Top tips for building an effective code of conduct
What is a code of conduct and why is it important?
A code of conduct is a publicly available, written document that sets out your organisation’s values, rules, standards and principles. Although mainly aimed at employees, an effective code of conduct should also guide your relations with suppliers, business partners, investors and contractors, embodying the way you act while outlining how your ethical commitments are translated into a set of expected behaviours.
Sitting at the top of the pyramid of regulations guiding any organisation, a code of conduct is a key component of corporate governance. In addition, codes are increasingly regarded as an important element of risk management, establishing clear expectations around responsible behaviour, and reducing the likelihood of unethical or unlawful conduct that could lead to reputational and financial damage.
Demand for a code does not just emanate from the top of an organisation. These days many employees – particularly the younger generations – expect and demand strong company commitments on social, environmental and ethical topics. A good code enables an organisation to meet these demands, potentially improving recruitment and retention rates and helping to attract the kind of people who match the values of an organisation.
On a wider canvas, it helps to position your organisation as a positive force within society, showcasing your company culture, values and unique selling points.
Key elements to include in a code of conduct
Any code of conduct must have the endorsement and backing of senior management. Typically, it will contain a supportive message from the CEO, some larger organisations are even including photographs and signatures of the executive committee to reinforce the messages. The tone comes from the top, so it is important to make clear how much value senior executives place on responsible behaviour. And nothing will emphasise this more than senior leaders acting as role models to help bring the code to life.
Next will come an introduction stating the purpose of the code and the reasoning behind it, followed by a statement of values and principles that align with the overall objectives. Ideally, all company commitments should flow from agreed company values, making them the cornerstone of any good code of conduct and the justification for all that follows.
Some codes will include Q&A sections and examples of ethical dilemmas that might crop up, along with possible ways forward, to help build confidence in good decision-making. A good code of conduct does not need to outline all possible ethical challenges for employees. Rather, it should aim to equip employees with the tools and procedures needed to navigate the situations that they will encounter. There should also be reassurances that anyone speaking up about possible breaches of the code can do so without fear of negative consequences or retaliation. In addition, details of independent whistleblowing mechanisms, for those who feel they would rather go through an independent channel, should be included.
Finally, a code should have links to relevant internal guidance or other published policy information. Indeed, codes of conduct are no longer designed as standalone documents, but rather sit as the central pillar of an organisation’s ethics and compliance programme, linking to all documents integral to company decision-making.
Top tips for developing an effective code of conduct
While there is no fixed formula for building an effective code of conduct or code of ethics, there are a number of pointers that it pays to bear in mind.
1: Understanding core values and principles: Before developing a code, it is helpful if the core values, principles and culture of your organisation have been defined and agreed. This often involves asking questions such as “Who are we as an organisation?”, “What topics are material to us and our employees?” and “If our employees have 30 minutes to dedicate to ethics, what should they hear about?”
Once values, principles and culture have been identified and defined, it is often useful to carry out a comparative analysis of codes of conduct that have been published elsewhere. Choosing the comparators carefully is critical. Taking inspiration from organisations known for setting high standards of ethical conduct can be really helpful here, so include codes from such companies in any benchmarking, together with others from businesses in your own or a comparable sector with similar social, environmental and ethical positions or issues to be addressed.
At GoodCorporation, when we work with organisations to help draw up new codes, we use our comprehensive code of conduct database, containing almost 100 codes from a cross-section of organisations, to provide an analysis against a range of peers and identify what needs to be included and any gaps in content.
2. Consider a risk assessment: We also recommend some form of risk assessment to identify the greatest threats to your organisation from misconduct and highlight these as areas the code must cover. Make sure that all key business functions are included in such a risk assessment: HR, finance, procurement, sales and marketing, government relations, community relations, health and safety and environmental management, CSR, and sustainability. The right code is the code that speaks to your issues.
3. Review the legal framework: It is important to review the legal framework and legal requirements that affect your organisation, as well as understand what best practice looks like. But beware: not everything has to be included in the code, it can be counter-productive to produce a code that is so long employees are put off reading it. Consider what needs to be placed front and centre, and do not be afraid to leave out peripheral items.
4: Take account of stakeholders: Make sure you focus on your key stakeholders and ensure that their concerns are addressed in the code. The best way to do this is to interview them directly. GoodCorporation often runs workshops with key stakeholders to both build up a sense of ownership of the code, as well as gather content recommendations.
5. Get feedback on the drafts: Start your first draft and expect to work through several iterations. The initial take is never perfect, but is useful for gathering feedback from legal counsel, compliance teams, CSR and sustainability units and various other departments – as well as individual employees who have volunteered to make comments on the text. When doing this, it is essential to select employees that accurately represent your workforce, particularly when it comes to gender identity, age and level within the organisation. It is important from the outset to concentrate on saying what needs to be said in an easily understandable way.
