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6 Essential Things to Include in Your Company’s Code of Ethics

6 Essential Things to Include in Your Company's Code of Ethics

Focus your code around your company’s core values to guide employees towards ethical behavior and decisions at work

Did you know just one document could decrease your risk of fines and reputation damage?

A company code of ethics gives employees (and often vendors and temporary workers) guidance for ethically confusing situations. Rather than picking up the pieces after a poor ethical decision, teach employees what behaviors to adopt and which to avoid to prevent lapses.

Get started writing your policy with these six key things to include in your code of ethics.

Set the ethical tone for your company with a strong policy

A clear, organized code of ethics provides employees with do's and don't's in the workplace, as well as the ethical standards your company operates under. Write or update your company's policy using our free code of ethics template.

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1. Message from the CEO/Founder

Start off your code of ethics with a sincere message written by your company's CEO, founder or other top leader. It should express the company's commitment to ethical behavior on professional and personal levels.

In addition, it should explain why ethics is important to the success of both the company as a whole and employees individually. A brief, inspiring message shows that senior management is on board with ethics, so employees should be, too.

Take this example from eBay's CEO, Jamie Iannone:

"Since Pierre Omidyar founded eBay, we’ve been guided by the principle that people are basically good. Our purpose is to empower people and create opportunity and we believe our marketplace should be based on mutual trust and reward. To accomplish this, we must conduct our business with integrity, adhere to the highest ethical standards, and respect our employees and our community of buyers and sellers.

The eBay Code of Business Conduct & Ethics helps put our values into practice. It guides us in the decisions we make on a daily basis.

Please read the Code carefully and ask questions if something is unclear. It’s important that everyone follows the spirit of the Code every day and in every interaction with each other and our community."

RELATED: How Do the World's Most Ethical Companies Prevent Discrimination?

2. Purpose and Scope

Next, define your code's purpose and scope. In order for employees to make good ethical decisions at work, they need to know when and to whom the policy applies.

Start by explaining why this policy was created; if possible, tie into some of the language from the CEO's message to reiterate the importance of ethics in your company.

Then, explain who must follow the policy. Do interns, temporary workers, contractors, vendors and/or suppliers have to adhere to these rules? In addition, when and where does the code apply? Are these rules just for the workplace, or anywhere the employee is representing your company (e.g. conference, meeting, trade show, etc.)?

3. Core Values or Ethical Standards

One of the most important things to include in your code of ethics is a list of the company's core values or ethical standards. These guide the entire document, setting the ethical and cultural tone for the company.

You can use these values as an outline for the policy. Use each value as a section header, then explain how employees can apply them to ethical behavior at work.

If one of your core values is "honesty," make a list of specific do's and don'ts that help employees adopt honest behavior and avoid deceitful behavior. For example, "DO disclose conflicts of interest. DON'T steal from or defraud the company, other employees or vendors."

Haven't defined your core values yet? Download our free core values exercises cheat sheet to get started.

4. How to Report a Concern

Employee reporters can provide invaluable information about ethics lapses. One might notice a change in a coworker's behavior that slips past their manager. Another could question a pattern of behavior within the company that no one thought of as unethical before.

However, if you want employees to alert you of ethics lapses, they need to know how and where to do it.

List ways they can report a concern or incident, as well as how and where to access them (if applicable). This could include:

  • Talking with their manager
  • Submitting an online webform
  • Calling your anonymous reporting hotline
  • Filing a paper form or phone report to your HR, ethics, compliance or fraud departments

RELATED: 3 Critical Reasons to Establish a Culture of Ethics in Your Company

5. Ethical Decision-Making

Some employees might need further guidance when they're faced with an ethical decision in the workplace. In addition to your rules and guidelines, include a section on decision-making under the code of ethics.

List questions that employees should ask themselves when faced with a tough ethical decision in order to make the right choice. For example:

  • Does the behavior comply with relevant laws and regulations?
  • Does it adhere to this code of ethics and other internal policies?
  • Does it reflect the company's core values or ethical standards?
  • Does it respect the rights and feelings of others?

In addition, encourage employees to ask their managers or an HR staff member for advice if they're uncertain what to do in a situation.

Have you ever wondered if running an ethical company can help you financially? Download this free ethics and profit infographic to see the benefits of ethics beyond a good reputation. 

6. Ethics and Compliance Relationship

Finally, one of the most important things to include in your code of ethics that many companies forget is the relationship between ethics and compliance. Emphasize that following legal and regulatory guidelines take top priority, even if a behavior seems ethically acceptable according to your code of ethics. Similarly, a behavior that complies with laws but seems to contradict the company's ethics code should also be questioned.

Encourage employees to stay up to date with new and changing laws and regulations and consult the company's legal counsel if they have questions. Finish by stressing the importance of reporting compliance lapses, explaining that looking the other way could lead to fines and reputation damage for the company.

When writing your company's code of ethics, focus on the positive. This isn't a list of rules to cramp employees' style; it's a way to establish a safe, successful workplace for everyone.

Frequently Asked Questions

What are the main code of ethics principles?

The main principles of a code of ethics include setting a clear tone from leadership, defining the purpose and scope of the policy, outlining core values or ethical standards, providing guidance on reporting concerns, offering support for ethical decision-making, and emphasizing the relationship between ethics and compliance.

What is a code of ethics example?

An example of a code of ethics is eBay's CEO Jamie Iannone's message, which expresses the company's commitment to ethical behavior, the importance of integrity, adherence to the highest ethical standards, and respect for employees and the community of buyers and sellers.

What is a personal code of ethics?

A personal code of ethics is a set of principles and values that an individual adheres to in their personal and professional life, guiding their behavior and decisions to ensure ethical conduct and integrity.