

the result of employees’ deliberations, with no undue

influence by external constituents.

Alternatively, we suggest the use of mediation within

stage three, as significant levels of disagreement and con-

tradiction will likely be encountered, when diverse busi-

ness units are together (Gower 2003). As an alternative to

the role of a moderator, a mediator must be in tune with the

full range of acceptable agreements for the organization

and employ ‘‘expertise in facilitating acceptable compro-

mises or in imposing fair solutions’’ in order to actively

facilitate negotiations (Fisher 1983, p. 304). Regardless,

the mediator must assist interactions among internal par-

ties, but s/he should not have authority to impose a final

outcome (Wall et al. 2001), again solidifying the impor-

tance of employee dictated code creation.

Stage One: Individual Reflections

In many ways, the first step is likely to be very difficult for

participants. Many adults are unlikely to have considered

the ethical prohibitions and expectations that haunt or

guide them in their personal and professional lives (see Hill

et al. 2007). Such directives have taken-for-granted quality,

making them sacrosanct and above reflection or comment.

The majority of these precepts have their foundation in

early periods of learning, morphing into an amalgamation

of ways of thinking and behaving that are implicitly or

explicitly taught by relatives, teachers, coaches, peers,

coworkers, and other role models (Nurmi 1993).

Given the nature of these discussions, the best way to

begin is with a framing conversation. These frames often

originate with western philosophers who advocate thinking

and behavior that seem remote in language and directives.

Even more recent figures with a modern approach such as

Rawls (1971) are considered difficult to understand much

less implement. The greatest concern centers on the per-

ceived lack of understanding regarding the profit-seeking

purpose of the corporation, with the implied limitation that

ethics and organizational success are somehow antithetical

(Nash 1981).

Regardless of background, most people are aware of the

Ten Commandments, even if they are unable to recite more

than a few of them. Such moral dictates are well-recog-

nized, easily articulated, and simple to understand, and

they are a springboard into the larger conversation about

professional ethics. Their usage in this situation may pro-

vide some relief from fears that this exercise will be too

esoteric or too difficult to comprehend. Thus, the bottom-

up process begins with the request that each person prepare

his or her set of commandments.

In doing such, individuals should seek to list all of the

moral principles guiding their lives (both personally and

professionally) in as simple a form as possible and without

judgment (Kruckeberg 2000). At this early stage, the only

instruction is to use no more than one concise sentence for

each principle and to aim for ten items in order to avoid

superficial reflection. Initial focus on individual mores may

create enthusiasm for the process, since it lends credence to

the belief that each person is an essential element in the

formation of the firm’s moral parameters.

In addition, participants are asked to notice whether

their listings mostly contain prohibitions (must not do) or

mostly responsibilities (must do) or an approximately equal

number of both types of ethical parameters (Stevens 2008).

This recognition is designed to make them aware of natural

tendencies. In the former case (must not do), such dictates

are reactive, causing people to avoid doing something in

response to natural triggers. For instance, a salesperson

might suggest that it is inappropriate to provide a know-

ingly false delivery date, even though telling the truth

might cause the use of a different vendor. In the latter case

(must do), mandates are proactive, leading individuals to

follow guidance prior to circumstances arising. For

example, managers could decide in advance that all ter-

minations must be handled as they would like family

members to be treated. Such reflection allows individuals

to understand personal prescriptions and how best to

respond to moral dictates. A combination of prohibitions

and responsibilities is advised, but not required.

624 R. P. Hill, J. M. Rapp

123

Role of Moderators Personal mores must undergo further

analysis by third-party moderators before entry into stage

two. After self-evaluations are completed, moderators look

at individual sets and provide feedback for possible revi-

sions. Rather than making judgment, their recommenda-

tions take the form of analyses of the underlying logic,

relevance to the job tasks performed, and one’s likely

ability to follow them under the most conditions. Feedback

comes in the form of critical questions concerning logic,

asking whether components of commandments focus

behaviors in ways that are consistent with intended

meanings. Typical questions to emerge should focus on

relevance to the work environment and product, and one’s

ability to operate within the dictated parameters while still

maintaining important relationships. The role of moderator

is to seek revisions of commands, moving codes from

ambiguous to contextually specific, and personal to focus

on professional conduct.

