Time to Create or Update Your Code of Conduct? (Code of Conduct Series Part 1 of 3)
Despite sitting at the cornerstone of almost every company, the code of conduct has received a bad reputation. While some may stereotype codes of conduct as dull and out of touch, effective codes of conduct are none of the above. Rather, they’re opportunities to showcase your company’s values and uphold a culture of compliance.
We’re creating a three-part series to show how you can optimize your code of conduct to create a more ethical workplace. In it, we will explore the following:
- Creating and maintaining your code of conduct
- Adapting your code of conduct into effective training
- Code of conduct training in practice: a case study
Quick Refresher: Why Are Codes of Conduct Important?
A code of conduct is more than just a statement of values; it’s the critical foundation of your company. Even in the smallest of workforces, not every employee is going to have the same definition of right and wrong. It’s your company’s job to outline proper ethical conduct so every employee is on the same page. When done correctly, employees will continually look towards your conduct policies to guide their decisions in the workplace. Clearly defining appropriate workplace behaviors will not only increase employee confidence, but help prevent future compliance violations.
However, when prevention methods fail, having a code of conduct can help protect your business from liability. In the case of an actual compliance violation, companies can face huge financial costs from legal investigations and government fines. A code of conduct works to mitigate this financial risk by demonstrating a company’s “good faith effort” to prevent workplace misconduct. As a result, many companies can reduce the cost of their financial penalties. Of course, simply publishing the code isn’t enough. Ethics training is crucial to ensure everyone in the company exemplifies the code’s guidelines.
Essentially, a code of conduct serves two main purposes: internal and external. Internally, your employees can use the code to guide their day-to-day behavior. Externally, your company’s code will act as a public declaration of its ethos, which appeals to customers and partners while also mitigating risk.
What Does an Effective Code of Conduct Look Like?
For your code of conduct to be effective, it needs to be well-written and speak to its audience. Otherwise, you’ll be left with a long, boring document that none of your employees will actually read. There are a few key factors to consider when writing your code:
- Resonate with the Workforce
Your employees are the ones who put the code of conduct’s guidelines into practice. As such, your code of conduct needs to specifically address their needs, values, and concerns. For example, if your employees sell medical device equipment, make sure your code details how employees should interact with healthcare professionals in order to stay compliant. To avoid a top-down approach, consider surveying your employees before developing your code to find out where they have questions and what areas need specific attention.
- Inspire Pride in the Company
We all want to work for a company we’re proud of. In fact, 82% of workers report that they would rather work for an ethical company with lower pay than a higher-paying company with questionable ethics. When businesses pride themselves in their high moral standards and ethical conduct, employees will feel more passionately about upholding ethical standards, too.
- Avoid Legalese
Chances are the readers of your code of conduct don’t have a law degree. So why would you expect them to understand a document riddled with legal jargon? Writing from a legal standpoint will only confuse the reader. Instead, use plain language that’s easily understood by employees at every level in your company. Cutting out the legalese will encourage people to actually read your code instead of relegating it to the junk drawer.
- Keep It Short
Google famously summarized its code of conduct principles in only three words: “don’t be evil.” Memorable, impactful, and displaying a touch of personality, the motto demonstrates how effective short copy can be in a company’s code. Writing concisely will cut down on pages while increasing your document’s overall readability.
When to Update Your Code of Conduct
Your code of conduct isn’t a static document. It should be evolving along with your company and requires periodic updates in order to stay relevant. There are many circumstances that may indicate it’s time for a refresh:
Your Business Got into Legal Hot Water
Legal troubles are the biggest red flag that your business needs to update its code of conduct. Consider Volkswagen’s 2015 “Dieselgate scandal” — left on the backburner for several years, Volkswagen’s compliance culture had morphed to become a “culture of tolerance” for misconduct. The situation came to a head when Volkswagen was caught cheating government emissions tests on over 11 million vehicles and forced to pay over $35 billion in penalties. The scandal prompted Volkswagen to completely overhaul its compliance program. If your company finds itself in a similar situation to Volkswagen, take it as an opportunity to reassess your compliance program and conduct policies. Renewing your focus on appropriate workplace conduct will help with reputational recovery in the moment as well as preventing misconduct in the future.
Current Events Highlight Potential Ethics Violations
Current events dictate more than just newspaper headlines; they force businesses to evolve with the times. If your business isn’t updating its ethical guidelines to keep up with global changes, then you risk falling behind into obscurity, or worse, notoriety. For example, the #MeToo Movement prompted businesses everywhere to re-evaluate their corporate cultures, particularly regarding workplace harassment. Investigations were launched, high-profile executives were fired for sexual misconduct, and detailed plans were put into place to identify and prevent future harassment. Companies that ignored #MeToo risked extreme reputational damage for their inaction and vague stances on workplace harassment. Staying mindful of current events will help your business become a modern champion of ethics and reduce its overall risk.
Interactions with Employees Reveal Ethics Knowledge Gaps
Perhaps you find a stack of confidential documents left out unattended. Or your company’s office supplies keep mysteriously vanishing. Maybe an employee admits to you that he never actually bothered to read the company’s code of conduct. If you notice your employees aren’t transferring the code of conduct into actionable behaviors, there’s a compliance problem afoot. Updating your code can help keep ethics top of mind and stop misconduct in its tracks.
Other Companies Are Making Changes
There’s nothing wrong with jumping on the bandwagon when it comes to upholding ethics. In fact, it’s even encouraged. Benchmarking your code of conduct against similar companies is a useful way to see when it’s time for an update. Compared against the competition and industry standards, your code of conduct’s gaps and weak points will be easier to spot. If industry and competition analysis isn’t your company’s forte, consider collaborating with a company known for benchmarking and best practice expertise.
It’s Been a While since Your Last Update
Even if you’re confident ethics and compliance are embedded in your business, it never hurts to give your code of conduct a checkup. In general, the consensus is that your business should update its code of conduct every one to two years. For best results, set up an annual meeting for your team to review and potentially update your code. This can go hand-in-hand with annual performance reviews, as many companies use their codes of conduct as a benchmark to measure individual and team performance. Consistently reviewing your company’s code will keep ethics at the forefront of your organization, ultimately benefiting your employees, customers, and business as a whole.
Creating a Culture of Ethics
Your code of conduct is only the first step in creating a culture of ethics for your company. You can have the most powerful, inspiring code of conduct in the world, but it won’t do anything for your business if your employees don’t embody its values. To get results, you need to ensure employees actually carry out the behaviors set by the code in the workplace. This is arguably the most difficult, but most critical aspect of implementing your code of conduct.
Curious how to take your code of conduct to the next level? Contact us, or check out Part Two of our Code of Conduct series: Adapting your Code of Conduct into Effective Training.