In today’s complex business environment, organizations of all sizes and across all industries are recognizing the growing importance of establishing clear guidelines around acceptable and ethical workplace behavior. Two commonly implemented tools for articulating these standards are the code of ethics and code of conduct. While these phrases are sometimes used interchangeably, they are actually quite distinct In this article, we’ll take a closer look at codes of ethics and conduct – from their definitions and objectives to their key differences and practical applications
Defining Codes of Ethics and Codes of Conduct
First, let’s clearly define what exactly codes of ethics and conduct are:
Code of Ethics A code of ethics is a set of guiding moral principles and values that are meant to guide a company and its employees toward proper and ethical behavior It outlines the overarching values and commitment to ethical business practices that an organization expects its team members to embody
Code of Conduct: A code of conduct is a set of rules and regulations that lays out the expectations for appropriate behavior and actions in a business setting. It clearly defines acceptable and unacceptable actions and prescribes specific standards for professional conduct at an organization.
The Purpose and Focus of Each Type of Code
Code of Ethics Purpose: A code of ethics serves as a broad guide for values-driven decision making and behavior within an organization. It’s meant to provide a moral compass or “true north” when navigating ethical dilemmas.
Code of Conduct Purpose: A code of conduct aims to ensure consistency and integrity in employee actions by clearly stating expectations, policies, and procedures around matters of professional conduct.
Code of Ethics Focus: A code of ethics has an expansive scope, covering a company’s overall ethical values, its obligation to stakeholders, and its role within wider society. It covers principles like trust, accountability, fairness, respect, and honesty.
Code of Conduct Focus: A code of conduct focuses narrowly on governing specific actions and issues like harassment, substance abuse, conflicts of interest, use of company resources, discrimination, and confidentiality.
So while a code of ethics provides high-level guidance, a code of conduct offers actionable policies and rules for employees to follow. Both are important for reinforcing values and putting those values into everyday practice.
Key Differences Between the Two Codes
Beyond just their focus and purpose, codes of ethics and conduct have some important differences:
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Specificity: Codes of conduct lay out specific rules and standards while codes of ethics establish broader principles.
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Scope: A code of ethics applies to the whole organization while conduct codes guide employee actions.
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Adaptable: Ethics codes tend to be more flexible since they provide general guidelines. Conduct codes need to be more structured.
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Enforcement: Violating a conduct code can result in disciplinary action while ethics codes tend to be voluntarily embraced.
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Legality: Codes of conduct reference statutory and regulatory compliance. Codes of ethics focus on ideals.
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Audience: Codes of conduct address employees specifically. Codes of ethics cover stakeholders more broadly.
Examples Comparing Codes of Ethics and Codes of Conduct
Let’s look at a few examples that illustrate the practical differences between these two important guidelines:
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A code of ethics may state that the company values and respects all employees and customers equally, regardless of personal characteristics. The code of conduct would build on this by specifically outlining policies around anti-discrimination and anti-harassment.
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The code of ethics promotes generally avoiding conflicts of interest. The code of conduct clearly defines what constitutes a conflict and the exact process for disclosing potential conflicts.
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The code of ethics asks employees to treat clients with dignity and respect. The code of conduct prohibits sharing confidential customer information or soliciting clients for personal gain.
So you can see how the code of conduct puts meat on the bones provided by the broader code of ethical values.
Creating and Implementing Codes of Ethics and Conduct
For most organizations, developing a comprehensive approach involves carefully crafting both a code of ethics and a code of conduct. Here are some tips:
Collaborate cross-functionally: Include HR, legal, compliance and a diverse group of employees when drafting.
** Align with laws and regulations**: Ensure both documents meet legal and industry requirements.
Make codes accessible: Share through the employee handbook, post visibly, and provide training.
Lead by example: Senior leaders must consistently model the expected behaviors.
Revisit and update: Review codes annually and adjust them as needed.
Enforce consistently: Follow protocols when violations occur while promoting open reporting.
Recognize successes: When employees exemplify the codes, recognize and celebrate them.
Establishing well-designed, clearly communicated codes of ethics and conduct lays the foundation for building an ethical and respectful organizational culture. Both work hand in hand to provide the framework and specifics for guiding values-based behavior in the workplace.
Frequently Asked Questions
What happens when a code of ethics conflicts with a code of conduct?
