Framework 166    Code of Conduct

Introduction
A code of

conduct has been described
"...The very foundation of a company's ethical corporate culture..."
LRN, 2023

It is
"...your organisation's character and culture written down. It is an articulation of who you are, what you believe, and why you are in business. It provides an insight into what you value and how you live and how you live those values: how you behave, make decisions, pursue goals, and ensure integrity, honesty, respect, and fairness across the enterprise..."
LRN, 2023

For all stakeholders, it offers a sense of the organisation's corporate character; it is not static, ie it is evolving; it provides a behavioural framework
Recently there has been a focus on value-based principles on what you should and should not do rather than can and cannot do.
It helps stakeholders navigate the grey areas that are inevitable the world of work.
A survey has shown that around 60% of all codes of conduct evaluated were regarded as effective or most effective (source: LRN, 2023)
It can be used to effectively change an organisation.

Important elements of the most effective codes of conduct
"...- communicating a leadership message that connects employees to purpose and company heritage
     - integrating and providing behavioural guidance around their values and mission
     - referencing specific responsibilities and expectations of stakeholders
     - providing details on the resources for reporting concerns and making those resources accessible
     - covering important risk areas and giving values-based business rationale for risk-mitigating measures
     - incorporating multiple types of reinforcement tools throughout the document
     - ensuring the document is laid out as a guide: linked, easy to read, and logically organised
     - unifying the document with company branding and reinforcing the culture visually..."
LRN, 2023

Code of practice should include the following features
"...- links to policies, procedures or training aids
     - updated to include enhanced DEI (diversity, equity and inclusion) content
     - updated to reflect lessons learnt and scenarios taken from recent investigations
     - uses chat bots or other live features, allowing questions from employees
     - web-based and interactive
     - addresses ESG ( environmental, social and governance) obligation and goals..."
LRN, 2023

Dimensions of code effectiveness (8)


(source: LRN, 2023)

More on each dimension (8)

i) tone from the top (C-Suite understands the organisational compliance risk and supports measures to mitigate, ie they are appropriate role models on ethical behaviour and living the values of the organisation, ie demonstrate a commitment to the purpose and the values of the organisation
"...a strong leadership message goes a long way to setting the tone for a culture of ethics and compliance. Keep it short. Make it inspiring. Tie to purpose and values. Include unique aspects of the organisation - culture, business, heritage, and positive impact on society and the world..."
LRN, 2023)

ii) purpose and values orientation (organisation are focusing on the purpose and values, eg ESG (environmental, social and governance)
"...purpose is why people come to work every day and stayed in the the company long-term. values are how the organisation goes about fulfilling it's purpose. The code takes these values and breaks down into specific behavioural expectations on how employees treat one another, customers, and the community they serve..."
LRN, 2023
Furthermore,
"...make values the centrepiece of your code and infuse them throughout the document. Explain how the code heightened employee risk awareness, enhances decision-making, and help strengthen culture. Create a unique theme that ties together your organisations brand, business, values, and commitment to doing business the right way..."
LRN, 2023)

iii) applicability and administration (clearly identify and state different stakeholders' responsibilities, accountabilities and expectations upfront; encourage a culture of transparency and fairness, ie the code applies equally to everyone working in the organisation regardless of organisational role and position: build trust by being transparent about reporting and conducting investigations)

iv) speaking out (clearly identify processes to get answers, seek advice, raise concerns, etc, ie have an accessible reporting process; this will foster trust and transparency.
"...State goals so that will know what to expect, where to go for help, and understand how they will be protected from retaliation. Retaliation can take many forms......the following actions are taken as 'punishment' were speaking out or participating in an investigation could constitute retaliation:
        - threatening, bullying or belittling
        - suspension, demotion, or termination
        - denial of benefits
        - denial of raise, bonus, or promotion (when otherwise deserved)
        - setting up for failure through overly burdensome and unrealistic expectations
        - negative performance reviews (when not warranted)
        - removal from key accounts or projects
        - production of hours..."
LRN, 2023
Furthermore,
"...Your code of conduct should include multiple resources for asking questions, raising concerns, and reporting potential violation. Be sure to address anonymous reporting and the extent to which confidentiality can be maintained. Make it very clear that retaliation in itself a violation of the code resulting in disciplinary action..."
LRN, 2023)

v) risk topics (one of the primary purpose of the code of conduct is to identify, understand and mitigate the key risks facing the organisation, ie
"...provide high-level guidance to help make employees aware of these risks and understand the principles and standards they can follow to help avoid or manage these risks..."
LRN, 2023
Furthermore,
"...Your code of conduct should cover a comprehensive range of E&C risk topics, grounded in your risk assessment. A good rule of thumb is to cover all medium and high risk at apply to at least 80% of the workforce. Be sure to include the business rationale - the why - for each topic. That is, not just the potential punitive measures that can result from a violation, but how the following principles make us better as employees, teams and as a company..."
LRN, 2023
NB 'E' refers to ethics; "C' refers to compliance

vi) knowledge reinforcement (involves an ethical decision-making framework, ie providing a framework for thinking through ethical dilemmas or uncertain situations so that make ethical decisions and do the right thing - see below example;



(source: LRN, 2023)
vii) usability (code of practice needs to be presented so that it is
    - easily navigated
    - readable (use plain, simple language that is easily understood by all staff; avoid jargon and technical words, etc; keep it simple; use shorter sentences, ie the information is presented in a way that is understandable and digestible for the reader, etc)

    - easy accessible (by all stakeholders, etc)
    - convenient (readily available, etc)
    - visually appealing (use of diagrams, infographics, pictures, etc)
    - use the latest technology (like digitalisation, hyperlinked to other resources like websites, web-based, use of responsive menus, search capabilities, live indexes, interactive, etc), etc

viii) look and feel (when reading your code of conduct need to be able to identify
"...who you are, why you exist, what you value, how you operate, and how you treat those with whom you interact......should mirror your company's brand..."
LRN, 2023

Furthermore, it is
"...the primary framework for driving ethical behaviour across your organisation. When done right, your code should inspire, guide, and enable employees to make ethical decisions and do the right thing - every day, everywhere they work..."
LRN, 2023




(source: LRN, 2023)
Some results from a worldwide survey of codes of conducts from around 200 organisations showed the following



(source: LRN, 2023)
Of the dimensions of the code of conduct, 'tone from the top' had the highest score in effectiveness, ie
"...having strong support from top management is an essential element in establishing and maintaining a strong culture of ethics and compliance..."
LRN, 2023
Also, usability had a high score; however, knowledge reinforcement is a dimension that needs improvement.

Do you need to revitalise or reinvent your code of practice?

To help you answer the above question, consider the 6 questions below

i) is your business going through a major event like merger, acquisition, spin-off, IPO, leadership change, restructuring, etc?
ii) has it been more than 5 years since you updated your code of practice?
iii) does your code look, feel and sound like your organisation?
iv) is your code accessible, easy to read and understandable?
v) those your code help staff make decisions?
vi) how do you measure user engagement?
(main source: LRN, 2023)

Summary

More and more code of practices are focusing on values-based approach using and using it to improve and to sustain an ethical organisational culture.
Increasing use of ESG (environmental, social, governance) goals and tools in codes of practice.
Importance of 'walking the talk' from senior management.
Codes reflect an organisation's commitment to creating more diverse, equitable and inclusive work environments that help to send a strong signal about what the organisation stands for, ie
"...how code helps the organisation to fulfill its purpose in line with its core values..."
LRN, 2023.