Theresa and Mike fully support creating a code of conduct for the newly merged JEANSTYLE organization. They have asked you to recommend how they should approach the development of the code of conduct, especially given the need to merge the companies into one team with a shared mission, vision, and values. They are interested in knowing how the code of conduct will help establish the new organizational culture of JEANSTYLE.
Review the scenario for this course, and address the following questions:
- What set of steps should be used to create the code of conduct?
- What topics should be included in the code of conduct?
- What impact does a code of conduct have on an organization’s culture?
Note: All character and company names are fictional and are not intended to
depict any actual person or business.
Knowing that mergers may require a dramatic change in company culture,
you realize that you need to meet with the human resources (HR) and
leadership teams because they will play important roles in the merger. The
leadership team will drive the change, and the HR team will be charged with
managing the change. You have scheduled a meeting with Steve Maine, your
vice president at ALTAP consulting, to consult with him on this project.
“Thanks for meeting me today, Steve,” you begin. “I need to talk through
some of the issues before meeting with the HR and leadership teams at
UWEAR and PALEDENIM. The merger is going well, but it is becoming
apparent that there are some significant change issues that need to be
“I’ve heard good things about your work on this project,” Steve answers. “I’m
sure you have it under control, but I’ll be happy to help where I can.”
“We are dealing with the issues of joining together two very disparate
companies,” you explain. “On the one hand, UWEAR is public and has 100
employees; on the other hand, PALEDENIM is private with only 15
employees. They basically provide the same type of service, but they are
completely different businesses in how they operate inside and outside of the
You continue, “Yes, and both the employees and managers of each company
have different philosophies and expectations. PALEDENIM employees and
managers have a kind of ‘one-for-all and all-for-one’ attitude. They all chip in
to get the job done. The UWEAR employees and managers look at things
differently. They’re more apt to do their jobs, get them done, and go home
without consideration for what else the rest of the team needs to complete.”
“That is definitely a culture issue,” Steve agrees. “In fact, that is the classic
definition of a culture issue. I’m sure they’re also dealing with the typical
power struggles. I bet everyone is worried about whether their department.will be headed by a UWEAR manager or a PALEDENIM manager.”“Exactly,” you say. “I know the intention of the merger is to benefit both
companies, but there are unintended consequences as well. We need to do
whatever we can to help the employees of both companies get through this
with the fewest glitches possible.How to Create a Code of Ethics for Your BusinessA code of ethics and professional conduct outlines rules for proper behavior in the workplace — usually based on a company’s core values. It lets employees know how they should behave, and it gives guidance for handling harassment, safety and other issues.A code of ethics for businesses is usually broader than a code of conduct that discusses how employees should act in specific situations. However, many businesses use one centralized document for a code of ethics and professional conduct.
- How to Create a Code of Ethics for Your BusinessA code of ethics and professional conduct outlines rules for proper behavior in the workplace — usually based on a company’s core values. It lets employees know how they should behave, and it gives guidance for handling harassment, safety and other issues.A code of ethics for businesses is usually broader than a code of conduct that discusses how employees should act in specific situations. However, many businesses use one centralized document for a code of ethics and professional conduct.
What is a code of ethics in business?
A business code of ethics, also known as an ethical code, is a set of principles companies provide to employees so they can approach their job with integrity. A code of ethics often includes a company’s core values, ways for employees to resolve problems they encounter and the standards of performance they need to meet.A company could also list laws and regulations in its code of ethics depending on the industry. For example, a banking organization might list government regulations that employees must follow to perform effectively in their roles.
Why is a business code of ethics important for your company?
Creating a code of ethics for your business is important for the following reasons:
- Explains your expectations: Business codes of ethics outline how you expect your employees to work in order to accomplish goals and live your company’ values. It also provides a framework for how employees need to interact with each other and clients in order to demonstrate a positive public image.
- Showcases the drive for success: List your overall objectives and goals in your code of ethics to give the public and your employees an idea of what you want the future of your company to look like.
- Improves employee retention rates: A commitment to maintaining and building on your company’s culture translates to higher retention rates for current employees. In your code of ethics, discuss how you plan to take care of your employees and explain the methods you’ll take to create stronger bonds between team members.
- Builds trust with external stakeholders: A strong business code of ethics builds trust with industry leaders and local communities. To make a code of ethics generate interest among external stakeholders, create a list of community leaders in your area and research their values.
- Attracts quality candidates who share similar values: An Indeed survey found that 28% of job seekers would reconsider accepting an offer from a company if the company’s mission/vision didn’t resonate with their values — even if the job met all of their other personal requirements and they had a positive interview experience.*
Common types of business codes of ethics
Codes of ethics can include many different policies. Here are some examples of common types of codes of ethics in business:
1. Being inclusive
Businesses should welcome people from all backgrounds, and they should not discriminate against anyone based on a variety of factors, including:
- National origin
- Sexual orientation
- Social or economic class
- Immigration status
- Political beliefs
2. Being considerate and respectful
People depend on each other to do their best and make the business they work at successful. When managers and employees make decisions, they should think about how those decisions could impact clients and the team as a whole. When people discuss actions and next steps, they need to focus on what’s best for the company. They should speak calmly and rationally to make everyone as comfortable and productive as possible.
3. Acting professionally
By acting professionally, you can increase your company’s reputation, reduce turnover and make employees’ jobs less stressful. Make all of your interactions positive and professional by focusing only on business-related topics. These rules should apply to your emails and phone calls as well. When you set a professional example, your employees will likely follow suit.
