Business leaders are usually quick to communicate their expectations to employees, especially when it comes to financial goals or tasks that they want 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 CODIV19 pandemic, public companies are ought to review their codes of conduct and revise them if necessary to mitigate litigation risk. 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 principal that every organisation should have a written, carefully considered ethical code of conduct as part of their fraud prevention strategy. CRI’s Certification program through the ABAC Center of Excellence includes developing an ethical code of conduct as part of the training and development phase for clients.
What should be covered?
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.
CRI Group can help your organisation with the finer points of drafting and implementing an ethical code of conduct. ABAC Center of Excellence 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 under CRI Group’s ABAC® Centre of Excellence, an independent certification body established for Anti-Bribery Management System training and certification, ISO 37301 Compliance Management Systems 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!