What is a code of conduct?

A code of business conduct is a set of rules that guides people in their daily practices and interactions with each other. In the workplace, a code of conduct may also be referred to as a code of business ethics. 

Some organizations expect their employees to adhere to a code of conduct with many requirements and rules, whereas others are extremely simple. They most often include codes of conduct in their employee handbook and may also post them on the company’s website for employees and potential customers.

Why is a code of conduct for business important?

A code of conduct is important in the workplace because it provides employees with a concrete guide on how they’re expected to act while on the job. It demonstrates a company’s values and what the company expects and strives for in terms of company culture. The following are a few benefits of having a code of conduct as a business. 

It can strengthen your company’s branding approach

Displaying your code of conduct on your website can also be part of your employee branding strategy. That’s because it can influence candidate perceptions about what it could be like to work for you, especially if they are researching your company before applying. 

By being clear about your values as a business, you can more easily attract and retain top talent. Consider stating them in concrete terms, such as how you commit to environmental goals or cost-effective solutions. 

Showcasing your code of conduct helps demonstrate the working environment and values aspects of your Employer Value Proposition (EVP) and what makes your offer unique as an employer. For example, your section on values and principles can show your commitment to diversity, belonging and inclusion. 

Providing a guideline for behavior and expectations within the workplace

When discussing job performance, this is one of the first indicators of what is expected. Explicitly stating this in the employee handbook provides a central reference point. You could also use this section to mention any performance tracking tools you might use and how employees will have to provide their consent in order for you to use them. 

Ensuring all employees are made aware of what is and isn’t tolerated at work

Addressing difficult employees is a key way to manage workplace conflict. Building awareness around expected behaviors opens avenues for dialogue and engagement. For example, you could include a section on workplace accountability and transparency. If you have an “open door” policy, this would be a good time to mention it, alongside its terms and conditions.

AI responsibility and fair usage

Your section on company values and principles could provide a good opportunity to set out your stance on responsible AI use. Indeed’s AI guidance recommends that employers center fairness, equality and responsible innovation when it comes to using this technology. Your section on AI responsibility can be its own section entirely, particularly if it needs to be more detailed. Consider factors such as:

• What jurisdiction you’re in
• What sort of business you are
• The types of data your employees handle (such as personal data)
• Who is responsible for which types of data
• Expert opinion and advice on what to include

With the above in mind, you might choose to emphasize best practices when it comes to the following:

• Not sharing sensitive or personal data with generative AI systems that are not solely owned and used by your company
• Fact-checking any information provided by generative AI
• Not using AI to replace any member of staff, instead treating it as a useful “co-pilot”
• Transparency with your customers and clients surrounding any AI-produced content or advice
• Who in the business is allowed to use generative AI in content creation and why (AI training could be a prerequisite)
• Any procurement procedures for specific AI products that you plan to use in your business

You might also choose to create an AI governance framework alongside your AI policy, which could involve appointing a senior AI officer and a culture of accountability.

Setting clear benchmarks as to how employee behavior and performance are measured

Having clear benchmarks ensures a fair environment for all employees. It also provides them with the tools to recognize when actions don’t align with the organization’s goals or values. 

For example, you could provide a benchmark of achieving an 85% customer satisfaction score for each employee. If an employee fails to meet this goal, then they may receive performance improvement coaching or even a warning for extremely poor performance during reviews. 

Informing potential employees of the company’s ethics and standards

Ethics and standards are important to the workplace because they have a direct connection to employee trust, performance and satisfaction. You could also include a more thorough, separate code of ethics as well, depending on the needs of your business. 

For example, you might need a more detailed rundown of how to handle large sums of money, transactions, personal and sensitive data and how to comply with complex legal regulations. 

Along with these, there are other reasons why a code of business conduct can be important. It serves as a means for maintaining compliance, especially in industries where there are specific codes and procedures that must be followed. It also helps organizations protect themselves from damaging risks. When the company has specific steps to follow, it can demonstrate a good faith effort in minimizing or even avoiding unethical or illegal acts.

