Whether newly employed or an industry veteran, you must have come across a document innocuously called the "Code of Conduct" sometime in your career. Maybe you paid attention to it and noted its various dos and don'ts, or you just signed it without giving it much importance. Perhaps you thought of it as another formality to join a new company. Whichever category you fall in, you ought to know the critical role that your organization's "Code of Conduct" plays in your professional life.

What is a Code of Conduct?

A Code of Conduct (CoC) is a set of regulations, rules, norms, principles, values, expectations, and behaviours that guide how a company conducts its business. A CoC, or as it is alternately called an "Employee Handbook", acts as a guide for employees on how to work when they face certain situations. It is, therefore, one of the most essential documents for an organization and its employees. It should not merely be a cut-and-paste job from the internet but something that closely represents the organization's culture, spirit and ethos. It is also the document that every employee should familiarise themselves with since it is one of the handiest reference tools for the employee during their time in the organization.

What are the components of a Code of Conduct?

1) Some of the most common components of a CoC are:

2) Company Culture 

3) Rules of Organizational Behaviour

4) Dress Code

5) Company Policy on Sexual Harassment

6) Policy on inter-office Relationships

7) Anti-Bribery and Anti-Corruption Policy

8) Company Policy on Hiring and Promotions

9) Attendance Rules

10) Rules regarding Conflict of Interest 

11) Confidentiality and use of technology

12) Policies against Insider Trading

13) Communication - standard practices

14) Policies related to the Environment

15) Policies associated with the use of Labour

16) Whistleblower Confidentiality

17) Violations, Disciplinary Proceedings and Penalties 

A CoC can vary depending on the type of organization. For example, certain organizations place great emphasis on their mission and vision statement while drafting their CoC. Some include a statement of values in their CoC which will govern all their future decisions, interactions, and business dealings. 

Some organizations also create a separate code of ethics that includes workplace ethics, policies against bribery, corruption and insider trading, and policies related to conflict of interest and confidentiality.

Why is it essential for an organization to have a Code of Conduct?

As mentioned above, the CoC creates a framework and roadmap according to which all organization members can behave when faced with different situations. Some other reasons for having a CoC are:

• Standardization of Behaviour and Expectations

With a clear CoC in place, every employee is not only aware of how they should behave while at the workplace, but they are also reasonably assured of the organization's expectations. Thus, CoC leads to standardization of organizational behaviour among the employees and the employer. The CoC lays down uniform standards of conduct for all employees and the consequences of deviating from them. Hence, no employee can claim they have been mistreated or discriminated against if the employer takes action following the CoC. The CoC protects the organization from disgruntled employees' unnecessary litigation or vengeful actions. 

• Public Disclosure

Displaying the CoC in a public place can benefit an organization. It makes it clear to future clients and investors that the organization is well-regulated and professional. Clients are more likely to want to hire an organization they know is professionally run than one with a chaotic management style. Even investors are attracted to organizations they are confident will manage their investments properly. All this becomes possible with a well-defined and comprehensive CoC in place.

It is also important to note that lately, there has been a move toward working with organizations whose values align with ours. For example, investors look to invest in companies that drive a sustainability agenda or those that fully comply with international labour conventions. Organizations can use the platform of a CoC to proclaim their values publicly to attract more organizations whose values align with them. 

• A Document for Posterity 

A CoC is not cast in stone and is a document the organization must amend as and when required. As a company grows and evolves, it faces different financial, ethical and social dilemmas. Once the organization has resolved the difficulties and learnt the lessons, it should incorporate the learnings suitably into the CoC. The CoC, therefore, also becomes a document which helps successive generations of management to benefit from the experience of those senior to them, even if they are no longer a part of the organization. 

• Effective Legal Compliance

Most importantly, a good CoC helps an organization remain legally compliant. When the rules and regulations on what the organization will do and will not do are set out clearly, there is no room for employees to commit illegalities and claim ignorance. For example, employees in organizations with clear Anti-Bribery and Anti-Corruption policies or Sexual Harassment policies cannot indulge in these activities and later claim innocence because they lack awareness of their organization's stand on these issues. 

Also, organizations with well-defined whistleblower protection policies ensure that any illegality committed by their employees comes to their notice soon. They can take action against it at the earliest. This assurance is not there with an organization that doesn't have clear whistleblower policies. Here, even if employees see some illegality, they may not come forward to report it since they are not assured of anonymity or protection. The illegality may go on for a long time before the management gets wind of it. By this time, it may have become too late to take action against it. This can be detrimental for organizations. 

For the above reasons, it is highly recommended that organizations draft a simple, coherent, comprehensive and written Code of Conduct that all employees must sign. The organizations must also train the employees concerning the content of the CoC. 

Watch this space for Code of Conduct - Part 2.

Author: Pallavi Mohan Editor: Sumali Nagarajan

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