A code of conduct is as much about conveying a message as it is about setting out the rules of compliance. Getting the tone right is therefore vitally important. It is no use having high grade content if it is delivered in an overly prescriptive or pedantic style, or if the code uses the wrong language for its audience. Keep asking yourself: “Who am I addressing?” – and tailor your words accordingly.
6. Get the language right: As a rule, it is better to opt for a more down-to-earth style than a legalistic one, and to go for an inspirational tone rather than a purely functional approach. Any code also needs to be appealing to the eye, so make the design interesting and consider using relevant photography and graphics. Case studies and ethical scenarios, diagrams and flow charts, and quotes from employees, heads of departments or external experts all help bring the code to life, ensuring that any pictures used accurately reflect your people and their diversity.
7. Choose a format that works: Once finalised, your code should be made available in multiple formats and in several languages. Print format has been the traditional route, and you should always issue some paper copies for stakeholders with no internet access. But these days it would be a serious omission not to produce a digital code of conduct.
Our experience shows that employees in particular, tend to engage with an interactive digital code in a more enthusiastic way than they do with a plain PDF or a printed document. Few people will need to read a code from cover to cover, so most will want to navigate pages quickly and browse content so they can move to the sections that are most relevant to them.
Digital codes allow for this, as they provide a swifter way to navigate to relevant online links and resources, or even to ask questions via interactive sections. Having the code in a digital format is especially helpful when it comes to updating it.
GoodCorporation offers a benchmarking exercise that helps companies to settle on the best style and format for the code. We also specialise in developing the right digital format, should this be required.
Implementing a code of conduct
Once your code is drawn up, communication is key. There is no point in producing something that no-one reads or knows about.
Don’t just let the code slide out – make sure its release is a notable event, and that all relevant stakeholders know about it. Set the date, organise a live presentation and get as many people to attend as possible. After the launch, use all your usual communications channels, including the intranet, newsletters, posters and apps, to publicise the code. It may also be helpful to identify ambassadors who can champion its contents and disseminate its key tenets.
When the launch and initial publicity is over, the next step is to provide training and education. Without this, the code will be just another document and is unlikely to become integral to your organisation’s culture. Training might focus specifically on a run-through of the code itself, or it could take a more tangential approach, looking instead at some of the key risks, topics and issues it covers, as well as everyday situations where the code may need to be utilised.
The other important part of code implementation is enforcement, as this signals your commitment to upholding its core values. This can take many shapes but should include, for instance, disciplinary procedures for employees who are found to have breached the code, and where necessary action against suppliers whose conduct has proved to contravene your own company values. In extreme circumstances, this might lead to the termination of a contract. However, to properly protect an organisation it is important all stakeholders know that breaking the code has repercussions.
Monitoring of code breaches and reporting transparently on compliance are also key elements of enforcement. Consider reporting publicly on your implementation of the code, the challenges faced and the key breaches identified, as this can demonstrate to the wider world that you are serious about your code.
Reporting and monitoring will, in turn, help with any evaluation of the effectiveness of your code. Best practice is to attach each topic to KPIs, allowing you to measure performance against each one and to identify where, and if, persistent breaches of the rules are taking place.
Best practices for maintaining an effective code of conduct
Keeping your code up to date is important, as risks change over time and political, ethical and regulatory landscapes also alter. Regular updates of the code are therefore essential if you are to remain ahead of the curve.
Codes of conduct used to be updated every five to eight years, but with a digital approach they can now be revised more easily and frequently – often yearly – to incorporate changes as new issues emerge.
When it comes to maintaining the relevance of your code, continuous efforts to encourage a culture of ethics and compliance are a must. This means talking about the code and its tenets on a regular basis, particularly through the voices of your senior managers and leaders, while fostering an environment of transparency and trust that allows stakeholders to report any concerns.
It also involves the recognition of ethical behaviour where it occurs, not just with praise, but possibly with monetary incentives, awards and promotions. Rewarding those who set a positive example speaks volume about your ethical culture.
The other side of the coin is to address any violations promptly and consistently. This not only makes the code a reality in all your business practices but sends out clear long-term signals about what will, and will not, be tolerated.
Code of conduct essentials
A code of conduct is a must-have for any organisation that is serious about its ethical conduct. As a statement of values and principles, it is important for all stakeholders, as it indicates what is expected of them.
Codes should have the unambiguous support of senior leaders and need to come from the top, although they should be devised through consultation with employees and other external stakeholders. The best are simply written and will have been through several iterations after receiving feedback from interested parties. They should be provided in digital form as well as in print.
Once finalised, a code should be launched with fanfare, using all the communications tools at your disposal, and followed up with a range of training options to make sure its requirements are embedded across your organisation.
Equally important is effective implementation. Whether it is implementing a whistleblowing channel and whistleblowing management guidelines, or drafting an anti-harassment and anti-bullying policy, the key point is implementation.
GoodCorporation can assist you in all these areas, from development and implementation of a code through its maintenance over the long term. Contact us for more information.