Ideally the two will align, with the code of conduct providing practical policies supporting the aspirational ethics code. If direct conflicts arise, the code of conduct’s specific policies should take precedent, with the code of ethics still providing a philosophical compass.
Can a small business have a code of ethics and code of conduct?
Absolutely. While large corporations tend to have very formal policies, even small businesses benefit greatly from having clearly defined expectations and guidelines around both values and proper workplace behavior.
Do codes of ethics and conduct really make an impact?
Yes. Well-designed and properly implemented guidelines shape organizational culture significantly. From providing legal protections to boosting reputation to retaining top talent, clear ethical codes and conduct policies lead to measurable business benefits.
What happens if an employee violates a code of conduct?
Intentionally violating workplace rules of conduct can lead to disciplinary actions ranging from a warning to required training to suspension or termination. Protocols for reporting and investigation should be outlined and consistently followed.
How often should we review our code of ethics?
Ideally, the code of ethics should be reviewed annually to ensure it still aligns with company values and priorities as these evolve. Reviewing it with employees also reinforces its importance.
What steps ensure employees understand the codes?
Providing the code during onboarding training and making it easily accessible is crucial. But regularly discussing it via all-hands meetings and incorporating it into decision making also boosts employee comprehension and buy-in.
Conclusion
A clear set of ethical values, modeled by leadership and backed by specific policies, is crucial for fostering an ethical workplace culture. Codes of ethics provide the moral compass, while codes of conduct translate that into enforceable guidelines for employees. Understanding the unique purpose and focus of these complementary tools allows organizations to thoughtfully instill values while also creating a fair, consistent and compliant work environment. By investing the time to develop and communicate robust codes of ethics and conduct, companies position themselves for success through strong culture, reputation and business outcomes.
Code of conduct examples
Listed below are five real-world code of conduct examples from successful companies.
Multinational financial services corporation Visa has developed a detailed and wide-reaching code of business conduct and ethics with the slogan: “Integrity. Everyday. Everywhere.”
It opens with a letter from the CEO stating the company’s commitment to integrity and the need to continually earn the trust of their clients by acting with the highest ethical standards every day. The code of conduct is structured using Visa’s six leadership Principles:
- We lead by example – Be accountable, Treat others with respect, and Demonstrate a passion for our business
- We communicate openly – Promote a shared vision, Communicate effectively, Value other’s perspectives
- We enable and inspire – Inspire Success, Remove barriers, and Value inclusivity and diversity
- We excel with partners – Build strong relationships inside and outside of Visa, Provide excellent customer service, and Take a solutions oriented approach
- We act decisively – Challenge the status quo, Decide quickly, Learn from our mistakes
- We collaborate – Break down silos, Engage with our colleagues, and Deliver as One Team at One Visa
Each section offers essential rules with explanations for implementation, valuable notes, examples, and links to relevant departments and other sources of additional information.
Visa’s code of business and ethics ends with a comprehensive list of resources to help when staff are unsure what to do in any situation. The list of issues or concerns along with the corresponding contact information is impressive and includes:
- Confidential compliance hotline
- Business conduct office
- Conflict of interest program
- HR
- Legal department
- Anti-tax evasion facilitation compliance
- Employee assistance program
Japanese tech conglomerate Sony has an informative and extensive code of conduct covering many aspects of working at the company.
It starts with Sony’s purpose and core values, followed by messages from both CEO and Executive Vice President, the second of which poses the question:
“Does this contribute to a better future for Sony and a better future for our society?”
This question, along with Sony’s ethical values of Fairness, Honesty, Integrity, Respect, and Responsibility, form the basis of their code of conduct.
From there, the code of conduct is separated into eight areas:
- Core Principles – Honest and Ethical Business Conduct, Relationship with Stakeholders, Respect for Human Rights, and Appreciating Diversity
- Fair Labor and Employment Practices – Equal Employment Opportunity/Non-Discrimination, No Forced Labor/Child Labor, Sound Labor and Employment Practices, and Work Environment (Anti-Harassment/Anti-Discrimination/Health & Safety)
- Responsibility for Products and Services – Product and Service Safety and Accessibility, Advertising and Marketing, and Environmental Conservation
- Protection of Intellectual Assets – Intellectual Property, Confidential or Proprietary Information, Personal Information, and Information Security
- Fair Business Practices – Fair Competition, Trade Controls, Fair Procurement, and Anti-Corruption
- Responsible Business Conduct – Sound Decision Making, Public Disclosure, Recording and Reporting of Information, and Tax Compliance
- Ethical Personal Conduct – Insider Trading, Personal Conflict of Interest, Corporate Asset, and Media Relations and Public statements
- Responsibility of Every One of Us – Reporting Concerns and Hotline and No-Retaliation
The code of conduct ends with an explanation of Sony’s ethics and compliance hotline. Maintained by a third party, it allows all employees to report concerns regarding breaks in the law or company policies, with the option to remain anonymous.