The review process in stage one is iterative and con-

tinues until both individuals and third-party consultants are

satisfied fully with the end result. The final product for

everyone is a refined list of personal commandments that

they may place on laminated, pocket-size cards that can be

referred to when ethical issues occur during decisions.

Stage Two: Work Team Discussions

The second step moves individual focused discussions to

group exchanges focused on creation of moral parameters

that work teams agree to follow. Stage two operates best if

groupings are limited to individuals who interact with one

another on a regular basis and exist at the same organiza-

tional level to avoid problems associated with trust and

status differences (Zaheer et al. 1998). Thus, salespeople

collaborate with other salespeople involved with similar

products or in a peer division, while their managers

develop joint ethics statements along with other sales

managers. Teams are optimally between five and eight

members so that everyone has an opportunity to be heard

and to increase participation on a per person basis (see

Wheelan 2009 for support on smaller versus larger group

sizes). 1

No one who occupies a supervisory role over

involved employees may join their conversations so as to

avoid fears about retribution for comments made.

Role of Moderators Contrary to stage one, moderators

play a consistent role throughout the entirety of stage two.

Accordingly, there are four distinct instructions given by

moderators to insure that the process is productive and does

not needlessly hurry or delay the final outcome. First, each

individual should discuss their personal commandments

with the group to the extent they may impact interactions

with the team members. Any criticisms or judgments of

individuals or mores are not allowed, with an emphasis

placed instead on trying to find ways to bring together all

ideas into a cohesive whole that represents a shared vision

of workplace activities and ethical issues. Other team

members must limit their interactions during this phase to

clarifying questions, with the moderator protecting integ-

rity of the discussion.

The second directive provides a frame for understanding

how to work toward the end result. Participants are asked to

consider many interrelated ideas inspired by research of

business ethicist Patricia Werhane. Accordingly, modera-

tors should guide individuals to take a systemic view of

their work together, recognizing that employee’s actions

and reactions impact professional lives of others around

them in profound ways (Werhane 2002). Individuals also

must recognize that their combined influence goes beyond

teams or company boundaries, suggesting different

answers to the question, ‘‘Why should I do the right

thing?’’ (de Colle and Werhane 2008). Combined thinking

should be driven by moral imagination that may reject

existing mental models and moral conflicts for new com-

mandments that include unique and untested approaches.

The third instruction addresses the final outcome of their

deliberations. Simply stated, the group must come up with

a set of ethical statements that they would agree to display

publically and hold each other responsible for during the

pursuit of their various job functions. The most important

condition is that all team members should abide by the final

list, requiring agreement on each and every statement to

increase group task identity and autonomy (Cohen et al.

1996). They should be careful to note said condition is not

intended to impede individual voices (Gentile 2010), but

rather to foster a sense of collective identity and firm-wide

cohesion. Any residual disagreements can result in the

removal of a particular statement.

The final pronouncement requires that the team prepare

itself for the next phase, which involves intergroup nego-

tiations, whereby codes of conduct continue to be refined.

It is in stage three that teams will begin to experience

significantly higher levels of conflict as they begin to

interact with individuals operating within very different

areas of the firm. In preparation, team members must

solidify their joint commandments and insure that all

statements are easy to understand and are clearly articu-

lated. Working with moderators, teams should prepare for

these discussions by explicating underlying rationales for

items in ways that resonate with coworkers at or near their

levels of operation.

1 Business units larger than ten people may split apart at the start of

the process and join together later when sufficient agreement and

understanding is reached.

Codes of Ethical Conduct 625

123

Stage Three: Intergroup Negotiations

Stage three will likely vary considerably in length and

complexity, depending upon size and hierarchy in the focal

company. It is at this stage that the independent groups

begin their negotiations with other business units (e.g.,

marketing comes together with accounting) in continuing

to develop and define the company relevant code of ethics.

This third stage includes other requirements for success

such as selection of a group leader to facilitate negotiations

and the use of trained mediators.

