How to Develop a Code of Conduct for Your Company
WHAT IS A CODE OF CONDUCT AND WHY IS EVERYONE TALKING ABOUT IT?
You probably heard about it…
Serious companies nowadays cannot be imagined without their comprehensive codes of conduct.
The surprising thing about these optimistic manifestos?
Some of these happened to have quite massive practical influence!
Google, Coca Cola, Ikea… Virtually all relevant companies have detailed and worked out codes of business conduct.
And what’s even more important: They all try pretty hard to comply with principles stated in those seemingly irrelevant documents.
What does this mean? Can this code of conduct be a legally binding document?
No. This is not labor law or anything…
The term refers to companies’ policy statements which define ethical standards for their business conduct.
In other words, a code stipulates company’s values, missions and goals.
For sure, the code may also touch upon more specific situations which may arise at the work place, hence, provide guidance on how to proceed (e.g. unethical behavior, mobbing, sexual harassment, thefts etc.).
When it comes to big, influential companies, they DO pay attention to the principles stated in their codes. The main reason? Reputation and image.
These companies are aware of their huge social and economic impact…
Code of conduct serves to attest their ethical intentions. Failing to comply with such intentions
Such failure can have a massive influence and sometimes even, fatally ruin a company’s image.
Speaking of smaller companies, their code of conduct is NOT all that INFLUENTIAL.
It is a useful tool, for sure, but it probably will not trigger such drastic results as within huge corporations.
That be said…
You may have been told you need a code of conduct or thought about it yourself but are not actually sure you want to invest time and/or money into its drafting.
Do you really need it?
A very general and rough estimate: you don’t really need it in this exact form if your company is very small, hence, employees less than 20 people overall.
Nevertheless, bear in mind that some ethical issues may have an even greater impact in smaller companies…
To give an example: Think of romantic relationships at the work place. Imagine what a bad break up or even potential sexual harassment lawsuit could do to a small business… In a company with relatively small turnover and intimate working climate?
The impact could prove much more significant than in big companies!
Plus, you should definitely think of having a code if your company operates under strict liabilities policies or its operations have potentially high social/environmental influence.
In such cases, companies size should not be the decisive factor.
The thing is that all companies have some kind of policies and rules!
A code of conduct is simple, rather general codification of the most important ones.
Ultimately, it is up to you to decide how important policies are to be communicated within the company…
A code may simply put more emphasis on those values you praise the most.
And having decided you need a code of conduct… where do you start?
STEP 1: INITIATE THE DRAFT
Ok, so you want it, you know you need it and your first question probably is:
Who, in the god’s name should draft this thing?
Let me answer some of FAQs here:
Do I need a lawyer? Can I do it myself? Is this a whole team action, meaning all employees need to pitch in?…
It depends on the company, on the impact you strive this conduct to have, how skilled you are with drafting of such documents, company regulations etc.
Let’s start with a few general information:
You do not need a lawyer.
Consulting a lawyer could make sense if:
- you are a big company,
- your business has major influence of social or environmental kind,
- or you are a company bound by strict liability policies. (the list is not exclusive)
In such cases, you may want to make sure your internal documents and guidelines are precise and work in your favor.
In other cases, a lawyer should not be necessary since, as previously mentioned, code of conduct is not a legally binding document.
You can do it (if you are up to the task).
If you trust yourself with doing this, have some writing experience and perceive drafting of this code as a fun task rather than a real obligation, I don’t see a reason why you could not do it yourself.
The thing is that it takes time and energy which are the exact things leadership is usually lacking.
In the recent years, many companies transferred this obligation to the HR section, so this may be an idea…
(If possible) the whole leadership should be on it.
Why the WHOLE LEADERSHIP?
Because this provides consistency, support for the document and most importantly, demonstrates unity among company’s leading people.
And think about this… Aren’t these some of the very goals you wish to achieve by drafting the code?
