Diversity & Inclusion, Learning & Development

What Should Your Company Code of Ethics Contain?

A single corporate scandal can be enough to leave a company’s reputation in tatters in no time. From Volkswagen’s emissions scandal to the collapse of Enron, cases of corporate misconduct have prompted companies across the globe to take measures to make sure employees put their most ethical foot forward. 

A company’s code of ethics lays out its values and mission, as well as the ethical principles that align with its core values and how employees must approach problems or make decisions in an ethical manner.

But what should your company’s ethics code include?

Value-Based Components

There are countless value-based components you could include in your code of ethics. Generally speaking, a code of ethics includes six moral values that outline how you expect your staff to be respectful, fair, trustworthy, caring, responsible, and good citizens. In addition, you can include values such as dress codes, the celebration of diversity, or sustainability.

Clearly State Your Expectations

If your company’s code of conduct is a monument, a crystal-clear set of expectations serves as its wire frame. This wire frame can then be used to determine the quality you expect from your employees, the customers you want to sign, and how you want to allocate your company resources.

When you craft your code of conduct based on your most important expectations, you set a clear path for your employees to follow. For instance, if sustainability is one of the main focuses of your business, you can include literature that demonstrates how your company strives to reduce its carbon footprint.

Focus on Inclusion

A company with a solid culture of ethics strives to create a workplace that is free of any form of discrimination. An inclusive workplace is critical to bringing out the full potential in every employee who sails in the same ship. Here are a few ethical standards that must be mentioned in your company code:

  • Treat every employee with respect and dignity.
  • Encourage and accept ideas from employees with different backgrounds, experiences, and perspectives.
  • Address and report any form of discriminatory behavior.
  • Leave no room for slang that fails to translate across cultures.
  • Confront unethical behavior that might spring from both unconscious and conscious biases.

Set the Tone at the Top

When it comes to communicating the importance of your company’s code of conduct, top management has a critical role to play. Ethical behavior isn’t a “natural phenomenon.” It is the result of clearly demonstrated behavioral expectations that are emulated directly from the top. Managers must not only model ethical behavior but also promptly address ethical issues.

State the Behavior You Expect from Your Employees

Your company’s code of conduct must also outline the “type” of behavior you expect from your employees. Workplaces that follow a zero-tolerance policy for unethical or unprofessional behavior naturally have a stronger culture of ethics.

Consider the Legal Ramifications

Shouldn’t following the law be second nature to employees? The answer, unfortunately, is a massive no.

Each industry has a specific set of state and federal laws that must be followed. Delivery drivers, for instance, often go through regular driver’s license reviews for driving under the influence (DUI) or speeding tickets. Also, bank employees go through several sanction screenings for money laundering.

While some law violations may not occur during work hours, they can nevertheless be grounds for disciplinary action, especially in examples like DUIs for delivery drivers. Stressing the importance of following the laws both inside and outside the workplace is critical to ensure no ethical lapses from the employees’ side damage your business.

Reward Ethical Behavior

Behavior that is rewarded is repeated.

A strong culture of ethics can be created by incentivizing ethical behavior, so insert workplace ethics in your company’s criteria for rewards and recognition. Also, train leaders to spot and reward employees who go the extra mile to do the right thing. Offering incentives that instill a sense of agency and pride—giving travel perks or front-row parking perks, for example—can work wonders without increasing the company’s expenses.

State Clear Guidelines Around Punishment for Violating the Code of Ethics

No company is perfect, and ethical lapses in the workplace tend to emerge from time to time. Building a robust code of ethics is certainly important to create an ethical workplace. To strengthen the components of the code, however, it is equally important to address the course of action around any form of violation.

For instance, you can’t just say DUI is strictly prohibited. You must also outline the potential disciplinary actions that could emerge from driving under influence. The disciplinary action you take against any violation, however, must be fair and justifiable to the very nature of the violation.

Compliance and Regulation

Compliance and regulation are other critical elements of legal requirements that most industries must meet. Failing to comply with these requirements unlocks an uncontrollable cascade of penalties, fines, and even legal action against the company, the employee who violated the rules, and leaders.

Financial services, real estate, banking, and healthcare industries are a few of the most highly regulated industries. For instance, if a mortgage representative fails to comply with the Truth in Lending Act while advertising interests, the company ends up facing severe repercussions. Therefore, it’s critical for your company to state how important it is for employees to follow all industry compliance and regulatory rules.

A Code of Ethics Is Crucial for Success

A robust code of ethics is critical for a company to ensure its workforce remains well aware of its values, mission, and guiding principles. It lays the road map that guides employees through the kinds of rules that are at play—both from law enforcement and from regulatory vantage points. Moreover, a well-rounded code of ethics guides employees as to how they must act when presented with gray areas of ethics.

Giovanni Gallo is the Co-CEO of Ethico, where his team strives to make the world a better workplace with compliance hotline services, sanction and license monitoring, and workforce eLearning software and services.

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