The Importance of Creating an Employee Code of Conduct

A code of conduct is intended to make it easier for employees to behave in accordance with the company’s core values and standards while complying with applicable laws. In this blog post, we will describe what a code of conduct is, what it should contain, and how you can make it available to your employees. After all, a company’s code of conduct only makes a difference if employees live by it during their daily work.

What Is a Code of Conduct?

A code of conduct, sometimes called a code of ethics, is an important document that sets out clear guidelines for how employees should behave in the workplace. It defines standards of professional conduct, business ethics, and company values that employees and managers must adhere to. The purpose of a code of conduct is to minimize legal risk, protect employee well-being, and ensure compliance with all applicable international and local laws.

Companies should enlist the help of legal experts to ensure that the code of conduct covers all important laws and regulations that have a bearing on daily business operations. These could include topics such as anti-corruption measures, protection of intellectual property, how to avoid conflicts of interest, corporate social responsibility, international sanctions, and general standards of business conduct. A code of conduct sets professional standards for these topics that align with the company culture.

The exact content of a code of conduct will vary depending on the type of business and the industry in which it operates. At the same time, there are some important pointers to follow when creating a code of conduct for your company.

What Are the Benefits of a Code of Conduct?

Having a code of conduct is especially important in current times. News can spread extremely quickly over the internet, and public statements that your employees make could cause reputational damage to your company. A code of conduct gives every employee a set of guidelines on how to act in the best interest of the organization – both within the company and in public. Clearly defined professional standards make any type of company more reliable and trustworthy – from new startups to long-standing large enterprises. Here are some of the benefits of a code of conduct.

• Increased Sense of Community
  Adhering to the same core values increases trust within an organization. Everyone pulls together to achieve the same goals.
• More Protection for Employees
  In difficult situations, employees need clear guidelines to follow. A code of conduct lets them know exactly how to behave and what behavior they can expect from their colleagues and managers.
• Improved External Perception
  Many companies publish their code of conduct on their website. By making their ethical standards public, they can enhance the perception of potential applicants, business partners, and other stakeholders. Such information gives everyone a clear understanding of the company’s values and professional standards.
• Lower Risk of Legal Consequences
  A code of conduct can protect a company from breaking the law. It can improve occupational safety and reduce the risk of inappropriate communications within the company and outside of it (for example, on social media). It can also help prevent General Data Protection Regulation (GDPR) breaches, money laundering, corruption, sexual harassment, and discrimination based on ethnicity, national origin, or sexual orientation.
• Fairer Collaboration
  A code of conduct should aim to ensure fairness among employees and managers. It should strengthen the team spirit and convey the values of the company culture.
• Better Employee Experience
  A healthy company culture and a positive work environment can improve employee satisfaction and employee retention. A happy workforce means more motivation and increased employee engagement.

What Points Should a Code of Conduct Cover?

A code of conduct should be carefully thought out and planned, and there are a few essential points it should contain. At the same time, each company’s code should be tailored to the company's standards, values, objectives, and industry.

• Compliance With International and Local Laws
  Compliance is a big topic for every company, and laws frequently change over time. Examples include the GDPR, mandatory time tracking, and laws governing the protection of intellectual property. Some of these regulations apply to all companies, while others are industry-specific. There should be regular revisions of the code of conduct to ensure it reflects any regulatory changes.
• Guidelines for Employees
  Every single employee is responsible for acting in line with certain professional standards, and the code of conduct helps them do this in their everyday work. For example, it could explain how to handle personal data in line with the GDPR, how to prevent IT security breaches, and how to avoid conflicts of interest.
• Social Equality
  No code of conduct would be complete without rules to prevent discrimination in the workplace. It should not only cover appropriate behavior between employees, but also the company’s hiring practices. A fair, equal-opportunity employer should implement measures to prevent discrimination against employees and job applicants due to any reason, including age, race, sex, gender identity, disability, religion, and national origin. The company’s social commitment, which can include actions such as donations or sponsorships, should also be described in the code of conduct to inform all employees of how they can contribute.
• Behavior Toward Third Parties
  This section should include guidelines for external communications and directions for interacting with customers, business partners, and government agencies. It could also include advice on complying with anti-money laundering (AML), corruption, and lobbying regulations. Companies should also do due diligence on external partners, such as suppliers, to ensure that they follow ethical standards and do not employ child labor or violate any human rights.
• Sustainability and Social Responsibility
  Reducing environmental impact should be on every company’s agenda today. For this reason, sustainability should also be included within a company’s code of conduct to ensure that the organization does business in an ethical and environmentally-friendly way.