You don’t want someone from the leadership turning against the code and saying he/she hasn’t agreed to it from the very start…
You especially do not want this scenario to happen the moment you wish to invoke the code and force someone to comply with it.
Therefore, leadership, stakeholders, managing partners… the more relevant people you get to agree and sign the code, the better.
As for the employees…
Relax… drafting of the code should not be a team event.
Nevertheless, it does make sense to get as many insights and pitches from the side of employees as possible…
Why this, you may ask?
Well, this code should serve as a guideline for everyone in the company, right?
That be said, it should WORK IN PRACTICE, not only sound nice.
And although you may think you know everything that is going on in the company… You could be wrong.
You may fail to address some of employees major issues or struggles, due to simply not knowing about them.
On another note, having a signature of employee’s representative may add up an extra impact and by letting employees in on the process, you may immediately strengthen their dedication to the code which is kind of the point.
To sum up: The sole drafting process does not have to include lawyers, should lie upon the agreement of the whole leadership and should consider the standing of employees.
Who puts it in words, you, HR or a third-party remains at the discretion of a specific company.
And now that we have formalities settled…
STEP 2: DECIDE ON COMPANY’S CORE VALUES.
In the document itself, you start with the important stuff…
The first question you should ask yourself is:
Why do I need a code of conduct?
- Do you want people to know RULES? Good, transparency.
People like knowing what they CAN and CANNOT DO. And even if they have been told something… they oftentimes really like to see it in writing too.
- You want to stress out some of COMPANIES GOALS (e.g. environmental goals, charities, fairness etc.)? Ok, goals give perspective and can guide the employees through some tough decisions they encounter in the everyday company setting.
- You strive to achieve friendly and productive WORKING CLIMATE? Productivity equals profits and it is a fact: people are more productive when working in a friendly atmosphere where they feel comfortable and safe.
All of these can be considered company’s values and all these KEY WORDS (among others) make the CORE OF THE CONDUCT.
Basically, code of conduct demonstrates how employees, customers, partners, and suppliers can expect to be treated by a concrete company.
And that is where you start!
You start by elaborating on what your company stands for and the purpose of the conduct.
Company X strives to conduct business with honesty and integrity, and in compliance with the law. Code of Business Conduct provides guidance on the handling of ethical issues and the promotion of an ethical culture.(An example inspired by Coca Cola code of conduct)
Think of this as an introduction, preamble…
Make it clear and concise.
It doesn’t have to be specific. Details will be communicated in the material part of the document.
So since we got through the chit chat, let’s start with actual tips on how to draft the MATERIAL part of the code…
STEP 3: WHAT TO INCLUDE IN THE ‘BODY’ OF THE CODE?
Ok, before getting to all necessary and unnecessary details, my suggestion to you would be to take a look at some of the examples of successful codes of business conduct (you can find one of the examples below).
When scouting for inspiration, it may make sense to focus on the companies operating in your field or with the size similar to the one of your company.
I am stressing this because every company has its specifics, meaning that it values certain principles more than others.
Every code is a document for itself, however, there seems to be a general agreement regarding points which should be included in it:
Values govern the company’s functioning and its decision making on all levels.
What we often hear nowadays are buzz words such as: fairness, transparency, responsibility, credibility, diligence, aspiration, commitment, etc.
By mentioning these in a code, a company dedicates itself to adhere to these values regardless of the situation and outcome, on all levels and all locations of its business.
The values that guide our decision-making are spelled out in our Code of Conduct. Put simply, our Code of Conduct challenges us to put the needs and well-being of the people we serve first. (Example inspired by J&J Credo)
As you see, this part is, indeed, quite general but it serves the purpose of providing certain ultimate, unbreakable principles which remain binding for the company regardless of the situation.
In an ideal case, a company should strive to provide some guidance on its INDIVIDUAL DEFINITION OF ITS VALUES.
What is diligence, what is aspirational thinking etc…
Explaining this in the code itself may not always be possible but in this case, a company should strive to provide guidance by developing practical tools, such as handbooks, case studies, best practices and/or organizing workshops.
