A good code will inspire employees to live up to company values.
Written by Jeff Rumage
A code of ethics outlines the ethical principles that govern employee behavior in the workplace. It often includes the company’s values, as well as the policies meant to guide employees in how they make decisions and conduct themselves at work.
A code of ethics is a set of principles designed to shape employees’ behavior and decision-making processes. It aims to prevent unethical behavior that could damage the company and its reputation.
The purpose of a code of ethics is to have “a comprehensive and formal way of telling employees and stakeholders what their expectations are around how people will behave in the workplace,” Pat Harned, CEO at Ethics & Compliance Initiative (ECI), told Built In.
A strong code of ethics will be memorable and inspire employees to live by its espoused values in their daily lives. This will hopefully prevent unethical behaviors that could hurt customer relations, scare away ethical employees and ultimately tarnish the reputation of your company.
In addition, a code of ethics offers an opportunity for an organization to communicate its mission and values to customers. Making formal commitments to principles like inclusivity and sustainability can earn the trust of customers and encourage them to keep buying from a business that aligns with their personal beliefs.
There is no one right way to create a code of ethics. From brief statements to lengthy handbooks, here are a few code of ethics examples for inspiration.
Here at Costco, we have a very straightforward, but important mission: to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission, we will conduct our business with the following Code of Ethics in mind:
If we do these four things throughout our organization, then we will achieve our ultimate goal, which is to reward our shareholders.
An impactful code of ethics doesn’t have to be pages of dense content. Listing a brief list of values may seem vague, but it actually creates room for flexibility. By keeping its values concise, Costco empowers employees to use their best judgment and adapt these principles to a variety of situations without overthinking them.
Starbucks makes it clear that it prioritizes the safety and well-being of its workers by starting its code of ethics with workplace guidelines that cover topics like harassment, diversity and wage regulations. The section also provides a couple of sample Q&A interactions, including the following example:
Sharing concrete examples can make ideals and values easier to identify in everyday situations. Workers can then feel more confident in speaking up when they believe a code of ethics has been violated, increasing the code’s effectiveness.
Mastercard makes it clear that employees are encouraged to speak up about potential conduct violations. The company’s code of conduct starts with a “culture of accountability” section that lists out scenarios where disciplinary action is needed:
These points reaffirm the responsibility of employees, management and company leaders to uphold the code. Mastercard follows this up with a page listing appropriate channels to report violations to and an anti-retaliation statement.
Microsoft foregoes the traditional handbook in favor of a digital “trust code” organized into several tabs. Under each tab, the company displays its values in short paragraphs and includes a “how to build trust” section at the bottom of each page with actionable bullets. For example, Microsoft’s “how to build trust” section under its ‘customers’ tab lists “honor privacy” with the following steps:
Reinforcing values with specific actions further clarifies expectations surrounding employee conduct and how employees could apply these values in their daily work.
Apple begins its business conduct policy with sections covering the broader rights of employees and international human rights the company respects. The human rights section is as follows:
Apple is committed to respecting internationally recognized human rights. Apple’s approach to respecting human rights is based on the United Nations Guiding Principles on Business and Human Rights, the global standard on business and human rights. For more information, see the Human Rights Policy.
A code of ethics can go beyond discussing how individuals are expected to behave in an individual workplace and state more widely recognized ideals the company aims to emulate.
BP’s code of conduct immediately provides a “decision tool,” which presents a series of questions for employees to consider whether they’re following the code:
Listing self-reflection questions can help employees internalize a code of ethics and connect to guidelines on a more personal level.
NVIDIA’s code of conduct lays out the process for reporting code violations and what happens after a report is submitted in its “What happens when you speak up?” section. For example, the company’s “investigate” stage includes the following steps:
While many codes of ethics may say it’s OK to report violations, the best way to alleviate any fears employees may have is to describe exactly what the process looks like. Even the brief steps NVIDIA lists for each stage give employees a general idea of what they can expect, removing some of the uncertainty around reporting code violations.
