A code of ethics is a set of principles for employees to adhere to while conducting their business in order to meet the standards set by the company. A strong code of ethics will help to set clear policies and professional standards of behavior in all areas of employee performance, such as appropriate use of the company's facilities and how employees are expected to approach problems and handle them. Setting an ethical code is important to guide employee decision making to align with the company's values when there are no explicit rules or direct oversight.
A Code of Ethics can be incorporated into many different official documents including Code of Conduct, Code of Business Ethics, and Code of Ethics and Standards. A company's ethical code, often based on core company values, sets out a company's mission, how professionals are expected to handle dilemmas, and the standards they hold employees to. The five main components of ethical codes are honesty, objectivity, professional expertise, confidentiality, and professional conduct.
Even though most Fortune 500 companies do not have a standalone code of ethics, they simply, and effectively, incorporate their code into the broader Code of Conduct. There are some key points to emphasize when creating a code of ethics for your company.
For example, Google highlights the importance of comprehensibility in their code of ethics. Through using a conversational tone and making their code easily accessible, they demonstrate the significance of clarity and approachability in an effective code of ethics. Costco creates four pillars to follow as to communicate how their employees should act and why. Starbucks amplifies the mantra “Speak Up” to inspire a culture of acceptance and accountability. All these examples expand upon strict policies and procedures to give all stakeholders a way to integrate the company’s mission and values into their decisions.
A business code of ethics is usually not standalone, working alongside the business mission and more concrete policies on behavior, in order to provide employees, partners, vendors, and third-parties an understanding of what the business stands for, and how its members are expected to behave.
A well-established code of ethics can enable your business to strengthen your brand and enable your employees and customers to understand your business far better, leading to better results down the line.
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