Codes of Conduct: what are they good for?

[A longer version of this post can be found at the blog of FCPA expert Thomas Fox as the June 7, 2013 entry.  Warm thanks to Tom for letting me guest blog and for being generous with his wisdom and expertise.]

I had an interesting and frustrating conversation with a relative about the work that I do, which includes working with companies on refreshing their Codes of Business Conduct.  Despite working at a large, publicly traded, multinational corporation, I had to describe the Code twice before he recalled having certified reading the one at his company.  It got me thinking about why we have Codes and whether they’re doing an adequate job serving their purposes.  (It also got me thinking about how we communicate the Code, but that’s a topic for a different day.)

Two of the primary goals of any Code are first, to document and clarify minimum expectations of acceptable behavior at a company, and second, to encourage employees to speak up when they have questions or witness misconduct.  There have been some very compelling articles discussing how important it is to teach employees that even actions that seem like minor misconduct should be reported.  I agree with this, of course, but I think that those of us in compliance & ethics should not lose sight of how difficult the decision to report major misconduct can be for many employees.

As adults, we spend most of our time at the office with our coworkers.  We often feel more loyalty to those coworkers than we do to the companies that employ us.  Our colleagues are people.  We work on projects together, we celebrate successes with each other, and we console each other when there are failures.  The collegiality that we build can improve productivity for the company.

Companies employ us.  They provide us with the money we need to shelter and feed ourselves and our families, but companies are not people.  The relationships we have with them are not personal.  What this means for C&E practitioners is that when we tell employees to report misconduct, no matter how small, the choice we are presenting is to be loyal to our comrades-in-arms or be loyal to the company.  Respect the teamwork and collegiality we’ve built, or “tattle” on our teammates for minor infractions of a Code that most employees skim once a year.  The decision to report, even in the face of serious misconduct, is gut-wrenching, especially if the bad actor is a friend or simply just likeable.

Our companies need Codes, so that our expectations around appropriate behavior are written down for employees.  We all know the general topics that should be covered in our Codes.  The level of sophistication in interactivity often depends on the level of technology sophistication of the employee base.  Many of us have gotten savvier about adding specific examples in our Codes to provide additional guidance.  We seem to take it for granted that employees will read the Code with the same attention and focus that we do.

The reality is that employees read the Code when forced to, either because of an annual certification campaign or because they face a dilemma.  In the former situation, employees skim, then sign; in the latter situation, employees look for an answer to a specific question.  Everyone in C&E has a checklist in mind of things that the Code should have and do.  At the top of my checklist is how quickly an employee who wants to do the right thing can find the topic of her question and how clearly the Code answers it.  If employees are unable to find clear answers to their dilemmas quickly, the Code is not serving its purpose.


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