A code of ethics often begins with the company’s CEO stating the company’s values and emphasizing the importance of maintaining quality standards, ethical principles and a healthy workplace. The rest of the code elaborates on these themes in more detail, along with more specific policies about conflicts of interest, accepting gifts, workplace harassment and the mechanisms for reporting unethical behavior.
Here are a few best practices to keep in mind when writing a code of ethics:
Begin your code of ethics with a statement about the company’s values, such as treating people with respect, acting with integrity or being accountable for one’s actions. These values will serve as the ethical foundation for the code of ethics, and all of the policies referenced in the document should tie back to these values.
“People want to align their expectations of conduct in the workplace with the company’s direction and objectives and believe that it’s contributing to the overall culture and performance of the organization,” Asha Palmer, senior vice president of compliance solutions at Skillsoft, told Built In.
Take into account the ethical and legal risks your organization is likely to encounter. The code of ethics may be a place for you to educate employees about potential risks and conflicts, like accepting gifts or mishandling customer information, and advise them on what they should do to mitigate and manage those risks.
But don’t feel like you have to address every potential ethics issue. Those topics might be better addressed through additional employee training. In fact, companies should make ethics training a routine practice, even if their code is fairly comprehensive.
Make it clear that employees will be held accountable for not complying with a code of ethics. Disciplinary actions should be tiered, depending on the severity and scope of infractions. An employee might receive a written warning after the first violation, for example, and face termination on the second or third violation. This information could also be included in a supporting piece of compliance documentation, like an investigation protocol.
Either way, stick to the disciplinary actions outlined in the ethics code to prevent employees from thinking that some people, especially those in leadership positions, are above the law.
“If there are similar breaches to the code of ethics that are being handled dramatically differently, you’re going to see huge problems within your workforce,” said Allison Mairena, vice president of people at NewGlobe. “Following true to what you have written down and being consistent and constant about talking about it and how you implement it is very important.”
The real work of an effective ethics policy is the ability to make it accessible and relevant to a company’s workforce. Otherwise, they are just words on a piece of paper.
“The reality is you want people to live those words,” Palmer said, “and see how those words apply to the jobs they perform.”
While some codes of ethics can exceed 40 or 50 pages, others are more engaging and interactive, incorporating videos, visual aids and colorful text boxes. Some companies have created chatbots to answer employees’ ethical questions, which reduces the hassle of looking through a long legal document.
Don’t write a code of ethics in a silo. Let it be informed by input from leaders, employees and other stakeholders. Once a first draft has been written, have department leaders from across the organization review it and advise whether it will resonate with their team.
A code of ethics should also inform employees how to report wrongdoing when they see it. Many companies set up an ethics and compliance hotline, which offers employees anonymity and the opportunity to bypass managers who may be involved in unethical behavior. Harned said companies should also tell employees what to expect when they report an ethics breach.
“That is one of the leading reasons why people don’t report,” she added. “It’s because they don’t have any clue what’s going to happen and they’re afraid.”
Traditionally, a code of conduct is more specific than a code of ethics. While a code of ethics may talk about company values and ethical principles, a code of conduct will be more prescriptive, posing hypothetical situations and specifying which behaviors are allowed and not allowed.
That said, the two terms are often used interchangeably, and it’s rare for a company to have both. The code of ethics — if it exists at all — is typically folded into the beginning of the code of conduct. Palmer said there has been a trend in the ethics and compliance profession to simplify these codes with the goal of making them more memorable.
“You want a sentiment or an ethical principle or value to resonate with people in a way where they think about whether and how it applies to what they’re doing,” she said.
A code of ethics is a set of ethical principles that guide employee conduct in the workplace. Employees should refer back to this document to determine if their actions are in alignment with the organization’s values.
A code of ethics will set clear expectations about what is acceptable and unacceptable behavior in the workplace. By aligning employees on a set of shared values and ethical principles, an organization can hopefully prevent unethical behavior that will hurt employees and the organization.
