Is Code of Ethics a Legal Requirement
Here is an article with some general terms that you should consider for your code. Once a code of ethics has been reviewed, amended and approved, it can be implemented. This Code is only effective if it is properly disseminated throughout the organization. To do this, you must: As I said at the beginning, we do not offer the Code as a minimum code, but as a reference that companies can use to evaluate their current code or create a new one. Some may take a minimalist approach and avoid violations of the principles and standards set out here. Others may focus on achieving excellence and implementing these principles in their strongest form. Many will want to take a stand on issues that do not have consensus or incorporate their own distinctive values and commitments into the foundations of the Code. But everyone will want to consider where they stand in terms of these widely accepted standards of conduct for global businesses. In some sectors, including banking, specific laws govern the conduct of business. These industries formulate compliance-based codes of ethics to enforce laws and regulations. Employees usually undergo formal training to learn the rules of conduct. Because non-compliance can cause legal problems for the company as a whole, individual workers within a company can be penalized for not following policies. Contrary to the principles discussed above, this may have its origin in the modern business context as a corrective to the indifference that often characterizes bureaucratic systems.
This implies a willingness to cooperate with other parties who may be affected by a company`s activities or who have a legitimate claim (even if it is not) to the attention. While cross-industry codes generally require greater responsiveness than business codes, CRT principles are something of a common ground, with rules for working with suppliers and responding to complaints and suggestions from customers, employees, and investors.• • • One of the advantages of small businesses is that they can sometimes avoid time-consuming disruptions in the business world. In all respects, whether traditional or modern, ethics is an important issue. Observations and studies show that ethical behaviour is effective. Millage recently wrote in Internal Auditor about the results of the 2005 National Business Ethics Survey (NBES). NBES is conducted by the Ethics Resource Centre. The survey found that 70% of employees at companies with a “weak” ethical culture (as measured by NBES) have observed ethical misconduct in their organizations. Only 34% of employees in organizations with a “strong” ethical culture did so. Employees observed morally destructive behaviors such as discrimination and sexual harassment; is internal, to suppliers, customers and the public; incorrect time; direct flight; and other problems. In any case, such activities lead to higher costs, loss of reputation, poor performance, etc. Ethics are important. While company representatives and employees have a fiduciary duty to protect and promote the company`s interests, they are always expected to do so in a manner that respects others – whether other employees, customers, supply chain employees or members of the public.
Indeed, respect for the person is perhaps the starting point for any ethical reflection. It leads directly to the protection of health, safety, expression and privacy, as well as the prohibition of humiliation, coercion and violations of fundamental human rights. It also involves positive efforts to develop human potential, and this often means special attention for those who are disabled or otherwise particularly vulnerable. All codes contain at least some provisions to ensure respect for the individual. Verschoor, Curtis C. “Benchmarking Ethics and Compliance Programs.” Strategic finance. August 2005. Companies must protect their assets, including records, computer systems, equipment and intellectual property such as patents.
They should have the computer and physical security they need to prevent hacking or theft. Consider including a rule in your code of ethics on how to manage company assets and data. The codes contain several guidelines relating to the duties of citizenship and its classic violations, such as violations of the law, free loading and bribery of officials. At the same time, the codes make it clear that the company is not a normal citizen. Instead of participating fully in political and public policy-making processes, companies are instructed to avoid “inappropriate” participation in political activities and to recognize the government`s commitment and responsibility to society as a whole. Membership in the organization requires members to comply with the Code of Ethics. Members are informed of this obligation at the time of membership and that violations of the Code may result in the imposition of sanctions, including termination of membership. Members subject to the Code of Ethics may only be audited against these ethical standards if the activity is part of or interferes with their professional duties. Personal activities that are not related to the performance of their professional duties or that do not affect the performance of their professional duties are generally not subject to the Code of Ethics.
The introduction or preamble to a code of ethics ideally includes a statement from the company`s most senior executive expressing personal commitment and support for the code. Experts and scientists in business ethics repeatedly emphasize the importance of leading senior management, also with examples. Codes of ethics published pro forma, perhaps in connection with some rumors of scandals, carry little weight with employees unless there are tangible signs of entrepreneurial involvement. The preamble to a code of ethics is an opportunity to send such a signal. Not all differences between codes tell the gap between business and non-business opportunities, and some do not follow an obvious pattern. An example is the treatment of remuneration, an issue explicitly addressed in the CRT principles, two multisectoral codes and four company codes. While the CRT`s principles call for “remuneration that improves workers` living conditions”, company codes favour “fair” or “competitive” remuneration. Depending on market conditions and the interpretation of these terms, the wage levels required can be very similar – or they can be radically different.
By emphasizing the commonalities that run through these codes and linking them to persistent questions of ethical and legal thought, we do not want to deny important differences in how the commandments are understood and applied around the world. Nor are we proposing that they be systematically respected. But we are seeing a core of global norms of behaviour emerging. Some codes of conduct contain language that addresses both compliance and values. For example, a food chain may create a code of conduct that prioritizes the company`s commitment to health and safety regulations over financial gain. This food chain could also contain a declaration of refusal to contract with suppliers who feed farm animals with hormones or raise animals in inhumane living conditions. Here is an analysis of 150 of these codes of business ethics completed in 1989. Five key elements were found, which were similar in many of them. These codes of ethics address: Like any tool, a code of conduct can be used well or badly – or left on the shelf to be admired or rusted. But the better done, the greater the chances that it will fulfill its purpose. The last section of a Code deals with the administrative implementation of the Code and penalties for violations of the Code. The simplest code requires reporting code violations in the management chain, including what to do if the next level does not take action.
In large organizations, an office or function may be specifically tasked with dealing with code violations. Mediators may be appointed. Sanctions are clarified and their administration defined, including a transparent procedure for establishing facts, warnings, requirements for counselling or rehabilitation, consequences of recidivism, up to and including dismissal or, where appropriate, even litigation. Within subdivisions, the Code may define categories of issues such as conflict of interest; accept or offer bribes, gifts, favours, etc.; rules on information such as disclosure, data retention, insider trading, etc.; preferential treatment, discrimination; interpersonal relationships, including sexual harassment; Resolution of quality and cost conflicts; and perhaps more and more problems. Well-executed codes of ethics will be concise and as short as possible, but will still include illustrative examples to make each point as clear as possible. Use your company`s core values to guide your code of ethics. For example, if you built your business on integrity and trust, incorporate these values into your code by explaining how you and your employees will follow them. If one of your company`s values is focused on sustainability, you can add information about how the company works to reduce its carbon footprint. A code of ethics goes beyond the limits of the law and establishes many activities that are not prohibited by law, but are nevertheless prohibited within the specified group.