American automotive company General Motors (GM) have produced a comprehensive yet easy to navigate and understand code of conduct known as “Winning with Integrity.”
It begins with an opening message from the chairman and CEO, emphasizing their fundamental commitment to ethical and honest business conduct. Straight after this message is a page dedicated to safety; it places safety for both customers and employees at the heart of everything GM does, noting why this is so critical given the products they make and sell.
The code of conduct then introduces GM’s purpose:
- We earn customers for life
- Our brands inspire passion and loyalty
- We translate breakthrough technologies into vehicles and experiences that people love
- We serve and improve the communities in which we live and work around the world
- We are building the most valued automotive company
And core values:
GM separate the code of conduct into four sections containing related topics:
- We follow our code
- We care about others, we put safety first
- We do what’s right
- We protect our company
Each section explains who it applies to, how the code will be enforced, and details the company’s expectations of its employees. It also has a recurring feature known as “Which Way?” that answers questions regarding potential situations where the code should guide the employees to the desired outcome. Finally, the code of conduct ends with some closing thoughts, policy links, and a list of additional resources.
French cosmetics company L’Oreal has developed an easy to follow code of ethics broken down into four sections:
- The L’Oreal Spirit
- Respecting our commitments as a business
- Respecting our commitments as an employer
- Respecting our commitments as a responsible corporate citizen
“The L’Oreal Spirit” contains forewords by the CEO, Chief Ethics Officer, and the executive committee as a whole stating the commitment of the company to the code of ethics that follows. The remainder of the section contains information regarding who the code is for, how it should be used, how staff should work together, respect for human rights, and local laws and customs.
“Respecting our commitments as a business” details L’Oreals business practices concerning:
- Product safety and quality
- Advertising and marketing
- Supplier selection and fair treatment of suppliers
- Fair competition
- Conflicts of interests
- Gifts and entertainment
- Bribery and facilitation payments
- Confidential information
- Representing the company
- Privacy and data protection
- Use of Company resources
- Financial and business records and the fight against money laundering
- Insider trading
- Tax
The final two sections, “Respecting our commitments as an employer” and “Respecting our commitments as a responsible corporate citizen,” explain company policy regarding how they treat employees and how they interact with the wider world.
Throughout the code, the company lays out its position through clear “We Must” and “We Must Not” lists and provides practical scenarios to demonstrate what they expect from staff. Each section also includes information and suggestions for who to report concerns to for the specific topic.
US electronics retailer Best Buy titled its code of ethics: “At our best. Every Decision. Every Day.”
It begins by describing Best Buy’s belief that “Magic” can happen when you connect each employee with the company’s purpose. Best Buy believes the purpose of a corporation should be to work towards a common good for its:
- Customers
- Employees
- Vendors
- Shareholders
- Community
And these groups form the structure of the code of ethics with a section explaining Best Buy’s responsibilities and policies regarding each of the five.
The code continues with a message from the CEO and an introduction to Best Buys:
- Purpose: Enrich lives through technology
- Rallying Cry: Let’s talk about what’s possibleTM
- Guiding Behaviors: Be human, Make it real, and Think about tomorrow
- Values: Unleash the power of our people, Learn from the challenge and change, Show respect, humility, and integrity, and Have fun while being the best
The code of ethics makes it clear who it applies to (every employee), what happens if it is violated, and the responsibilities every employee has. It emphasizes Best Buy’s expectations from its leaders and provides important details on how staff should raise concerns. In addition, Best Buy provides “What If?” examples throughout the code of ethics to show how it works in practice.
Tip # Disseminating a code of conduct
Enforcing a code of conduct starts by disseminating it widely throughout your organization. Need to be aware of the code of conduct to know the organization’s values and behave accordingly.
The most efficient way of spreading your code of conduct is through the employee handbook distributed during onboarding. In general, the process of orienting new employees is a vital time when the code of conduct needs to be made accessible and clearly explained.