As a result, teams assign one person to become

spokesperson for the duration of discussions, with the

remainder of the group acting as resources and support.

Selection often occurs naturally as leaders are likely to

emerge during the second stage (Smith and Foti 1998).

This separation of duty facilitates greater organization and

structure to the process, as discussions are likely to become

increasingly heated and controversial; thus, trust in the

designated leader clearly is essential (Bentele and Se-

idenglanz 2008). The second major difference in stage

three is the introduction of trained mediators to the process.

These third-party mediators are brought into work with the

unit dyads to insure teams operate in the best interests of

their collectives and to navigate away from idiosyncratic

priorities.

The process begins with teams having an opportunity to

read and discuss the lists of those they are negotiating with

and make comparisons to their pronouncements. The goal

is to create three smaller lists outlining those of (a) clear

agreement, (b) significant difference, and (c) little per-

ceived concern. Once these lists are determined, conver-

sations with mediators once again introduce issues

advocated by Werhane et al. More depth is given to pos-

sible positive and negative consequences of their combined

actions, emphasizing the biological modeling of Frederick

(1995, 1998). A relevant analogy mimics the image of a

stone dropped in the middle of a calm pool of water,

watching concentric circles as they ripple throughout the

entire area until reaching the shoreline. As the groups enter

discussions regarding their codes of significant difference,

participants are asked to consider each ethical mandate as a

circle representing potential systemic impact on the variety

of internal and external stakeholders (see Clarkson 1995).

Their task is to insure that ethical parameters that emerge

from negotiations are reflective of this impact.

Role of Mediator The two units interact on-and-off until a

resolution is reached that is agreed upon by both groups of

team members. These negotiations are the most difficult of

the process and require the greatest amount of intervention

by the mediator. Both groups involved in this discussion

are likely to hold priorities consistent with their work unit;

it is the mediator’s job to bring consensus and under-

standing between the groups. The interventional methods

employed by mediators will likely include three primary

techniques through duration of the discussions: (1) the

development of key negotiable points for each party

(Munro 1997), (2) educating and advising adversarial team

members, and (3) encouraging concessions (Wall et al.

2001).

While it is not the role of the mediator to make decisions

for the group, such third-party consultation is necessary for

smoothing arguments, generating understanding, and

building trust between constituents (Landau and Landau

1997). As the two groups in discussion are often operating

from a list of priorities derived from specific work-units,

arguments are likely to arise surrounding perceived

importance of items placed in the collective code of ethics.

Accordingly, mediators are expected to utilize communi-

cative (McAllister 1998) and solution-based (Conlon and

Fasolo 1990) expertise to bring about a joint understanding

and develop newly-framed, collaborative items that satisfy

involved parties (Kaufman and Duncan 1992). These pro-

cesses encourage workers to seek an end result consistent

with the quality output of earlier stages. In addition, it

should build confidence that the final product is an

employee-driven set of ethics.

Stage Four: Board Endorsement

Once all work-units have come to an agreement on their

corporate code of ethics, the process progresses into the

fourth stage—board endorsement. This final step in the

bottom-up process is the most integrating stage of the four,

as it entails the culmination of all prior work and requires

buy-in of the top executives in the firm and board of

directors’ approval. In some cases, organizations may be

small enough or privately held and not be subject to intense

scrutiny experienced within large public corporations;

however, every organization has owners, employees, and a

variety of key external stakeholders who have vested

interests in the conduct of the company that must play a

vital role in the decision-making elements of the firm.

Given the complexity of navigating relationships with

senior leadership, directives in stage four are drawn from

the scholarship on Leader–Member Exchange Theory. As

such, we recognize inherent difficulties employee members

of an organization are likely to face when interacting with

members of senior management (Bauer and Green 1996),

and apply related tenets for navigating board approval.