8 Steps To Create a Code of Conduct

As a code of conduct defines appropriate actions for employees to take in all areas of their work, it requires strategic planning. Its contents not only apply to employees, but also managers, senior executives, and the board of directors. While the human resources department is typically responsible for ensuring that all employees have read and understood the document, the compliance and legal teams should also contribute to its creation.

It’s crucial to constantly check that everyone within the company is following the code of conduct and is aware of any subsequent revisions. These eight steps can help you write your code of conduct.

1. Define Company Values
   Every company has its own values, goals, and standards that make up the corporate culture. The code of conduct should reflect these. As a first step, you should clearly define your company culture and ensure that all employees live up to it.
2. Formulate Rules and Guidelines
   The code of conduct should contain all legal regulations that apply to your business and its employees. You should consult legal experts to ensure that the list of regulations is comprehensive and accurate. A good starting place can be to check code of conduct examples from other companies, as these are often freely accessible online and many regulations apply across industries.
3. Set Out Sanctions
   Employees and management should be aware of the consequences of breaching the code of conduct. This ensures accountability and helps everyone understand the importance of the rules set out.
4. Use Easily Understandable Language
   The code of conduct should encourage honest and ethical behavior among your entire workforce. For this reason, it needs to be written in a way that ensures everyone can understand what they are allowed to do, what they are not allowed to do, and how they should represent your company externally. Take care to use clear and simple language, avoiding jargon or overly complicated specialist terms that may confuse some employees. The best approach is to break complex topics down into smaller pieces and translate them into everyday language.
5. Ensure Easy Access
   The document should be accessible to everyone within the company and become a key part of everyday work. You might consider referring to the code of conduct in company meetings or putting up posters around the office that reference some of its key points. The HR department should also make the document part of the onboarding process so that new employees can quickly familiarize themselves with its contents.
6. Train Your Employees
   Once you have your code of conduct, you need to make sure it is deeply ingrained in the organization. Create FAQs to make topics easier to understand and organize group sessions to check whether everyone understands. For legal topics such as data protection or anti-money laundering rules, you may need to arrange training to ensure compliance.
7. Be a Role Model
   Team leads and senior managers should lead the way and set an example for everyone else. They can do this by referring to the code of conduct in everyday work and making sure that their behavior always follows the guidelines. Senior managers should have full knowledge of the document so that they are able to answer any questions they might receive.
8. Update the Code Regularly
   A code of conduct is not a document that applies forever. New laws or updated regulations might affect your daily business – and you should ensure that everyone is aware of the changes. Mandatory time tracking and GDPR are just two recent examples of updates that have affected businesses in many countries and all industries. Some employees may require refresher courses on specialist topics as and when regulations change.

Writing a Code of Conduct That Really Works

A code of conduct is an essential document to guide ethical decision-making, help ensure legal compliance, and advise employees on professional conduct. As these documents refer to laws and regulations and must be followed exactly, we recommend consulting your legal department or enlisting the support of legal experts.

A code of conduct is an essential document to guide ethical decision-making, help ensure legal compliance, and advise employees on professional conduct. As these documents refer to laws and regulations and must be followed exactly, we recommend consulting your legal department or enlisting the support of legal experts.

Your code of conduct has an impact on every company’s employee, from new hires to the board of directors, so you should involve different departments and managers in its creation. Make it accessible to everyone, regularly revise and update it, and try to ingrain it in your daily business as much as possible. Remember that laws and regulations change, and so might your company culture. Bring these updates into the document to reflect the company’s core values and ensure compliance with all applicable laws and business practices.

A comprehensive code of conduct policy will address various ethical issues and outline the consequences of violations, potentially including legal action. Including a disclaimer in the code can clarify its status as a legal document, emphasizing the importance of compliance with federal laws and other applicable regulations. This helps prevent personal gain at the expense of ethical standards and underscores the commitment to upholding the integrity of the organization.

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