Guiding principles determine company’s modus operandi.
Gender, social, religious equality; prohibition of all kinds of discrimination, opened and respectful treatment of employees throughout the whole supply chain, fairness and best quality for customers and partners etc.
These principles are similar to values but are slightly more precise and concrete. They focus on specific ethical or practical issues of the modern business and demonstrate the position of a company in this regard.
They can be more precise, e.g.:
strict anti-bribery policy instead of a rather general statement, such as ‘adhering to the laws of the country’.
It really is up to you how you phrase it…the idea remains the same:
When in doubt on how to proceed in a potentially tricky situation, principles stated in the code should be able to provide guidance and help employees make best possible decision.
A go to person or an office
This person should be contact point for all questions, uncertainties or potential breaches of obligation resulting from the code.
Being a fairly general document, people will have questions about it.
They may want to clarify a potentially tricky situation, file a complaint or report a potential misconduct…
In case this happens, they need to know whom to go to, right?
Therefore, one of the essential steps of drafting a code of conduct (and making it actually come to life) is coming up with a person responsible and capable of dealing with these technical matters.
100% confidentiality is a must!
Apart from this, you may also want to come up with a frequently asked questions and answers, hence, make these accessible for everyone in the company.
I know this can be an extremely boring task but trust me… You will save yourself a lot of time and efforts by coming up with this Q&A section.
Penalties and consequences
For cases of breaches of commitments resulting from the code… Because you’ll probably have this as well!
Strictly prescribed penalties provide clarity and motivate people to obey rules resulting from the code.
Many people may decide to comply with it because it is a decent thing to do and because it simply makes sense but there is no guarantee everybody will.
For this less obedient group, there is only one way to go.
Furthermore, many may regard penalties section as a proof of documents importance.
This section may also get employees to comply with the rules without objecting too much or simply get them to think twice when conducting their everyday business.
Last but not least, if a penalty is, indeed, invoked, it is always better to have a written legal ground which entitles such measures.
Internal measures or not, it is always better to be on the safe side, right?
To sum up, I provide you with a general overview of certain points which ought to be mentioned and elaborated in the code:
- Integrity and business ethics (see the guiding principles section)
- Respectful treatment and prevention of harassment/mobbing
- conflict of interests policy
- protection of the brand
- where to ask questions and get an advice
- punitive measures in case of a breach of obligations from the code
TIP 1: BE GENERAL AS POSSIBLE BUT MENTION KEY POINTS
And this is very important!
You want to cover all relevant areas but do not want to kill the reader with too many details.
Once again, this is not a legal document and one of the most important features of a good code of conduct must be its SIMPLICITY.
Or imagine it this way…
It should be drafted in a way, that an average employee, without any legal knowledge can understand and comply with it.
Reader friendly, you know?
You should include above mentioned key points but don’t go into too many details.
Let me give an example:
Bribery in all forms is strictly forbidden.
This is ok. What you should not be writing is something like this:
Bribery in any form will not be tolerated. A definition of bribery is… Behavior and actions which could be perceived as bribery include (extensive list of actions)…
I think you get the picture…
A code should not strive to cover all issues a regular employee may encounter on a daily basis.
It may be wise to remember that you, in fact, cannot cover all issues or dilemmas which may arise which is exactly why you shouldn’t attempt this in the first place.
In order to achieve this goal, it may make sense to assign a go to person or the whole office which would be able to deal with questions, troubles and complaints on a case by case basis.
A code should literally serve as a benchmark to help people become more sensitive, notice potential misconducts and potentially, encourage them to report them.
It is for this reason that many big companies put a kind of a disclaimer at the very beginning, owing up to the fact they’ll never be able to cover all major ethical or god forbid, practical issues which may arise.
Still, this only means they give up the intention to anticipate everything, not the intention to fight potential misconducts as they come across them.
