Why your organisation needs an ethical code of conduct!

What are the key features of your organisation’s success? People are at the heart of your business; therefore, they are your most important asset. We believe that core values such as transparency, ethics and compliance communicated from the top will inspire your team and your organisation to grow exponentially. Thought leading by example might not be tangible enough, we recommend you to develop an ethical code of conduct that will help you to document your organisation’s belief in ethics and compliance. What is the importance of this document, what should be covered and how to report unethical behaviour – we answer that and more in this article.

Tone at the top

Business leaders are usually quick to communicate their expectations to employees, especially when it comes to financial goals or tasks that they want to be accomplished. However, what is often lacking is a clear, concise explanation of what the organisation expects in terms of ethical behaviour. The recent article “Puffery or Not? Courts Examine Corporate Codes of Conduct” explains that although a number of federal courts have found code of conduct statements to be non-actionable puffery, given the uncertainty in the face of the novel COVID-19 pandemic, public companies are ought to review their codes of conduct and revise them if necessary to mitigate litigation risk.

The research made by Harvard Business Review identified that the most important leadership competencies are centred around soft skills and emotional intelligence. 195 leaders from more than 30 organisations in 15 countries suggested that high ethical and moral standards and providing a safe environment are the number one theme of competencies that is the most important in the workplace. The article highlighted that a leader with high ethical standards inspires commitment to fairness, instilling confidence. “High ethical and moral standards” were selected by 67% of respondents marking it as one of the most important traits. Such an attitude from management demonstrates a commitment to fairness, instilling confidence and help to improve the organisation’s working environment. As it is considered crucial by employees, and it helps businesses significantly, why not implement an ethical code of conduct and document management values?

The importance of ethical code of conduct

Does your organisation have an ethical code of conduct? If not, you might be making assumptions that your employees know to conduct themselves in an ethical manner, when, in fact, this expectation only exists in a grey area in their minds – if at all. In fact, some employees who have engaged in fraud, corruption or other unethical situations have claimed that while they knew their behaviour was wrong, they thought it was implicitly accepted by their bosses and, in some cases, their company on the whole.

Rather than assume that ethical rules “go without saying,” every organisation should spell out what they expect of their employees when it comes to ethical behaviour. At CRI Group, we counsel business leaders on the principle that every organisation should have a written, carefully considered ethical code of conduct as part of their fraud prevention strategy. ABAC’s ethics and compliance programs include developing an ethical code of conduct as part of the training and development phase for clients and prove that your business is following ethical, and transparent values towards anti-bribery, anti-corruption and compliance.

What should be covered in the ethical code of conduct?

An ethical code of conduct should be tailored to your company and your organisation – no two will be exactly the same. What are the risks inherent in your organisation? What about in your industry? A pharmaceutical company will have some different risk areas than a retail store, for example. A nonprofit organisation might have concerns that relate to fundraising; a government agency might be focused on preventing bribery or collusion.

The goal of an ethical code of conduct is to help all employees understand the expectation that they behave in a legal and ethical manner at all times and that the organisation has zero-tolerance for unethical behaviour. It should include the following focal points:

1. Business values

This can include your organisation’s mission and vision and should help set the tone for how the organisation relates to its clients, partners, its own employees and the public at large.

2. Guiding principles

The principles that guide your company likely include customer satisfaction, financial success and profitability, improvement and growth. Your company might also follow policies of corporate responsibility, such as respect for social and environmental issues, and support of the community and/or nonprofit efforts.

3. Role of leadership

This section of the code of conduct should state that management has clearly endorsed the code, and that employees can approach any manager or executive with ethical concerns or complaints.

4.Regulatory and compliance

This section should communicate the organisation’s commitment to meeting all compliance requirements, from OSHA and EPA to Sarbanes-Oxley and Dodd-Frank. This reinforces leadership’s expectation that employees must act diligently and ethically to uphold those standards, as well.

5. Employee responsibility

Every employee, from top to bottom, shares the responsibility toward upholding the ethical standard defined in the code. Contractors and volunteers are also expected to follow the standard of behaviour.  Furthermore, the code should make clear that if unethical behaviour is detected, turning a blind eye or deciding “it’s not my problem” is unacceptable. That, in itself, is a breach of the ethical code.

Ethics and compliance hotline

As part of your ethical code of conduct, it is vital to encourage your employees and provide them with the Ethics and Compliance Hotline. It will serve you as an anonymous reporting mechanism that facilitates reporting of possible illegal, unethical, or improper conduct when the normal channels of communication have proven ineffective or are impractical under the circumstances. At CRI Group, we are committed to having an open dialogue on ethical dilemmas regardless and introduce our hotline is available to all employees, as well as clients, contractors, vendors and others in a business relationship with CRI Group and ABAC Group. If you find yourself in an ethical dilemma or suspect inappropriate or illegal conduct, and you feel uncomfortable reporting through normal channels of communication, or wish to raise the issue anonymously, use CRI Group’s Compliance Hotline in below mentioned ways or provide us with your complaint online on the form below.

What are the next steps?

We can help your organisation with the finer points of drafting and implementing an ethical code of conduct. ABAC®  includes this critical piece as a part of any robust fraud, bribery and corruption prevention program.

After the ethical code of conduct is approved by company leadership, it should be read and signed by all employees (with the signed copies kept on file by the organisation). And it should be displayed prominently in the office. Unethical behaviour, including fraud and other corruption, is everyone’s problem, and it must be prevented, detected and reduced. Staying one step ahead of any critical risk to your organisation is part of being an effective business leader.

ISO 37001:2016 Anti-Bribery Management System certification is offered by ABAC® Center of Excellence, an independent certification body established for Anti-Bribery Management System training and certification, Compliance Management System and Risk Management System certification. The program will be tailored to your organisation’s needs and requirements. For assistance in developing and implementing a fraud prevention strategy, contact ABAC today or get a FREE QUOTE now!