A company’s code of ethics covers the principles and guidelines that shape ethical decision-making and behavior within an organization. It serves as a foundation for employees, contractors, and even vendors, helping them navigate complex ethical situations and make decisions that align with the company's values. By establishing a clear set of expectations, a code of ethics can prevent costly mistakes, protect your organization’s reputation, and reduce the risk of legal penalties.
Creating a well-defined code of ethics is essential for guiding employees on what behaviors to adopt and which to avoid. Instead of dealing with the fallout of unethical decisions, your organization can proactively teach ethical practices that align with its core values. In this post, we’ll cover six key elements to include in your company’s code of ethics to ensure it’s comprehensive and effective.
Get started writing your policy with these six key things to include in your code of ethics.
Set the ethical tone for your company with a strong policy
A clear, organized code of ethics provides employees with do's and don'ts in the workplace, as well as the ethical standards your company operates under. Write or update your company's policy using our free code of ethics template.
1. A Message from CEO/Founder: Setting the Ethical Tone
Start off your code of ethics with a sincere message written by your company's CEO, founder or other top leader. It should express the company's commitment to ethical behavior on professional and personal levels.
A code of ethics is crucial to the success of both the company and its employees. It sets the foundation for ethical behavior, guiding decisions and actions at every level. By emphasizing why a code of ethics is important, senior management shows their commitment to integrity, inspiring employees to align with these values. A brief, motivating message from leadership reinforces the importance of ethics, encouraging the entire organization to follow suit and uphold high standards.
Take this example from eBay's CEO, Jamie Iannone:
"Since Pierre Omidyar founded eBay, we’ve been guided by the principle that people are basically good. Our purpose is to empower people and create opportunity and we believe our marketplace should be based on mutual trust and reward. To accomplish this, we must conduct our business with integrity, adhere to the highest ethical standards, and respect our employees and our community of buyers and sellers.
The eBay Code of Business Conduct & Ethics helps put our values into practice. It guides us in the decisions we make on a daily basis.
Please read the Code carefully and ask questions if something is unclear. It’s important that everyone follows the spirit of the Code every day and in every interaction with each other and our community."
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2. Define the Purpose and Scope of Your Code of Ethics
Next, define your code's purpose and scope. In order for employees to make good ethical decisions at work, they need to know when and to whom the policy applies.
Start by explaining why this policy was created; if possible, tie into some of the language from the CEO's message to reiterate the importance of ethics in your company.
Then, explain who must follow the policy. Do interns, temporary workers, contractors, vendors and/or suppliers have to adhere to these rules? In addition, when and where does the code apply? Are these rules just for the workplace, or anywhere the employee is representing your company (e.g. conference, meeting, trade show, etc.)?
3. Highlight Core Values and Ethical Standards
One of the most important things to include in your code of ethics is a list of the company's core values or ethical standards. These guide the entire document, setting the ethical and cultural tone for the company.
You can use these values as an outline for the policy. Use each value as a section header, then explain how employees can apply them to ethical behavior at work.
If one of your core values is "honesty," make a list of specific do's and don'ts that help employees adopt honest behavior and avoid deceitful behavior. For example, "DO disclose conflicts of interest. DON'T steal from or defraud the company, other employees or vendors."
Haven't defined your core values yet? Download our free core values exercises cheat sheet to get started.
4. Clear Guidelines on How to Report a Concern
Employee reporters can provide invaluable information about ethics lapses. One might notice a change in a coworker's behavior that slips past their manager. Another could question a pattern of behavior within the company that no one thought of as unethical before.
However, if you want employees to alert you of ethics lapses, they need to know how and where to do it.
List ways they can report a concern or incident, as well as how and where to access them (if applicable). This could include:
- Talking with their manager
- Submitting an online webform
- Calling your anonymous reporting hotline
- Filing a paper form or phone report to your HR, ethics, compliance or fraud departments
RELATED: 3 Critical Reasons to Establish a Culture of Ethics in Your Company
5. Ethical Decision-Making Frameworks
Some employees might need further guidance when they're faced with an ethical decision in the workplace. In addition to your rules and guidelines, include a section on decision-making under the code of ethics.
List questions that employees should ask themselves when faced with a tough ethical decision in order to make the right choice. For example:
- Does the behavior comply with relevant laws and regulations?
- Does it adhere to this code of ethics and other internal policies?
- Does it reflect the company's core values or ethical standards?
- Does it respect the rights and feelings of others?
In addition, encourage employees to ask their managers or an HR staff member for advice if they're uncertain what to do in a situation.
Have you ever wondered if running an ethical company can help you financially? Download this free ethics and profit infographic to see the benefits of ethics beyond a good reputation.
6. Clarify the Ethics and Compliance Relationship
Finally, one of the most important things to include in your code of ethics that many companies forget is the relationship between ethics and compliance. Emphasize that following legal and regulatory guidelines take top priority, even if a behavior seems ethically acceptable according to your code of ethics. Similarly, a behavior that complies with laws but seems to contradict the company's ethics code should also be questioned.
Encourage employees to stay up to date with new and changing laws and regulations and consult the company's legal counsel if they have questions. Finish by stressing the importance of reporting compliance lapses, explaining that looking the other way could lead to fines and reputation damage for the company.
When writing your company's code of ethics, focus on the positive. This isn't a list of rules to cramp employees' style; it's a way to establish a safe, successful workplace for everyone. Download our free code of ethics template and explore how Case IQ can help streamline your ethics and compliance processes.
Frequently Asked Questions About Workplace Ethics and Codes of Conduct
1. What are the main code of ethics principles?
The main principles of a code of ethics include setting a clear tone from leadership, defining the purpose and scope of the policy, outlining core values or ethical standards, providing guidance on reporting concerns, offering support for ethical decision-making, and emphasizing the relationship between ethics and compliance.
2. What is a code of ethics example?
An example of a code of ethics is eBay's CEO Jamie Iannone's message, which expresses the company's commitment to ethical behavior, the importance of integrity, adherence to the highest ethical standards, and respect for employees and the community of buyers and sellers.
3. What is a personal code of ethics?
A personal code of ethics is a set of principles and values that an individual adheres to in their personal and professional life, guiding their behavior and decisions to ensure ethical conduct and integrity.
4. What does a company's code of ethics cover?
A company's code of ethics outlines the principles and guidelines that govern employee behavior and decision-making. It typically includes the organization’s values, ethical standards, reporting mechanisms for unethical behavior, and policies addressing workplace conduct, compliance, and accountability.
5. Why is a code of ethics important?
A code of ethics is vital for establishing trust and integrity within an organization. It sets the tone for ethical behavior, promotes a positive workplace culture, ensures compliance with laws, and protects the company’s reputation by guiding employees in making ethical decisions.
6. How does a personal code of ethics differ from a corporate ethics code?
A personal code of ethics reflects an individual’s values and moral beliefs, guiding their personal and professional behavior. In contrast, a corporate ethics code is a formal document that defines an organization’s ethical standards, focusing on collective behavior and business practices.
7. Which of the following defines a business's code of ethics?
A business’s code of ethics is defined as a set of principles and guidelines that outline the ethical expectations for employees, management, and stakeholders. It governs how the company conducts itself internally and externally, ensuring accountability and integrity.
8. What are the three major sections of the code of ethics?
The three major sections of a code of ethics are: (1) Core values and principles, which define the company’s ethical standards; (2) Behavioral guidelines, which specify expected conduct in various situations; and (3) Reporting and compliance mechanisms, which outline how to handle violations or report concerns.