Choice of Representatives The first task is to assemble a

team of representatives from the various business units

who will be responsible for both presenting and

defending the code of ethics to the board (designated by

626 R. P. Hill, J. M. Rapp

123

letters in Fig. 1). The decision of who represents their

interests within stage four is different from stage three;

while representatives in stage three emerge due to

inherent leadership qualities, representatives in stage four

must be chosen according to their relationships with

members of senior management (Dienesch and Liden

1986; Graen and Uhl-Bien 1995). Choosing individuals

that have prior experience successfully interacting with

senior leadership in the organization engenders the

highest levels of trust (Bauer and Green 1996), as such

relationships are developed over time and are based on

continuous proof of both ability and performance (Mayer

et al. 1995). Accordingly, prior developed trust and

responsibility between a subordinate and senior-level

employee provides for fertile grounding in understanding

and acceptance (McAllister 1995).

Trust in leader-member relationships is integral for

engaging senior management, corporate executives, and

the board, as the bottom-up process of developing an

influential corporate code is likely to be faced with ques-

tions and doubts. In placing organizational employees that

have proven commitment to/understanding of organiza-

tional operations and dynamics in front of the board

increases overall negotiation power of lower-level

employees (Westphal 1999). Thus, key decision makers are

more likely to engage in, listen to, and approve the pre-

sented code of ethics when interacting with individuals that

have an established level of working together for goal

attainment (Turner 1990).

Prior to board presentation, lower-level representatives

should work collectively with the larger contingent to

identify key supporting discussion points for items in the

code. It should be disseminated to all employees to allow

for final review and feedback. Since the group of repre-

sentatives come from diverse positions within the firm, and

have been actively engaged with the complete membership

of the company, they are in an excellent position to seek

input from coworkers. Once voices of the rank and file are

heard, representatives may prepare arguments and presen-

tations for the board.

Presentation to Board The presentation before the board

of directors or advisory body should take place at a meeting

dedicated to the task of review without their being

encumbered by other responsibilities. In addition, the best

location is the premises of the firm so that as many workers

as can or wish to attend are there. If the company is too

large or the facility does not contain a room that will

accommodate such an audience, a minimum of all senior

management, representatives, and board members must be

present. Materials should be distributed to the board prior

to this meeting to provide for sufficient time to review and

question its development and content.

Compared to stage three, negotiation does not play a

significant role in this phase of the bottom-up process.

Rather, the presentation is structured as an informational

defense with representatives supporting their work and

addressing any clarifying issues brought to light by orga-

nizational officials. While clarifying questions can be

asked, the primary responsibility of this body is to insure

the appropriateness and completeness of this moral foun-

dation rather than introducing new ideas or criticizing

individual tenets. Since the purpose of using a bottom-up

approach is to develop a code of ethics representative of all

levels of the organization, members of the board may not

exert influence or make major changes, though they may

play a role in modifications surrounding appropriate

verbiage.

If approval is granted, the internal or external legal

representatives must pass judgment before the code of

conduct becomes the official ethical guide. Recent scandals

involving large public companies like Enron have led to

legislation such as Sarbanes–Oxley, with additional laws

and consumer protection on the horizon because of the

more recent financial meltdown. Thus, it is important to

insure that these moral prescriptions are in concert with the

compliance requirements of legal tenets.

Considerations for a Bottom-Up Approach

The processes associated with a bottom-up approach to

developing a code of ethics are presented in their entirety.

Several concerns that may arise, however, warrant further

discussion; the most fundamental of those involving time

commitment and disruption of work as well as organiza-

tional size.

Time Commitment and Disruption to Work Flow

When presented in its entirety, the expected timeline from

start to finish may be viewed as a daunting series of tasks

that take away precious hours from more ordinary

responsibilities. While employees will understand the value

of these deliberations, they may also be wary of what is a

major time commitment, involving activities not directly

supported by principal goal structures of management.

Exacerbating this perspective is one’s history with prior

organizations—either through personal interactions with

senior management or prior involvement with codes of

ethics development—that emphasized alternative perspec-

tives (e.g., top-down) than the one offered here. Since a

bottom-up approach presents a unique model of involve-

ment, it is unlikely that all employees will feel comfortable

allowing such defused levels of control in a crucial cor-

porate doctrine.

