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Code of Conduct Legislation

Compliance Knowledge Base | Code of Conduct

Posted by: India Wentworth Published: Thu, 30 Aug 2018 Last Reviewed: Thu, 30 Aug 2018
Code of Conduct Legislation

Despite what the title of this article implies, there actually isn't any legislation surrounding the topic of codes of conduct within the business environment. Rather than there being rules that companies have to follow when it comes to having a code of conduct, it is a voluntary thing, but it is seen as a sign of good company practice if you have a formal structure in place.

Codes set out the expected standards of behaviour and practices for organisations across the public and private sectors, typically underpinning the organisations' underlying values. Codes continue to have relevance and meaning for many businesses, but this isn't always the case. This is highlighted by the fact that whilst the majority of larger businesses have a structure in place, smaller companies tend to avoid having a formal code of conduct. Some organisations still seem to approach their codes as a matter of compliance, using them to look good on the surface, rather than having a deep-rooted impact on the business. What is clear is that many organisations are still failing to use the codes as a tool to inspire an ethical corporate culture.

Code of Conduct Legislation

What You Need to Know

Purpose: A code of conduct regularly communicates the organisation's particular culture and shared sense of purpose. A growing number of organisations use the code to reassess their rules-based policies with a more values-based approach to push for more ethical decision-making. Good practice includes a mixture of learning and decision-making tools to support good judgement in alignment with values.

Structure: The structure and content of the codes continue to evolve as they move towards identifying their corporate purpose and values.

Relevance: As codes change, so do their contents. An example of this is having a more proactive approach to human rights, data privacy, due diligence, and social media. There is a constant challenge that codes are facing when it comes to keeping up with the speed of change in today's society.

Content: Despite the importance of stakeholder engagement and empowerment to add authority, codes still rely heavily on the language of command and control. Some industries can be seen to be slower than others to adopt good practice elements of code design. Organisations in these sectors should look further afield when benchmarking their codes of conduct for good practice.

The Importance of a Code of Conduct

A well-written code of conduct clarifies an organisation's values and principles, linking them with standards of professional conduct when it comes to employee behaviour. As a result, codes of conduct become the standards that companies need to live up to.

Additionally, it helps employees in general decision-making by giving them a structure to follow when it comes to company behaviour, allowing them to be prepared to handle ethical dilemmas they may face in the workplace. It can also serve as a valuable reference for potential customers and clients by letting them know your business values, and this can lead to healthier business relationships.

As you can see, a code of conduct can not only benefit the employees within the business, but also improve your image as a brand, with both of these cases highlighting the positive impact it has on the company.

Every code of conduct has to reflect the business it represents, whether that means the daily operations of the company, the company's core values, or the general company culture. This need for it to be tailored to the business means that there isn't one set code of conduct that every company can use, but there are still ways you can make sure your code of conduct is very the best it can be. Make sure your code of conduct:

  • Is easy to understand and explains any technical/legal jargon
  • Covers all areas that impact the daily lives of employees and answers any questions that they may have
  • Has the backing of the senior management team through a foreword from the CEO/President
  • Is available to all employees and investors to view

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