What is a code of conduct?

A code of business conduct is a set of rules that guide people in 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. Codes of conduct are most often included in the employee handbook and may also be posted on the company’s website for investors, potential employees and stakeholders to view.

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.

Benefits of a code of conduct include:

• 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. Having this explicitly stated within the organization handbook provides a central reference point.
• Ensuring all employees are made aware of what is and isn’t tolerated at work: Dealing with difficult employees is one of the key sources of workplace conflict. Building awareness around expected behaviors opens up avenues for dialogue and engagement.
• Outlining a company’s values and principles: This is a way of showing the uniqueness of the organization and shaping the company’s structure. It also plays a significant role in improving employee recruitment and retention.
• Setting clear benchmarks as to how employee behavior and performance are measured: Having clear benchmarks ensures a level field for all employees and gives them the tools to recognize when actions don’t align with the organization’s goals or values.
• Informing stakeholders, investors and 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.

Along with these, there are other reasons why a code of business conduct is vital. 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, they can demonstrate 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:

1. Determine who will be included in the creation of your company’s code of conduct
2. Consider any ethical issues that have occurred in the past
3. Create an outline
4. Discuss the draft with stakeholders
5. 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 and stakeholders. Many codes of conduct are created by upper management and then reviewed by a team of trusted employees as well as any stakeholders that may be affected by the code of conduct.

2. Consider past ethical issues

Before creating your code of conduct, consider all of the past ethical issues your company has faced and include how these will be prevented in your 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.

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. Discuss the draft with stakeholders

Once you have outlined the code of conduct, give stakeholders the opportunity to review and discuss its contents.

5. Compose the final draft

After all stakeholders have had the chance to contribute, you can then compose the final draft for review and publication.

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

Mission statement and values

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

Provide a statement on the expectation that employees must adhere to 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

Below 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 should clearly indicate what is not allowed in the workplace in terms of harassment and discrimination, including discriminatory or sexually based jokes, actions and comments.]

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

FAQs about codes of conduct

What is the difference between a code of ethics and a code of conduct?

A code of ethics is a high-level guide that speaks to company values and morals. It’s about providing professionals with a framework for honesty and integrity. It’s a set of principles that dictates how actions should be judged. A code of conduct guides professionals on how they should act. It provides more details on specific rules and policies regarding broader beliefs.

Who writes the code of conduct?

In most cases, the human resources team creates the employee code of conduct in collaboration with the executives, managers and employees.

How is a code of conduct related to company culture?

A well-written code of conduct influences workplace communication and relationships within the framework of the company’s values and mission. It influences how employees relate to each other by fostering this belief system, which defines behavior and standardizes company culture.