Why Have a Code of Conduct - Free Ethics & Compliance Toolkit (2024)

Regardless of whether your organization is legally mandated to have a code of conduct (as public companies are), every organizationshouldhave one. A code has value as both an internal guideline and an external statement of corporate values and commitments.

A well-written code of conductclarifies an organization’s mission, values and principles, linking them with standards of professional conduct. The code articulates the values the organization wishes to foster in leaders and employees and, in doing so, defines desired behavior. As a result, written codes of conduct or ethics can becomebenchmarksagainst which individual and organizational performance can be measured.

Additionally, a code is acentral guide and reference for employeesto support day-to-day decision making. A code encourages discussions of ethics and compliance, empowering employees to handle ethical dilemmas they encounter in everyday work. It can also serve as a valuable reference, helping employees locate relevant documents, services and other resources related to ethics within the organization.

Externally, a code serves several important purposes:

  • Compliance: Legislation (i.e., the Sarbanes-Oxley Act of 2002) requires individuals serving on boards and organizational leaders of public companies to implement codes or clearly explain why they have not.
  • Marketing: A code serves as a public statement of what the company stands for and its commitment to high standards and right conduct.
  • Risk Mitigation: Organizations with codes of ethics, and who follow other defined steps in the U.S. Sentencing Commission’s Federal Sentencing Guidelines, can reduce the financial risks associated with government fines for ethical misconduct by demonstrating they have made a “good faith effort” to prevent illegal acts.

For additional information about the benefits of a code, seeCreating a Workable Company Code of Ethicspp. 3-4 and 6-9.

Why Have a Code of Conduct - Free Ethics & Compliance Toolkit (2024)

FAQs

Why Have a Code of Conduct - Free Ethics & Compliance Toolkit? ›

A code encourages discussions of ethics and compliance, empowering employees to handle ethical dilemmas they encounter in everyday work. It can also serve as a valuable reference, helping employees locate relevant documents, services and other resources related to ethics within the organization.

Why is it important to have a code of conduct or ethics? ›

A personal code of ethics can ensure you are doing things legally and safely. It also helps you show others that you are an ethical person with values that are important to you. These are traits that can help you throughout your career and your life, including in relationships and professional settings.

What is a particular benefit of using the code of ethics Toolkit created by the ethics & compliance Initiative? ›

The Code of Ethics Toolkit: A Guide to Developing a Code of Ethics (Code of Ethics Toolkit) has two purposes: 1) It outlines the process by which the SHRM member code was developed. 2) It can serve as a guide in designing a Code of Ethics for organizations in which you work.

What is the purpose of having an ethical code? ›

A code of ethics outlines an organization's guidelines and best practices for maintaining honesty, integrity, and professionalism. Violating the code of ethics can lead to sanctions, including termination, for organization employees or members.

What is the purpose of a code of conduct? ›

A code of conduct is a company manual that states the rules, values, goals, ethics, and vision of a business. It provides staff with a clear outline of expected behaviour, and instructions on what is and isn't considered good practices by the company.

What are the benefits of having a code of conduct? ›

It gives employees structure and helps them understand what's expected of them. It reassures team members that you will respond appropriately to poor conduct. It enables managers and senior leadership to make informed decisions on performance enhancement and disciplinary action.

What is the purpose of the Code of ethical conduct? ›

A well-written code of conduct clarifies an organization's mission, values and principles, linking them with standards of professional conduct. The code articulates the values the organization wishes to foster in leaders and employees and, in doing so, defines desired behavior.

What is a potential benefit of a code of ethics? ›

It provides a framework for ethical decision-making and behavior, reducing the likelihood of ethical lapses or breaches. By clearly defining acceptable practices and behaviors, organizational leaders can mitigate risks related to legal and regulatory compliance, data security, and confidentiality.

What are the three purposes of the code of ethics? ›

Here are some key aspects of the purpose of an association's code of ethics: Provides a common set of rules or standards for all in the profession to adhere to. Defines best practices for the profession. Provides a basis to meet compliance requirements for the profession.

Why is code of ethics important in it? ›

Data management and privacy are one of the biggest challenges faced by those in the IT field. Ethics in IT helps to ensure that these challenges are taken seriously and dealt with constantly to help ensure protection and reliability.

What is the primary purpose of a professional code of ethics? ›

A key purpose of a code of ethics is to maintain integrity with the general public. Many companies include guidance to the effect of safeguarding the interests of their clients above their own interests. This is essential to forging a positive reputation for a business.

What is the main purpose for establishing a code of conduct for professional? ›

The primary aim is to make sure that the professionals take the responsibility for their practices and the interests of those who are being served by such professionals are served. The code of conduct highlights that professionals should behave in a responsible manner.

What makes a good code of conduct? ›

A good code of conduct is:

A public document that clearly states the actors within the company who are responsible for its development, oversight, and implementation.

Why do we need code of conduct and ethics? ›

A code of conduct, sometimes called a code of ethics, is an important document that sets out clear guidelines for how employees should behave in the workplace. It defines standards of professional conduct, business ethics, and company values that employees and managers must adhere to.

What does a code of conduct tell you? ›

A code of conduct includes policies and rules for employees and employers to follow in the workplace. Often, a company uses its core values, including its mission, to guide the creation of these codes. These guidelines outline how people can appropriately interact with one another at work.

What is the purpose statement of the code of conduct? ›

The Purpose Of A Code Of Conduct

As such, the organization, its management, and its employees use the code of conduct to communicate their values to each other, their customers, and those with whom they do business.

Why is it important to have a code of conduct or a code of ethics in communication brainly? ›

Answer: It is important to have a Code of Conduct or a Code of Ethics so that a person has a guide in doing what is right or wrong. He/she is aware of what rules he/she is obliged to follow. Because of Code of Ethics, the person will not disrespect, hurt, humiliate other people.

What is ethics and why is it important? ›

Ethics is what guides us to tell the truth, keep our promises, or help someone in need. There is a framework of ethics underlying our lives on a daily basis, helping us make decisions that create positive impacts and steering us away from unjust outcomes.

What is the importance of the code of ethics for professional teachers? ›

The Importance of Teacher Ethics. The code of ethics for teachers is designed to protect the rights of the students, all the students. It is important that teachers understand that when they get a teaching position they are agreeing to follow the code of ethics.

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