A code of conduct is a set of predefined principles and values created by companies to serve as a framework for ethical behaviour in the workplace. This set of ideals differentiates one company from another, reflecting its culture and dedication towards upholding moral values.
Purpose of the code
A company’s code of conduct serves as a foundation for ethical decision-making and an instrument of corporate governance. It is employed by businesses as a communication tool to give stakeholders valuable insight into a company’s commitment to integrity. It serves the following purposes:
- Guides communication within the workplace, contributing to a better culture
- Reinforces the company’s core values and mission
- Ensures legal and ethical compliance, minimising risks
- Sets clear expectations for employees and guides them on how to approach difficult situations
- Provides a foundation for resolving disputes and conflicts of interest
- Promotes accountability and a culture of continuous improvement
The core elements of a sound code of conduct include:
Board member responsibilities
The key components of ethical standards include impartiality, integrity and honesty. It is vital to define the principles for the fair treatment of all employees and to support the company’s commitment towards upholding these ethical standards.
Compliance with regulations
This section emphasises the importance of adhering to all applicable laws and regulations. It is vital to highlight the methods of reporting ethical and legal violations in the workplace.
Conflict of interest policy
Clearly define what constitutes a conflict of interest and highlight the procedures for disclosing them. Specify what steps should be taken to manage conflicts as they arise.
Address the importance of keeping sensitive customer data, trade secrets and proprietary information safe. Include guidelines for respecting employee privacy.
Define how all company individuals are intended to behave during meetings. Emphasise the proper meeting etiquette regarding respecting others, ensuring confidentiality and engaging in constructive communication.
Violations and reporting
Your code of conduct must clarify what will happen if an employee is found in breach of any clause. Establish mechanisms for safeguarding whistleblowers, ensuring that company individuals and stakeholders can report concerns fearing retaliation.
Role in risk management
A robust code of conduct helps identify and mitigate behaviours that might put the company’s reputation at risk. When you communicate ethical standards and expectations clearly, employees are less likely to engage in misconduct. Additionally, by highlighting the importance of compliance, you reduce the risk of legal breaches significantly.
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