Why your Organization needs to write a Code of Conduct

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Recently I found myself uncertain about the best course of action to take and wished I had a code to consult to guide my decision making in the area I faced uncertainty. I am sure this kind of uncertainty is experienced in various organizations around the world. A code of conduct is an organization’s uncertainty – busting tool.

All organizations need a code of conduct- written, communicated, and lived. The code of conduct is a document spelling out how the values of an organization are to be practiced in the complex social, political and environmental context that an organization operates. Its content may range from setting out employment practices, relationships with business partners and communities of interests, environment, health and safety, employee comportment, and use of company resources, etc.

A code of conduct achieves many objectives. It is both a branding and risk management tool. And it also serves personnel management purposes

It helps a company promote a desired corporate culture by making expected behavior mainstream among employees. A well-practiced code of conduct can lead to an increased level of confidence and trust from external stakeholders. For example, after many years of behaving in a certain way, some organizations have achieved an identity of how they conduct their operations e.g. it is common to hear about the Hewlett Packard Way

Secondly, a code of conduct is a risk management tool that reduces potential and actual liability from regulatory infractions by company representatives. Spelling out compliance requirements in a code of conduct reduces potential liability because it lessens the likelihood and number of illegal acts, especially when the code of conduct has an enforcement mechanism such as whistleblowing hotlines, compliance reviews, etc. Also, it reduces actual liability because even in the case of an ethical misconduct by an officer of the company, the company is usually not culpable if it can be proven that it took steps to train staff members against performing such an illegal act. In this case, the employee may be charged in his personal capacity for the act and not the company, and even when the company is charged, most laws will allow for a lesser penalty if a code of conduct was established

As a personnel management tool, the code of conduct establishes standards of behavior that governs employee conduct both in public and private. And in these days of ubiquitous Internet use, the code of conduct needs to govern employees’ online behavior as well given that a tweet in London can make reverberations in Lagos.

A code of conduct is not only necessary for big organizations, even small enterprises can benefit from improved corporate governance. It will give an aura of professionalism that will help attract business from bigger companies that prioritize sound corporate governance practice.

Finally, like every other policy document, practice trumps everything. Senior management must demonstrate commitment to an organization’s code of conduct and must communicate it consistently in both formal and informal ways. Only then will a code of conduct become a living document that provides a true north for employees seeking direction in an uncertain business world.

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