What Is the Code of Business Conduct?

The code of business conduct is also referred to as the code of ethics, depending on the company. It is a set of principles designed to guide workers to conduct themselves with honesty and integrity in all actions representing the company. Large companies such as Coca-Cola, have two code of business conduct rules; one for global employees and one for non-employee directors, who still represent the company. Think about your company’s mission and how you want to the public to perceive you and the business.

Value-Based Code

Think about the values you want to permeate in all aspects of your company. The value-based code of ethics sets the tone for how things are done. For example, a plumbing company might require employees to wear a uniform to all house calls, which demonstrates professionalism. They might further require courteous interactions, and to use specific language when speaking with clients.

Another company might focus on reducing a carbon-footprint and might require office workers to move to digital environments.

These are just a couple of examples of how to integrate values into a code of business conduct. Because these are part of a company mission and are not regulatory, it is up to management to make certain that employees are following the protocol.

Compliance-Based Code

A compliance-based code of ethics requires that employees follow the rules and regulations set forth by the state and the industry you’re in. The entire mortgage industry was transformed after the financial crash in 2008; a major part of the transformation had to do with a compliance-based code of ethics, and to make certain that people really could afford the loans they were getting. Similarly, the investment industry has a “know your customer” rule, which is a regulatory requirement that is weaved into the company’s code of business conduct.

Failure to follow compliance-based code of business conduct rules often results in legal action, on top of in-house disciplinary action. As the business owner, when someone doesn’t follow the legal rules, such as protecting client data or properly handling money, the recourse to their actions can harm your company. The failure to follow a legal rule such as described above isn’t the same as employees who don’t follow a regulation to wear a uniform to work.

Creating Your Code of Business Conduct

Create this document, and include it as part of your employee handbook. Review the code of business conduct with employees at least once a year. Make adjustments, as values or compliance regulations change.

Start the code of business conduct with four brief statements. The first is the company vision statement, which should be in your business plan. Write a statement about the guiding principles for the company. Then write a statement about the core company values.

Complete this first section with the company mission statement, again pulled from your business plan.

Explain the Importance of the Code of Business Conduct

Use the next sections to explain why the code of business conduct is important; why the need for trust and respect among co-workers is important; and why being seen by the public and how you hope the company will achieve its mission is important. Use concise language to make the code easily understood by all employees, from the clerk to the executive vice-president.

Define the Laws that Govern the Company

Define the laws that govern the company, as well as any specific regulations and compliance issues that must be adhered to. For example, if you sell tobacco products, then in the code of business conduct, it is imperative to explain the law of selling to minors and asking for proof of age. The code should also set the tone for things like accepting gifts and promotional items from clients or vendors.

A code of business conduct is often extensive, when considering the many things it must cover. Use one of the many human resources templates that have a code of business conduct section that you can study, section by section, so that you don’t forget anything.