Codes of Ethical Conduct 627

123

Accordingly, top management must express their dedi-

cation to the process and a commitment to allocating the

necessary time (see McNamee and Fleming 2007), with

several pronouncements to insure widespread perceptions

of sincerity. First, executive level management should

reveal their expectations and understanding that the

developed code of ethical conduct will be of the people,

with their managerial role a complementary one of over-

view and support. Second, leadership should be open to

embracing the final result, placing importance on a worker-

centered, problem resolution result (Sabatier 1986).

Finally, management should help employees deal with

disruptions to regular assignments, even relieving them

from nonessential tasks.

Organizational Size

While debate exists over the relationship between size and

complexity (see Beyer and Trice 1979 for an historical

example), there should be little doubt about the magnitude of

the challenges in developing a code of ethics in large, mul-

tinational firms. Differences in cultures, legal systems, dom-

inant religious beliefs, and population diversity may have the

same impact on the development of the moral fabric of an

organization as they do on its performance (Kim and Mau-

borgne 1987). Problems occur with translations of instruc-

tions into different languages, variations in work product

across units, and assimilation of resulting codes into a single,

globally applicable document. These dilemmas may be even

more vexing if there is animosity among divisions or if they

are only loosely aligned (see Almond and Ferner 2006).

The best solution is to define the reach of a particular set

of codes in as small a portion of a large company as pos-

sible. While it is a rough yardstick, any unit that encap-

sulates the full set of business functions (e.g., operations,

marketing, accounting, etc.), has an individual or autono-

mous website that characterizes it as serving consumer

needs in their entirety, and/or has a substantial set of

stakeholders not relevant to other portions of the parent

company, may be eligible for a separate ethical code.

When each of the independent analyses are completed and

approved by their boards, representatives from each sys-

tem, should then come together to develop a global set of

moral parameters reflective of the entire conglomerate.

From here, stages three and four will be repeated, with the

use of mediation to supplement cross-company/cross-cul-

tural negotiations.

Closing Remarks

While the option exists for implementing either a top-down

or bottom-up approach in the development of ethical codes

of conduct, our discussion makes it clear that the cooperation

of workers at all levels is necessary for appropriate devel-

opment and implementation of a new code. Even bottom-up

practices cannot be successful without enthusiastic support

from senior leadership, along with real ownership of the

processes and outcomes among individuals and their group-

ings (McNamee and Fleming 2007). The management task is

to energize workers’ collective sense of self so that they

realize how their personal ethics and shared more impact

themselves and the larger entity (Jones et al. 2007). The goal

ultimately is to influence the corporate culture and formal

structure of firms in ways that shape managerial behavior and

employee actions toward a moral ideal (Murphy 1988). Such

results eventually create an environment, whereby leadership

understands how to recognize and reward ethical behaviors

and to ferret-out and punish unethical conduct across all

layers in the company (Trevino et al. 2000).

Our bottom-up perspective allows organizational workers

to exert influence over the final code of ethics and let’s their

voices be heard. Instead of privileging one position relative to

others, an attempt is made to even the playing field, allowing

employees at all levels in the company hierarchy to explore and

refine ethical beliefs without constraints associated with status

or reporting structure. As a consequence, they are free to seek a

higher moral ground reflective of individual values, as well as

job functions. They must come together to summarize their

statements across the entire business, but this step is completed

without predetermined ordering of preferences or people. The

goal is for employees to recognize that the end result is equally

shared among them.

The rationales, processes, and issues presented herein

have a taken-for-granted quality. They assume that man-

agers desire to rise to higher moral ground over time, with

an emphasis on employee participation to resolve systemic

challenges. This perspective clearly is not the orientation of

all companies, as the lack of ethics in recent infractions

suggests. Nevertheless, the majority of organizations and

workers do wish to conduct themselves in ways that build

trust with stakeholders, if only because it serves their long-

term interests for survival and profitability. When given the

opportunity to do so using techniques that rely on self-

reflection and individual input, we believe that chances of

arriving at widely-accepted codes of conduct increase

greatly. Our hope is that this method can help managers to

reach new heights of moral maturity.

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