Your Organization needs a Code of Conduct—Here’s Why

A code of conduct is an important tool in HR management. In fact, 86 percent of Fortune Global 200 companies utilize a code of conduct.  But what is a code of conduct and why should your company create one if it doesn’t exist already?

Code of conduct: a road map to success

To put it simply, a code of conduct (sometimes referred to as a code of ethics) tells your employees how they are expected to behave. It articulates an organization’s mission, as well as its values and principles.

Your code of conduct should clearly outline what you believe as an organization and how each employee should treat each other, as well as the people they interact with as a representative of your business.

Aside from meeting legal requirements, establishing a code of conduct also helps to create a company culture and improve an organization’s reputation.

Wooden signpost - code of conduct (ethics, respect, code, honesty, integrity).

There are several reasons that your business should have a code of conduct, including:

It encourages ethical behavior within your company.

It makes your business a better place to work.

There can be long-term success for employees and the business.

It shows your company’s vision and mission.

Shows customers and other companies you have integrity.

What’s included in a code of conduct

Deciding what to include in a code of conduct may vary depending on your business or industry, but there are several different areas that are commonly addressed.  Some of the most common elements are:

Integrity—Integrity is how you expect your employees to react in any ethical situations, especially when it involves a customer.

Teamwork—Including teamwork will let your employees know how they are expected to act and interact within a group.

Respect—Everyone who interacts with your business deserves to be treated with respect.

Innovation—You always want to be improving your product and/or customer experience to grow your business.

Client focus—Ensure your employees know how you expect your customers to be treated.

You should also include items such as a letter from leadership and a table of contents at the beginning of the code of conduct. All of these are meant to give all employees, from the CEO to the new hire, a greater understanding of company values and expectations.

It’s important to be clear and concise when drafting your code of conduct. You want to make sure there’s no confusion. PepsiCo’s code of conduct, for example, gives exact dollar amounts for what is considered a gift and what isn’t.

Updating Your Code of Conduct

In 2014, 93 percent of companies in the U.S. had a code of conduct but less than half did a good job of updating it, according to a briefing from the Institute of Business Ethics.  Always remember to update your code of conduct as things change over time. As your company grows and changes, so too should your code of conduct.

Code of Conduct

There are several items to consider before you begin to update your code of conduct, including:

  • When it was last updated
  • Changes to company policies and/or federal and state laws
  • If the guidelines are still current

You might also want to compare your code of conduct to other companies in the same industry. See what they have and then decided if you need an update.

Once you do start revising your code of conduct, make sure you have a committee reviewing it and seek feedback from stakeholders.

Want to know more? Check out KnowledgeCity’s courses on Creating a Code of Conduct and Business Ethics and learn how you can incorporate your company’s values and vision into a strong code of conduct for ethical decision making.

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