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Do you tolerate workplace bullying? Do you value customer service over sales volume? How should employees respond if they see a colleague breaking the rules? A company code of conduct helps you and your staff navigate the many ethical questions that businesses tackle every day.
TL;DR (Too Long; Didn't Read)
The importance of a code of ethics is that it tells your employees what you expect and what they can expect from you in return.
Defining a Code of Conduct
Your business's code of ethics tells your staff, investors, customers and suppliers how you conduct your business and what standards you set for yourself and your company. It is about principles, not procedure. Your company rules detail how human resources handles sexual harassment complaints, while the code of conduct tells employees that you will not tolerate harassment and will stand up for the victims.
Some companies see a code of conduct as mostly a hoop to jump through. They draw up a bare-bones code to meet regulatory requirements or something fancier to impress the public. There are genuine benefits of a code of conduct for a small business, so it is worth putting more effort into it.
Benefits of Business Ethics
Even if there is no legal requirement for your business to draw up a code of conduct, it is worth doing so because:
- It shows employees and potential employees that you are a responsible and ethical company. If, say, your ethics are pro-diversity and anti-harassment, that makes you a more attractive company for which to work.
- It shows your customers that you value integrity. If you live up to your code, they can do business with you and be confident that you will not cheat them to make a buck.
- It tells your employees what you want from them. You may think the principles by which you run the company are intuitively obvious, but your employees' ethics may not be the same. Spelling out your code of conduct puts everyone on the same page.
- Having a code spelling out unacceptable behavior helps employees to see that discipline is fair. If your code says your staff must be honest with vendors and customers, they will understand when you discipline employees who lie.
- It tells employees what to expect from you and gives them a benchmark to judge whether you are living up to your own standards.
One of the biggest advantages of a code of conduct is that it gives the culture at your company an ethical foundation. If you and your team actually live by the code, it can improve the way you deal with each other and with stakeholders outside the company.
Writing the Code
Codes of ethics are not one size fits all. Your situation and your values may not be the same as other companies, even in your industry. A construction company may place a high ethical value on preventing workplace accidents, for instance, but that is not usually an issue for accountants. If you want to enjoy the advantages of a code of conduct, put some thought into it.
- What are your company values? Integrity? Teamwork? Loyalty? Diversity? What exactly do you mean by those words?
- What behavior is unacceptable at your company? Is it acceptable if managers yell at staff? Will you tolerate offensive jokes or nicknames?
- What behavior do you want to encourage? If teamwork is one of your core values, for instance, do you want team members to listen and respect each other's opinions? Is interrupting each other OK or a sign of disrespect?
- If someone breaks the code, how will you discipline him?
When you figure out what you want, you can start drafting the code itself. To get the full benefits of a code of conduct, it helps to strike an aspirational tone. Express the code of ethics as goals for which to strive and not a "don't do that" list.
- Patriot Software: Creating a Code of Conduct for Your Small Business
- Corporate Compliance Insights: Creating an Effective Code of Conduct (and Code Program)
- WhistleBlower Security: Four Reasons Your Business Needs a Code of Ethics
- ERC: Workplace Culture: What It Is, Why It Matters, and How to Define It
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com