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ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics

A company's code of ethics states that integrity is a core value, but managers' bonuses depend solely on meeting quarterly profit targets, and employees who miss targets are openly criticised. What is the most likely consequence for the code?

The code will be seen as inconsistent with what the organisation really expects, weakening its credibility. When reward systems and criticism focus only on profit targets, employees conclude results matter more than integrity, so the stated values are not taken seriously.

  1. AIt will be seen as inconsistent with real expectations, weakening its credibilityCorrect
  2. BIt will become legally binding on all managers
  3. CIt will be strengthened because targets reinforce discipline
  4. DIt will have no effect because codes never influence behaviour

Explanation

When reward systems conflict with stated values, staff conclude that results matter more than ethics, so the code loses credibility. The code does not become legally binding merely through this conflict, and targets do not reinforce integrity here.

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