How to write a code of conduct

The following are steps you can follow when drafting a code of conduct for your organization:

• Determine who will be included in the creation of your company’s code of conduct
• Consider any ethical issues that have occurred in the past
• Create an outline
• Compose the final draft

1. Determine who will be included in the creation of your company’s code of conduct

One of the first steps in drafting a code of conduct is determining who will be included in the process. Common individuals involved in developing a code of conduct include management, long-term employees or groups who have an interest in the company’s actions. 

Many codes of conduct are created by upper management and then reviewed by a team of trusted employees, as well as any parties that may be affected by the code of conduct.

2. Consider past ethical issues

Before creating your code of conduct, consider all the past ethical issues your company has faced and include how these will be prevented in the code of conduct. Additionally, you can also take into account ethical issues that similar businesses have faced and address these as a way to prevent them from occurring within your organization.

Think carefully about ethical issues before they arise in your company, such as those related to the adoption of new technology and the increased use of employee or customer data.

3. Create an outline

Determine the components you will include in your code of conduct, including, but not limited to:

• Conflicts of interest
• Asset protection
• Company policies
• Company culture
• Attendance expectations
• Sexual and general harassment and discrimination
• Cell phone and technology use while in the office
• Substance use
• Dress code
• Disciplinary actions that may be taken
• Privacy policy
• Equal opportunity
• Once you have chosen the elements to include, outline each section with the information you feel is most appropriate to your organization

4. Compose the final draft

After C-suite employees have had the chance to contribute, you can then compose the final draft for review and publication.

5. Revisit your code of conduct often to ensure relevance

Regularly revisit your code of conduct to ensure it aligns with current legislation and compliance issues. For example, changing legislation surrounding data protection and the use of customer or employee personal data could be important to keep up-to-date with. 

Also, check that the code of conduct is still relevant after organizational restructuring or other changes. For example, who staff members need to report to regarding certain issues may change if you restructure your HR department. 

Components of a code of conduct

Here is a list of elements you might include in your code of conduct:

• Mission statement and values
• Workplace policies and procedures
• Industry compliance and regulations
• Disciplinary actions

Begin with your company’s mission statement 

If you’re drafting values for your employees, ensure they stem from and support the mission statement. You can also include a statement on the ethics and professional standards your organization champions.

Workplace policies and procedures

Include a statement clarifying that employees must follow your policies and procedures. Remember that they will vary depending on the business and industry.

Some examples of common workplace policies include:

• Anti-harassment
• Financial integrity and compliance (reporting, payroll, business travel, purchasing)
• Data privacy
• Communications (conduct on social media and emails)
• Client and business partner code of conduct
• Intellectual property and conflicts of interest
• Industry compliance and regulations
• Indicate the company’s expectation that employees comply with industry and government laws and regulations

Disciplinary actions

Include a section on violations and disciplinary actions. This tells employees how to report violations of the code of conduct or business policies. It also provides a statement on disciplinary actions for employees who violate the code of conduct or policies, which may include verbal warnings, written warnings, suspension and even termination.

Code of conduct template

The following is a template you can use when drafting your own code of conduct:

[Page of contents: Many codes of conduct include a page of contents that lists the topics discussed in the document and the page numbers on which each topic can be found.]

[Company policy and purpose of the code of conduct: This is a brief outline of the purpose of the code of conduct and the company policy regarding expectations surrounding the code of conduct.]

[Dress code: Use this section to clearly outline what is expected of employees in terms of dress code and grooming.]

[Technology use and security in the workplace: This section can include policies that pertain to cell phone use, internet usage, company email use and cybersecurity.]

[Relationships between employees: This section outlines expectations regarding relationships between employees, including fraternization and romantic relationships. It may also indicate whether dating supervisors is or isn’t allowed.]

[Expectations of company culture and behavior in the workplace: This section includes all expectations related to appropriate behavior at work and the organization’s ideal company culture. This may include punctuality, attendance, employee interactions and other behaviors that directly impact a company’s culture.]

[Harassment and discrimination: This section must clearly state that harassment and discrimination are not allowed, including sexually based or discriminatory jokes, actions and comments.]

[Disciplinary actions: This section may include the disciplinary actions your organization is prepared to take in the event that the code of conduct is violated.]

Codes of conduct are important in that they help employees understand and follow your business policies or industry compliance rules. To create a code of conduct, first begin with your mission statement before laying out your policies and procedures. Our code of conduct template helps you present these clearly to your employees.