One final note:
Skip the legal terms.
Don’t miss the point… This document should really be as accessible and understandable as possible.
One of the most famous codes of conduct, the one of Google, gained its significance for one reason only:
It has proved to be easily understandable for everyone.
Therefore, while drafting your own code, make this your mission as well…
For the people to the people.
TIP 2: INCLUSION OF EMPLOYEES
We already mentioned this earlier but this is where this contribution becomes truly significant.
Include your employees when you already have a preliminary draft (if not before) and ask for their opinion.
Some of the FAQs you should ask:
Do they understand it? How do they understand it? Are there some topics which are relevant for them but remained uncovered by the document?
But please, don’t go from one employee to another asking these questions…
You can assemble a few employees from different sectors or have just one employees representative commenting and then signing the code.
Even if you don’t include each and every one of employees, this approach will have multiple benefits and will gain additional credibility to the code you are drafting.
Employees may give you a helpful insight on stress out some of the issues you overlooked.
They may also say the document is complicated. Or they may say it is perfectly fine…
In any event, you should bear in mind that employees remain one of your target groups, being directly affected by the company’s code of conduct…
That be said, hearing what they have to say about it does make sense, doesn’t it?
Such inclusion equals less work for you, more support for the document.
And now that you have your draft ready…
MAKE IT WORK: BRIEFINGS, REMINDERS, CONFIDENTIALITY
Your company has a code of conduct and this is great news.
But what happens now?
Again, this remains up to a specific company and how it goes about the existence of its code of business conduct.
The thing is that for many companies these principles never become more than words on paper…
Simply having them, even in writing, doesn’t suffice.
Don’t let your efforts to be a waste of time! Make it work!
The company must stress its guiding principles consistently, remind people of its values regularly and have actual, functioning instruments to deal with potential misconduct.
What should you be doing in practice to ensure your code actually comes to life (and stays relevant)?
Well, you can start by:
- Answering frequently asked questions regarding the code and making them accessible for everyone in the company.
- Provide a go to person to solve dilemmas and attend for potential whistle-blowers. Employees rarely feel comfortable coming up about their colleagues or even, superiors and they need to know their career will not be jeopardized in any case.
- There must be absolutely NO RETRIBUTION for people who decide to come clean about potential misconducts and potentially, make a mistake.
- Dealing with potential misconducts, conversations and investigations within the company should be as confidential as possible. Negative publicity could bring more harm than the actual misconducts, plus, it may scare of employees from ever coming clean about anything.
- Penalties should be proportional to the action that triggered them, meaning, you don’t sanction a person for accepting a chocolate from the client. Or you do… but in this case, your company may not have the best working climate and atmosphere.
- At least once per year, employees should be reminded of the code and what these principles stand for.
- At least once per year, leadership or whoever is in charge of the code should revise it and potentially, amend it, if there is a need for any changes due to recent developments in the company. Such changes should then be communicated within the company as soon as possible.
- Just to be sure all employees understand the code and its purpose, it may be useful to organize occasional briefings and exercises, hence, let people in on best practices which can be used to deal with potentially tricky situations.
- It could be useful to include a mandatory briefing on this topic for all new hires joining the company. This way, they get the idea about its significance from the very start of their employment.
- Actually incorporate these principles into the everyday business, regardless of how insignificant individual actions may seem. That is how words come to life…
And there you have it…
It’s not as hard as it seems and having a functional code of conduct may actually improve company’s functioning in many ways.
Final piece of advice: Make sure you believe it!
The biggest issue with documents of this kind may be them sounding fake or artificial. The result?
People will not buy it!
Furthermore, they will have troubles understanding and complying with it.
Copying another company’s code of conduct may be a lot easier but you will not get it to sound real. Not in a million years…
For this reason, make sure you draft it as personal and true as possible. Focus on the spirit and actual values of your specific company!
Consider it an actual contribution to the company’s functioning and live by it.
That is the only way it makes sense…
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