Creating a code of conduct

The Institute of Business Ethics (IBE) has created an eight-step plan for developing a code of conduct as well as practical guidance for smaller companies.

What does a Premiership footballer have in common with a supermarket shelf-stacker? Both are likely to be subject to a code of conduct.

Precise terms vary but will always focus on promoting good business practice and staff behaviour to the benefit of the company, its employees and shareholders. So precisely what role does the code of conduct play?

About 92 of the FTSE 100 companies have a code which they advertise and make accessible on their websites. Codes may not be compulsory in the UK but after the scandals like those at Enron and WorldCom, companies here are keen to promote themselves as healthy, decent environments.

More than just PR

So is a code of conduct just a corporate PR exercise? Not according to Mike Emmott, advisor on employment relationships at the Chartered Institute of Personnel and Development, who stresses that it supports and defends staff and makes a company attractive.

"Employees want to be able to respect their firm and see it in the top 100 companies list," he says.

Codes are not just for the big boys. Medium-sized companies are increasingly likely to adopt them, although smaller firms of around 10-15 employees have been slower to embrace the idea.

Rob Riley, partner in the employment group of solicitors Addleshore Goddard, says that such companies should consider the benefits of creating a code, rather than viewing it as a further step towards a red-tape regulated working environment.

Help getting started

The Institute of Business Ethics (IBE) has created an eight-step plan for developing a code as well as practical guidance for smaller companies.

The eight steps focus on assuring the welfare of staff, good customer relations, good book-keeping and supporting local communities.

Simon Webley, research director from the IBE, hopes the tenets of a code can find a practical application and be incorporated into induction programmes because, he says, "we cannot always assume new recruits fit to company values".

Of course, it is not all plain sailing. Global companies using global codes should be careful about the wording.

Anti-discrimation phrasing often central to US codes may sound onerous in UK versions, since unfair dismissal laws that apply here do not apply in the US. 

In stating that staff should obey all the company's rules any code must sit comfortably with existing legislation.

Potential conflicts

One area where conflicts may arise is how in-house restrictions on the use of office applications (computers, telephones) tie in with data protection and lawful business monitoring laws. 

More of an issue is how a code affects employees outside the workplace. Additional clauses have recently been added to many codes to cover the 'work-related' arena. This includes conferences, parties and corporate hospitality events where employees should be careful not to endanger company confidentiality in a more relaxed environment.

This leaves us with other questions: where is the boundary between work and home, and how and why should a code cover this? Recent US cases show that some staff have lost their jobs because of activities outside work which, while not illegal, were deemed to have tarnished their companies' reputation.

If codes start blurring the line between work and play they may face opposition from both employees and trade unions.

Codes of conduct are nothing new and the intention in imposing them is practical but just how far companies go in using them as a tool to protect their reputations may well become an increasingly contentious issue.

IBE eight steps to develope a code of conduct

• Find a champion. Unless a senior person such as the chief executive is prepared to drive the introduction of a business ethics policy, the chances of it being a useful tool are not good.
• Seek the endorsement of the chairman and the board. Corporate values and ethics are matter of governance. The board must be enthusiastic, not only about having such a policy but also about receiving regular reports on its operation.
• Find out what bothers people. Endorsing a standard code or copying that of another company will not suffice. It is important to find out on what topics employees require guidance.
• Pick a well tested model. Use a framework which addresses issues as they affect different constituents of the company, such as shareholders, employees, customers, suppliers and local/national community. Some even include competitors.
• Produce a company code of conduct. This should be distributed in booklet form or via a company intranet. Existing policies, for example on giving and receiving gifts or the private use of company software, can be incorporated. Guidance on how the code works should also be included.
• Try it out. The code needs to be pilot tested. An external party such as the Institute of Business Ethics will comment on drafts.
• Issue the code and make it known. Publish and send the code to all employees, suppliers and others. State publicly that the company has a code and implementation programme that covers the whole company. Put it on your website and send it to joint-venture and other partners.
• Make it work. Practical examples of the code in action should be introduced into all company internal (and external) training programmes as well as induction courses. Managers should sign off on the code regularly and a review mechanism should be established. A code 'master' needs to be appointed.

www.ibe.org.uk/developing.html