What is a Code of Ethics? What is a Code of Conduct? They are, in fact, two unique documents. A Code of Ethics governs decision-making, and a Code of Conduct govern actions. They both represent two common ways that companies self-regulate. They are often associated with large companies, and provide direction to employees and establish a public image of good behavior, both of which benefit businesses of any size. However, any company large or small, public or private, will benefit from having a set of documented rules in place where employees and other stakeholders can reference to ensure they are performing in their positions as expected by the company. Code of Ethics: When faced with ethical dilemmas or debatable situations, what is articulated in the Code of Ethics can help guide decision making.
Code of Conduct: The Code of Conduct outlines specific behaviours that are required or prohibited as a condition of ongoing employment. It might forbid sexual harassment, racial intimidation or viewing inappropriate or unauthorized content on company computers. Codes, along with other measures, have helped some companies dig themselves out of scandals, and have helped many companies build a healthier workplace climate and reputation. An example of an ethical dilemma that employees regularly come face to face with is gift giving and accepting. This can sometimes be a bit of a tricky situation to navigate because in some cultures small gifts are tokens of respect and gratitude. Acceptance of large gifts may produce the appearance of an improper relationship between the company and the recipient, and vice versa. Work with management while consulting the Code to come to a generally accepted resolution. Similarities: Differences: Working Together: For The Smaller Business: Conclusion Either way, it's critical that these documents are treated consistently in every instance of wrongdoing. The Code needs to apply to every employee from the ground up, and no matter how small the violation, appropriate discipline needs to take place. For example, if your code stipulates that theft of company property is prohibited, and an employee takes home one pack of post-it-notes from the supply inventory, that's theft, and should be treated as such. These documents help employees understand how they can feel good about being contributing members to the company's future success. An organization's culture differs from industry to industry, and there's no one-size-fits-all solution for building and adopting a strong organizational culture. Tools to help manage the expectations of employees, and gather information on actions that challenge the code will help to build and strengthen the internal culture. Grab your complimentary eBook giving you 10 best practices to building your compliance program.
From Volkswagen’s emissions fiasco to Wells Fargo’s deceptive sales practices to Uber’s privacy intrusions, corporate scandals are a recurring reality in global business. Compliance programs increasingly take a legalistic approach to ethics that focuses on individual accountability. Yet behavioral science suggests that people are ethically malleable, so creating an ethical culture means thinking about ethics not simply as a belief problem but also as a design problem. The authors suggest four ways to make being good as easy as possible: Connect ethical principles to strategies and policies, keep ethics top of mind, reward ethical behavior through a variety of incentives, and encourage ethical norms in day-to-day practices.
Unethical behavior ruins reputations, harms employee morale, and increases regulatory costs—not to mention damages society’s trust in business. Yet corporate scandals are a recurring reality. What Doesn’t WorkCompliance programs take a legalistic approach to ethics that focuses on individual accountability—but a large body of behavioral science research suggests that even well-meaning and well-informed individuals are ethically malleable. A Better WayLeaders must design workplace contexts that encourage good behavior. Keeping prosocial values top of mind for employees as they make decisions will reduce the likelihood of transgressions while making workers happier and more productive. From Volkswagen’s emissions fiasco to Wells Fargo’s deceptive sales practices to Uber’s privacy intrusions, corporate wrongdoing is a continuing reality in global business. Unethical behavior takes a significant toll on organizations by damaging reputations, harming employee morale, and increasing regulatory costs—not to mention the wider damage to society’s overall trust in business. Few executives set out to achieve advantage by breaking the rules, and most companies have programs in place to prevent malfeasance at all levels. Yet recurring scandals show that we could do better. A version of this article appeared in the May–June 2019 issue (pp.144–150) of Harvard Business Review.
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