Within a business, the code of conduct and the company code of ethics are two very different documents. The code of ethics governs how decisions are made, while the code of conduct governs how professionals act. These two documents are often found in huge companies and are a means with which to provide direction to the employees of the company to ensure that the public image of the company is well preserved. They are both beneficial to businesses of all sizes, however.


A code of conduct governs how professionals act within an organization.

Code of Ethics Definition

Sometimes known as a value statement, a code of ethics sets out the general principles that will guide the behavior of all the employees of an organization. The purpose of a code of ethics is to set out the ethical premises under which all decisions related to that organization should be made. If the organization is committed to the preservation of the environment, for example, then the code of ethics will probably explain that whenever employees are making a decision or choosing between alternatives, they should go for the alternative that benefits the environment the most.

Most codes of ethics work on the so-called golden rule, which is “to do unto others that which we would like done unto ourselves”. Whenever employees or members of an organization are faced with difficult situations or ethical dilemmas, the code of ethics should come to their rescue and give them a clear indication of the best course of action.

What Is a Code of Conduct?

The code of conduct describes what employees of the organization must do to implement the code of ethics. In a sense, the code of conduct is a subset of the code of ethics and gives it a real-life application beyond what only seems like philosophical speculation.

The code of conduct will give the code of ethics application in a variety of situations. For example, imagine there is a rule in the code of ethics that states that employees are supposed to obey the law at all times. This is a very general rule, and you need to know how it can be applied to a variety of situations. The code of conduct, then, will list which specific laws are meant to be obeyed in the organization’s operations and the industry in general. The employees will then know which laws are most important to their careers and will be better placed to obey these laws.

Code of Conduct In-Depth Definition

A code of conduct is an outline of what is considered appropriate behavior by the organization and what is considered inappropriate behavior. It can be used for organizations with employees, such as a company, or for organizations with members, such as an accountancy oversight body. The code of conduct is built directly from the code of ethics and should reflect in its formulation the core values held by the organization, ensuring the actions of the employees are in compliance with these core values and not in contradiction of them.

A code of conduct will tell you which course of action to take in all circumstances. Sometimes, while the acceptable actions are well defined in the code of conduct, you may be faced with a dilemma where two courses of action both seem appropriate. In such cases, the fact that the code of conduct has been drawn from the code of ethics means you will still be able to reason about which action aligns the best with the code of conduct. The code of conduct also promotes the actions that reflect most positively on the organization, enabling employees to behave in a way that builds the public’s trust for the organization.

If an employee commits any actions prohibited by the code of conduct or that are generally harmful, then the existence of a code of conduct can help the organization to dig itself out of any scandal that might ensue. The company might even save itself from having any criminal charges pressed against it if it had a written code of conduct that was directly violated by the employee in question.

Vague vs. Specific

The code of conduct is particular, whereas the code of ethics might be general and a little too vague. A code of conduct will outline which behaviors aren’t permitted in the organization, especially those which, when caught, might lead to a termination of employment. Such acts as the viewing of unauthorized content on work computers, racial intimidation and sexual harassment will be clearly defined, and situations that would qualify as any of these will be described in detail. The protocol to be followed when one is suspected of committing prohibited behavior will also be well defined to ensure there is no ambiguity on the subject.

Having a code of conduct can be beneficial in lots of ways to a company. Having a code of conduct combined with other special programs and systems has helped lots of organizations absolve themselves of major scandals. They have also helped to foster healthy and nurturing work environments for lots of companies.

What Are the Similarities?

Both the code of ethics and the code of conduct will be used to encourage employees to do certain things as opposed to others, and both will be a guide for employee behavior. While one guides employee thought, the other guides employee actions. The code of ethics will give guidelines about the kind of values that employees should have and what choices they should favor in situations where they have different alternatives from which to choose.

A code of conduct guides employees by making the assertion that there are actions which are correct, and there are other actions which are inappropriate. What is common to both is that the organization uses them to define a narrow range of acceptable behavior for its employees.

What Are the Differences?

The code of ethics and the code of conduct are both very unique documents. So, what exactly makes them so different from each other? While both regulate the behavior of employees, they do it in wildly different ways. The code of ethics will give standards which apply to a broad set of different situations without any stark specificity in them. This is intentional and is meant to emphasize the values that the employees or members of the organization are meant to have, rather than the specific actions they should take. Ultimately, they are taught what approach to adopt when making decisions about the correct course of action to take when faced with an ethical dilemma.

A code of conduct is much more specific and requires very little thought or independent decision making. You are given a bunch of rules governing your actions that you are required to obey at all times. If you obey these rules, you are safe. If you don’t, then you are forced to incur a penalty. The code will be very clear about what is expected of the employees or members of the organization and will have in place set procedures for what consequences will be faced if any of the rules are broken.

Synergy in Large Companies

Larger companies typically have both a code of conduct and a code of ethics, both working together and prepared separately or in the same document. These will blend both the principles that inspire actions and the right actions to take. These documents become much more important as a company grows larger because there are many more opportunities for friction and ethically ambiguous scenarios in a large company than there are in a small business.

Additionally, a large company has much more at stake with a brand to defend. It is therefore important that it develops a working code to govern how it behaves in relation to the outside world. Not only will its reputation be enhanced, but it will also have greater legal protection.

Code of Conduct for Small Businesses

If you’re a smaller business, then you are likely to be able to survive without a code of ethics or conduct. If you have less than 10 employees, then everyone is interacting intimately with everyone else in a typical day. It is much easier to exhibit appropriate behavior in such circumstances.

You do, however, have the chance of increasing the number of employees you have over time. That can mean your ethical risks and hazards will increase over time as well. Having these important documents early enough will ensure you are well prepared to face the risks as they arise. They can also help to form a company culture that only grows stronger as your company grows bigger, and they can also make for a good marketing tool for potential clients and business partners.

It really doesn’t matter which code your small business chooses to apply; what matters is that it is consistent in both its formulation and implementations. The code should bind every employee of the organization, no matter their level and no matter the size of the code violation. If your code says that you shouldn’t steal company profit, then the penalties should be incurred whether the employee stole a computer or a box of ballpoint pens.

Elements of a Good Code of Conduct

The code of conduct of a business should be an indication of the circumstances of the particular profession or industry that the organization occupies. However, there are some things that all codes of conduct and all codes of ethics have in common. All unprofessional behavior, for example, should be discouraged. That includes behavior that most people would think of as immoral, behavior that goes against the public interest or any behavior that would reflect badly on the profession or industry, regardless of whether it would be considered immoral or not. Any behavior indicating professional incompetence should be discouraged as well.

Outline for a Code of Conduct

Your code of conduct should have clear guidelines for the practices to be adopted by members or employees, both internally and externally.

Examples of internal practices include the following:

  • Dress code
  • Cell phone and Internet use
  • Sexual harassment
  • Diversity
  • Drugs and alcohol
  • Equal Employment Opportunity
  • Americans with Disabilities Act

Examples of external practices include the following:

  • Communications with the public
  • Advertising
  • Environment
  • Conflicts of interest
  • Client confidentiality

Find a Template Online

There are many examples of codes of conduct online. The jobs website Betterteam has examples for small businesses, including a customizable employee handbook that can be downloaded for free.

Incorporate Industry and Government Regulations

Internal and external practices must be in compliance with the set of regulations that affect your organization’s industry as well as government rules and regulations. The code of conduct should be reviewed periodically and updated to reflect any regulatory changes.