Code of Conduct for the 21st Century Business

The purpose for creating a business Code of Conduct for business owners is to protect themselves from lawsuits and to ensure good workplace and public relations; more and more businesses are creating codes of conduct for their employees to follow. Courts enforce and determine whether an employee’s actions were negligent are using effective codes of conduct.

Protects the Public

An effective code of conduct can protect the public as well as employees. The code of conduct should ensure that the employees act professionally and reliably when interacting with the general public and with each other.

Specific and Comprehensive

Codes of conduct that use specific language are more effective because they allow employees to see exactly what actions the company allows. A comprehensive code of conduct also ensures that the employee knows many of the possible situations he/she may face.

Penalties

Enforcement should include penalties even up to loss of employment. The business is responsible for making sure employees are aware of penalties for violating the code of conduct.

A corporate code of conduct does not have any standardized definition, and refers to a company's public policy, which defines their standards for ethical conduct. They are completely voluntary, meaning that a company may choose to have or not have one, and may address any issue from common workplace issues to worker's rights. Most corporate codes of conduct have evolved as a result of consumer pressure, which has given rise to a whole sector of corporations focused as much on ethical behavior as profit in recent years.

Formats

Compliance codes, corporate credos, and management philosophy statements are the three most common types of corporate codes of conduct. Compliance codes outline required employee or company actions in terms of ethical behavior; corporate credos explain a company's accountability to its stakeholders; management philosophy statements are more general outlines of expected company actions relative to ethical guidelines.

Content

Employee honesty, company commitments to the employee, confidentiality of records, environmentalism, product and workplace safety, drug-related issues, and employee conduct are all issues commonly dealt with in corporate codes of conduct. Regional variation is common; ethical considerations are more prevalent in codes for U.S. companies while workplace safety is more frequently addressed in European organizations.

Execution

Many corporations with codes of conduct will also offer training to their employees regarding them. Such training can be as narrow as an explanation of the company's ethics statements only, or may involve a variety of ethical sensitivity exercises.  Videos on ethics and educational seminars are also a common medium of instruction. In those cases where no training is provided, manager comprehension of codes is often assured through oral or written confirmation.

Transparency

In terms of the transparency, access to and dissemination of corporate codes of conduct, there is a clear trend favoring the distribution of such codes to all employees of an organization. Some companies even include portions of their corporate code of conduct in their annual reports to shareholders. It is far more common, however, that codes are kept in internal circulation.

Enforcement

Most corporate codes of conduct do not state any enforcement provisions. Some, such as Boeing, note only "violations of the company standards of conduct are cause for appropriate corrective action, including discipline." According to the U.S. Department of Labor survey, companies who are contractors of the U.S. government may face corrective action if they fall short of complying with the code of conduct of the government department they service.

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