4. Considering your actions
It’s important to think about what you do in the workplace and how it affects others. Certain actions, like taking personal calls near others, could distract employees and make it difficult for them to focus. Think about any rules you may need to add to your code of ethics to encourage a positive working atmosphere, such as keeping phones on silent or having meetings in designated areas.
5. Admitting when you make a mistake
People need to take responsibility for their actions and learn from their mistakes. They should also listen to the perspectives of others to implement the best idea. Acknowledge your employees’ suggestions to show you value their opinions and suggestions.
6. Avoiding conflicts of interest
Many companies have rules against managers dating employees, running for public office or investing significant amounts of money in competitors or companies that employees do business with. By asking employees to avoid conflicts of interest, you can ensure that they remain productive and have a positive impact on the company.
7. Protecting company assets
Businesses need to protect their property, including records, computer systems, equipment and intellectual property, such as patents. They should have the IT and physical security they need to prevent hacking or thefts. Consider including a rule in your code of ethics about how to treat company assets and data.
8. Being punctual and avoiding absences
Most companies have an attendance policy to encourage people to come to work on time. For example, if someone is sick and they can’t make it to work, what steps should the employee take? Many businesses require a doctor’s excuse for an unscheduled absence, but you can come up with your own policies to suit your business.
How to write a code of ethics for your business
Here is a framework to help you establish a code of ethics for your own business:
1. Define the company’s priorities
Meet with your key leaders to identify how they make important decisions. Use this discussion to identify the customers you want to sign, the quality expected from employees and the allocation of resources. Creating a code of ethics based on your top priorities makes it more focused and clear to your employees and the public.Use your company’s core values to guide your code of ethics. For example, if you created your business based on integrity and trust, incorporate these values into your code by explaining how you and your employees will follow them. If one of your company’s values is focused on sustainability, you could include information about how the company is working to reduce its carbon footprint.
2. Speak with employees about content to include
Schedule a meeting with employees to talk about what they want to include within your business’s code of ethics. Discuss the kind of culture they want to work in and if the current environment meets their expectations. Use their suggestions to determine what to include in your code to foster a positive workplace.Ask employees for additional feedback on how to improve your company’s current code of ethics if you already have one. Find out if employees are comfortable collaborating, if they have a role model or mentor and if they believe they’re growing. The responses help your organization live by your values and ensure consistency when communicating this message to influential stakeholders.Related: Creating a Positive Feedback Loop in Your Business (With Examples)
3. Underline acceptable workplace behavior
Explain the type of behavior you expect your employees to have. Companies with a zero-tolerance policy for misconduct show that they have high standards for conduct in the workplace and commit themselves to doing the right thing at all times.
4. Note who is in charge of compliance
Consider designating a compliance manager to hold employees accountable. Search for someone who has a track record in upholding ethical procedures. Either hire a dedicated compliance officer to be a part of your human resources team or choose a current employee. Your compliance officer needs to have a thorough understanding of your company’s values, policies and procedures and feel comfortable serving as a liaison between you and your employees.
5. Get approval from management
Ensure your managers approve of the code of ethics before implementing it. Approval from leaders makes it more likely that employees will follow it.
6. Initiate a code program
A code program outlines the steps your employees need to take to implement your new code of ethics. Training, reinforcement and metrics help employees understand the purpose of the code program and how you plan to uphold it.
Things managers should remember about ethics in the workplace
To keep their employees happy and make their businesses successful, managers should consider these tips:
Give people credit for their work
If you give employees credit for good performances or new ideas, they’ll be more likely to do their best. Give praise and recognition when an employee excels. Acknowledging an employee publicly will motivate their team to work harder as well.
Show all your employees that you appreciate them
Thanking someone for working overtime, asking how their weekend was or having lunch with employees occasionally will show them that you value them. People want to have a good relationship with their manager so they feel comfortable approaching them with questions or ideas.Related: Samples of Appreciation Letters: Templates and Examples
Let people make their own decisions
Employees often prefer when they have a certain amount of autonomy and freedom to make their own decisions. Try giving your employees a general set of instructions or even just a goal, then let them find the best way to do their work. Make yourself available if they have any questions or need guidance, but allow them to work independently if possible.
Treat all of your employees fairly
Managers may get along with some of their employees better than others, but this shouldn’t impact their business decisions. They should reward everyone who works hard, and consider ideas from all team members.Related: How to Address 12 Types of Bias in the Workplace
Lead by example
Managers should follow company policies and rules to encourage their employees to do the same. For example, if there’s a company policy against using company computers for personal reasons, make sure managers are leading by example.*Indeed survey, n=10,000Post a JobFind jobs.Automate, interview, and more with Indeed Hiring Platform.Learn more*Indeed Data (US)
Codes of ethics FAQs
Are codes of ethics required by law?
Companies generally aren’t required by law to have codes of ethics. However, the Sarbanes-Oxley Act (SOX) of 2002 requires corporations with publicly traded stock to publish their codes of ethics if they exist. They also have to publish any updates or changes to their codes of ethics.
Are codes of ethics legally binding?
Ethical codes in business are generally not legally binding. Companies and their employees need to follow anti-discrimination and other laws no matter what is in their codes of ethics.
Where can employees find their company’s code of ethics?
The code of ethics is usually part of the company handbook, along with other policies and procedures.
How can you educate employees on the code of ethics?
Include your code of ethics in the employee handbook or as part of your onboarding materials so all new hires have access to it. You can also post it on your website for additional visibility. Make sure managers cover the most important aspects of the code as part of your new hire onboarding and training.