While ethics is not a new concept in business, ithas gained importance and visibility recently asa result  of  public-  and  private-sector  disclosureand  reporting  issues  and  the  passage  of  TheSarbanes-Oxley  Act  (SOX).  The  lessons  learnedfrom  Enron  and  the  other  accounting  scandalsshow  that  the  development  of  an  ethics  policydoes not automatically lead to an ethical organi-zation  any  more  than  developing  a  corporateVision  creates  a  visionary  organization  (Collins,2001)
Ethical behavior is not about abiding by the law.Individuals and organizations can act legally andstill be acting unethically. Ethical behavior is driv-enby compliance with a set of values that actsas  the  touchstone  for  situational  decisionswhere rules may not exist to cover every alterna-tive. Ethics is about the integrity of the decision-making process that is used to resolve any num-ber of issues.Rushworth  Kidder, president  of  the  Institute  forGlobal Ethics, explains the link between the driv-ing values of an organization and the behaviorsthat  result:  “Ethics,in  its  broader  sense,dealswith human conduct in relation to what is moral-ly good and bad, right and wrong. It is the appli-cation  of  values  to  decision  making.  These  val-ues  include  honesty,  fairness,  responsibility,respect,and  compassion.”  In  its  Statement  ofEthical  Professional  Practice,  IMA  outlines  theoverarching principles that drive ethical behavior.Members  of  the  organization  are  expected  toabide by the Statement and engage these princi-ples—both at their jobs and in life itself—even ifit  costs  them  financially,just  as  members  ofother professional organizations are expected toabide by their group’s respective code of ethics,such as the American Institute of Certified PublicAccountants’  (AICPA)  “Code  of  ProfessionalConduct.”Establishing  a  code  of  conduct  in  smaller,  pri-vately  owned  organizations  is  usually  fairlystraightforward:  The  owner  “leads  by  example.”His  or  her  demonstrated  behavior  becomes  themodel  for  other  employees—even  if  it  is  neverdocumented—and  creates  the  organizational“culture.” Challenges arise when these organiza-tions grow and employees become disconnectedfrom direct day-to-day contact with the owner.
In larger organizations, the problem is magnified.If no defined code of conduct and ethical behav-ior is developed, employees will act on their ownbeliefs and values, or they will observe and emu-late  the  behavior  they  see  around  them  on  adaily basis. If  the  kinds  of  scandals  that  plagued  the  busi-ness  world  in  the  late  20thand  early  21stCentury are to be avoided, organizational behav-ior  needs  to  be  defined  and  deployed  in  a  waythat drives the individual behavior of employeesin  a  manner  consistent  with  defined  expecta-tions of the wider organization. Many individualsat  the  center  of  corporate  scandals  have  pro-fessed the belief that they were innocent of anywrongdoing, including  Kenneth  Lay  of  Enron  orConrad  Black  of  Hollinger.  The  problem  is  thatthese individuals did not define their behavior bywhat most of society would see as “reasonable,”but  rather  they  followed  their  own  particularcode—in  some  cases,limiting  the  definition  ofethical  behavior  to  require  compliance  with  thelaw and nothing more. When laws may have beenbroken,it falls to the courts to decide if an actwas illegal and to assess penalties. In situationsthat may be unethical but are not illegal, howev-er, there  is  no  legal  remedy.  The  only  course  ofaction  for  society  is  to  either  pressure  the  gov-ernment to enact more rules or to decide not todo business or develop relationships with uneth-ical companies and individuals. This is how SOXcame  about,and  it  is  how  an  organization  canlose the value of its brand.