Tuesday, September 12, 2006

Create and evaluate a Code of Conduct

A corporate Code of Conduct, sometimes also refered to as Code of Ethics, helps a company to show to all involved parties, internal and external, the standards that govern its conduct, thereby conveying its commitment to responsible practice wherever it operates.

As you know, there have been many recent legal and paralegal initiatives to promote or require good conduct by corporations. Because there are now so many of these guidelines, it is not simple to get an overview, so that you're able to quickly assess if your firm's Code of Conduct is 'worldclass'. A useful article in the HBR of Dec 2005 by Professors Lynn Paine, Rohit Deshpandé, Joshua D. Margolis, and Kim Eric Bettcher may help: it provides a useful overview of all (?) things that should be considered in any Corporate Code of Conduct.

The authors suggest 8 governing ethical principles which taken together they call: The Global Business Standards Codex (GBS Codex). These 8 principles to create or evaluate a Code of Conduct and their most important aspects are:
  1. The Fiduciary Principle (Diligence, Loyalty).
  2. The Property Principle (Protection, Theft).
  3. The Reliability Principle (Contracts Premises, Commitments).
  4. The Transparency Principle (Thruthfulness, Deception, Disclosure, Candor, Objectivity).
  5. The Dignity Principle (Respect for the Individual, Health and Safety, Privacy and Confidentiality, Use of Force, Associatiation & Expression, Learning & Development, Employment Security).
  6. The Fairness Principle (Fair Dealing, Fair Treatment, Fair Competition, Fair Process).
  7. The Citizenship Principle (Law & Regulation, Public Goods, Cooperation with Authorities, Political Noninvolvement, Civic Contribution, .
  8. The Responsiveness Principle (Addressing Concerns, Public Involvement).

The article itself is already a summary of regulations and best practices. So if you want to assess or create a Corporate Code of Conduct, you are advised to read the article completely.


Blogger Dave said...

Thanks for the great summary of the Global Business Standards Codex. The only thing I would add is probably somewhat obvious: many of the company values grouped under these standards need to be customized to the particular business/industry. For example, an international service company has a concern with money laundering and bribery of government officials, whereas a company with no international operations may not face these issues. Thus, I think the way that the professors made the standards somewhat generic is helpful for comparing one's COBE to what is considered a world-class COBE. But I would also suggest that any company looking to drafta or revise its COBE get an idea of what other companies in its line of business include in their COBE.

8:41 PM  
Anonymous Anonymous said...

Thank you MLogs for this informative post.

With respect to David's comment, I can certainly see the value of separating the terms "code of conduct" and "code of ethics."

"Conduct" relates to specific actions. A code of conduct is likely to specify specific policies, procedures and actions to be followed in specified circumstances.

"Ethics," on the other hand, refers to things like values and integrity. Ethics are more principle based, and a code of ethics should specify the key ethical principles by which all members of the organization are expected to adhere.

However, I would not normally feel that having a separate code of conduct and code of ethics would be beneficial, particularly from a viewpoint of simplicity.

The simpler and more straightforward the code, the greater the likelihood of employee compliance with the code concerned. Having two different codes is too complicated and this reduces the likelihood of employee compliance with the such codes.

In the majority of circumstances, having one simple, straightforward code is the optimum approach in my opinion.



10:19 AM  
Anonymous Anonymous said...

I appreciate your framework for evaluating what's right in business. However, one need to consider a company's entrenched culture and business practices. For example: I worked as a consultant for Bassich and Associates, a market due diligence company, which secure competitive information by misrepresenting its mission and objectives to "job-search-candidates" with a direct link to the targeted companies through job-search portals (e.g., Monster, Careerbuilder). Using manipulative techniques (e.g., a lucrative new job offer), its associates and consultants deceive hopeful individuals to disclose proprietary information (e.g., market share, sales, sales growth, sales breakdown, strategies, tactics and other critical performance indicators) about their companies in the guise of a possible a new and lucrative job offer. Its business practices are both deceptive and unethical, often resulting in the dismissal of the unknowing individuals (job-search-candidates) upon revelation by their companies. However, as a consultant with the company, I am pressured into following this practice and to perpetuating this unethical behavior. Eventually, I had to quit but am still bothered by what I have done. How can one resist the pressure of complying with such unethical practices?

1:42 AM  

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