What is a code of ethics for businesses?

A code of ethics for businesses is a set of principles companies provide to employees to help them approach their jobs with integrity. They usually include a company’s core values, ways for employees to resolve problems and the performance standards staff members need to meet. A company might also list laws and regulations in its business ethics codes, depending on the industry. For instance, a bank might list government regulations employees must follow to effectively fulfill their roles.

Though companies aren’t required by law to have them, the Sarbanes-Oxley Act (SOX) of 2002 requires corporations with publicly traded stock to publish their codes of ethics and updates, if they exist.

Why is a code of ethics for businesses important for your company?

Business ethics codes explain how you expect employees to accomplish goals and live your company’s values. It also provides a framework for how team members need to interact with each other and clients to demonstrate a positive public image.

A commitment to maintaining and building on your company’s culture within your business ethics codes may also translate to higher retention rates for employees. It may also attract quality candidates who share similar values and assist with building trust with external stakeholders.

Common types of business codes of ethics

Consider this list of business ethics code examples and work with human resources to create your own policy with values that match your company.

1. Inclusivity

Businesses should welcome people from all backgrounds, and they shouldn’t discriminate against anyone.Laws exist to prevent discrimination based on numerous factors, including:

• Sex
• Race
• National origin
• Sexual orientation
• Gender
• Social or economic class
• Education
• Immigration status
• Age
• Political beliefs
• Religion

Beyond laws requiring nondiscrimination, inclusivity helps your business build a culture with diversity at its center. Encouraging people from all walks of life to contribute ideas lets your business benefit from novel approaches to problems, keeping it flexible enough to weather changing market conditions.

2. Respectfulness

People depend on each other to do their best work and make the business they work at successful. When managers and employees make decisions, they should think about the impact on stakeholders, including clients and the team as a whole, and focus on what’s best for the company. Likewise, workers should listen to each others’ perspectives and implement the best ideas, while management should acknowledge suggestions to show it values employee opinions.

3. Professionalism

By acting professionally, you can increase your company’s reputation, reduce turnover and make employees’ jobs less stressful. Aside from creating a culture of respect, professionalism encourages positive work relationships and fosters trust and accountability. Likewise, professionalism promotes credibility with stakeholders and mitigates potential risks relating to fairness and equality. It also encourages leaders and employees to make ethical decisions that support your organization’s continued growth and success.

4. Consideration

Consideration has a profound impact on the workplace environment, so think about what you do and how it affects others. Certain actions, such as taking personal calls near employees, may distract them and make it difficult to focus. And worse, it sets a bad example and makes team members think it’s OK for them to take personal calls on company time as well. With this in mind, add rules to business ethics codes to encourage a positive atmosphere dedicated to work, such as keeping phones on silent or having meetings in designated areas.

5. Accountability

Both leadership and employees need to take responsibility for their actions and learn from their mistakes. To create a culture of transparency and responsibility, add an accountability section to your business ethics codes that instill a commitment to clear-cut standards. Accountability promotes trust between management and coworkers, and it provides a framework for dealing with problems, including noting consequences or remediation when employees don’t live up to expectations set by your business ethics codes.

6. Integrity

Integrity ties together company ethics by supporting honesty and consistent behavior. For example, many companies have rules against managers dating employees, investing significant amounts of money in competitors or suppliers or running for public office. By asking employees to avoid conflicts of interest, you can keep them productive and make a positive impact on the company by building trust and empowering workers to make ethical decisions.

7. Protection

Businesses need to protect their property, including records, computer systems, equipment and intellectual property, such as patents. This means creating an effective IT department and having physical security to prevent hacking and theft. Include rules in your code of ethics of business about how to treat company assets and data, especially if you have remote workers on your team.

8. Punctuality

Punctuality keeps employee morale and productivity levels higher. Most companies have an attendance policy to ensure team members come to work and make it there on time. For example, sick workers need clear-cut directions for who to call and what to do. Some businesses require a doctor’s excuse for an unscheduled absence, while others allow the use of paid time off (PTO).

How to write a code of ethics for businesses

If your business doesn’t have a code of ethics or wishes to update the current one, this framework can help you establish a concise code that’s simple for everyone to understand and follow.

1. Define your priorities

Meet with key leaders to learn how they make important decisions. Use this discussion to identify the customers you want to sign, the quality expected from employees and resource allocation. Creating business ethics codes based on your top priorities makes them clear to employees and the public.

Use your company’s core values when creating a code of ethics for businesses. For example, if your business focuses on integrity and trust, incorporate these values into your business ethics codes. Likewise, if one of your company’s values issustainability, include information about carbon footprint reduction.

2. Consult employees

Schedule a meeting with employees to talk about what they want to include in your business ethics codes. Discuss the kind of culture they desire and if the current environment meets their expectations. Use their suggestions to determine how tofoster a positive workplace.

Ask team members for additional feedback for improving the current code of ethics. Find out if they’re comfortable collaborating, if they have a mentor and if they believe they’re growing. Their responses can help your organization live by its values and ensure consistency when communicating this message to influential stakeholders.

3. Outline acceptable behavior

Explain the type of behavior you expect from your employees. Companies with a zero-tolerance policy for misconduct show they have high standards for behavior in the workplace and commit to doing the right thing at all times.

4. Designate compliance management

Designate acompliance manager to hold employees accountable, either by promoting someone with a track record of upholding ethical procedures from within or hiring a new employee. The compliance manager you select should have a thorough understanding of your company’s values, policies and procedures and feel comfortable serving as a liaison between you and employees.

5. Get management approval

Ensure managers approve of the business ethics codes before implementation. Seek feedback during the process and change tactics as needed if conflicts arise. Approval from leaders makes it more likely that employees adhere to the codes you set.

6. Initiate a code program

A code program outlines the steps your employees need to take to implement your new business ethics code. Training, reinforcement and metrics help workers understand the code’s purpose and how you plan to uphold it.

Things to remember about workplace ethics

To help keep employees happy and make your business successful, managers should consider these tips.

Give credit for work

If you give employees credit for good performances or new ideas, they’re more likely to do their best. Give praise and recognition when a staff member excels. Acknowledging an employee publicly motivates the team to work harder as well.

Show appreciation

Thanking someone for working overtime, asking how their weekend was or having lunch with employees occasionally shows you value them. People who have a good relationship with their managers usually feel comfortable approaching them with questions or ideas.

Provide autonomy

Employees often prefer when they have a certain amount of autonomy and freedom to make their own decisions, so provide a general set of instructions or even just a goal, and then let them find the best way to do their work. Make yourself available if they have any questions or need guidance, but let them work independently if possible.

Play fairly

Managers may get along with some of their employees better than others, but this shouldn’t impact business decisions. They should reward everyone who works hard and consider ideas from all team members.

Lead by example

Managers should follow company policies and rules to ensure employees do the same. For example, if company policy states that using company computers for personal reasons is against the rules, managers must lead by example.

Business code ethics offer a concise assessment of what’s expected from employees and management, as well as what team members can expect from their companies. By creating a standardized code of ethics for businesses, you can achieve benefits in terms of productivity, inclusivity and brand reputation.