ETHICS CODE AND CODE OF CONDUCT AS TOOLS OF CORPORATE RESPONSIBILITYJÚLIA KATRINCOVÁ

VANESSA VELAZCO

CONTENT OF

THE

PRESENTATION

Definitions:

Code of Ethics

Code of Conduct

Differences between code of ethics and code of conduct

Importance

Examples

Starbucks

Tesco

Financial Crisis of 2008

Implementation

Creation of the codes

Methods of dealing with ethical dilemmas

Summary

Opinions

Vote of Thanks

WHAT DOES

“CODE OF ETHICS”

MEAN?

“Ethical codes are statements of

the norms and beliefs of an

organization. These norms and

beliefs are generally proposed,

discussed, and defined by the

senior executives in the firm and

then published and distributed to

all of the members." (Hosmer)

WHAT DOES “CODE OF ETHICS” MEAN?

The code of ethics is a moral standard that the company expects employees to follow.

Ethics guidelines are established by the laws and industry regulations.

A business can exceed minimum ethics guidelines to ensure that employees feel safe. Conflicts of interest should

also be addressed in a code of ethics.

A well-written code of ethics that’s well done builds trust among employees and establishes credibility with

outsiders like customers or partners.

The six values that have been suggested as being desirable for codes of ethics include: trustworthiness, respect,

responsibility, fairness, caring and citizenship.

TOPICS OF A CODE

OF ETHICS

Money management

Diversity rules

Sexual harassment rules

Employee privacy

Consumer privacy

Licensing requirements

Security measures

Truthful statements in sales

Environmental policies

Fair hiring practices

WHAT IS A “CODE OF CONDUCT”?

A code of conduct states how the company

expects employees to behave. Ethics are higher

level concepts, whereas the code of conduct gets

down to specific action expectations.

For example, the code of ethics might state that all

employees must obey all safety protocols, a code of

conduct explains the distance from an oxygen tank

employees are allowed to smoke.

DIFFERENCES BETWEEN THE CODE OF ETHICS AND THE CODE OF

CONDUCT

Code of Ethics Code of Conduct

Wide-ranging and non-specific. Less morally driven.

It’s usually public. It’s usually only for employees (not publicly disclosed)

Governs decision making. Governs actions.

Focused on value and principles. Focused on actions, compliance and rules.

Designed to provide a set of values. It’s a support to accomplish the goals of the code of

ethics.

IMPORTANCE OF THE CODE OF CONDUCT AND ETHICS

A well-written code of conduct clarifies an

organization’s mission, values and principles, linking

them with standards of professional conduct. The

code articulates the values the organization wishes

to foster in leaders and employees and, in doing so,

defines desired behavior. As a result, written codes

of conduct or ethics can

become benchmarks against which individual and

organizational performance can be measured.

IMPORTANCE OF THE CODES OF ETHICS AND CONDUCT

INTERNALLY

A code has value as both an internal guideline and an external statement of corporate values and commitments.

A code is a central guide and reference for employees to support day-to-day decision making. A code

encourages discussions of ethics and compliance, empowering employees to handle ethical dilemmas they

encounter in everyday work.

A study by organizational ethics consulting firm LRN found that 73 percent of workers in an organization with a

written code of conduct or ethics believe that it improves the organization as a workplace.

Creating a code of conduct is a good team-building activity to invite employees to join. Get employees to discuss

what's important about working in your business and what guidelines you can write for now and for the future to

ensure that these behavioral concepts will endure.

IMPORTANCE OF A CODE EXTERNALLY

Externally, a code serves several important purposes:

Compliance: Legislation requires individuals serving on boards and organizational leaders of public companies to implement codes or clearly explain why they have not.

Marketing: A code serves as a public statement of what the company stands for and its commitment to high standards and right conduct.

Risk Mitigation: Organizations with codes of ethics can reduce the financial risks associated with government fines for ethical misconduct by demonstrating they have made a “good faith effort” to prevent illegal acts.

EXAMPLE OF

FAMOUS CODES

Starbucks has been known for being one of the best employers and having a great work environment on the past few years, having recognition from Forbes as the #44 Best Employers in 2019.

Starbucks code includes the mission of the company, rules of the workplace environment, business practices, intellectual property, community involvement, and the ethical decision framework.

Starbucks’ code of conduct also answers several questions that employees can reference when facing uncertainty. These short Q&A sections help readers understand how they should act in certain situations and why that behavior reflects the standards created by Starbucks. Additionally, Starbucks has included a unique ethical decision-making framework to assist employees when they are faced with ethical dilemmas in the workplace.

Well OrganizedGreat Situational ExamplesFAQs

TESCO

In 2016, Tesco breached the “Groceries Supply Code of Practice”.

Tesco was asked to introduce changes to practices and systems after seriously breaching the code.

Tesco was doing unilateral deductions from suppliers, the length of time taken to pay money due to suppliers and in some cases an intentional delay in paying suppliers.

Delay in payments arising from data input errors, duplicate invoicing, deductions to maintain Tesco margin; and unilateral deductions resulting from forensic auditing, short deliveries and service level charges.

Tesco counts with a code of practice and a code of ethics. This doesn’t mean that they are followed just because they have one.

2008 FINANCIAL

CRISIS

1. Vision statement

2. Values statement

3. Organizational code of ethics

4. Ethics officer

5. Ethics committee

6. Ethics communication strategy

7. Ethics training

8. Ethics help line

9. Measurements and rewards

10. Monitoring and tracking systems

11. Periodic evaluation

12. Ethical leadership

HOW TO IMPLEMENT A CODE OF ETHICS

Root the code in core values such as trust and integrity.

Give a copy to all staff.

Provide a way to report breaches in a confidential manner.

Include ethical issues in corporate training programmes.

Set up a board committee to monitor the effectiveness of the code.

Report on the code’s use in the annual report.

Make conformity to the code part of a contract of employment.

Make the code available in the language of staff located overseas.

Make copies of the code available to business partners, including suppliers.

Make a named individual responsible for code implementation.

Review the code in light of changing business challenges.

Make sure senior staff “walk the talk”.

HOW TO DO A CODE OF CONDUCT

1. Identify key behaviors needed to adhere to the ethical values

proclaimed in your code of ethics

2. Include wording that indicates all employees are expected to

conform to the behaviors specified in the code of conduct.

3. Obtain review from key members of the organization.

4. Announce and distribute the new code of conduct

ETHICAL CHECKLIST

THE 12 QUESTIONS

Laura L. Nash poses 12 questions to help managers address ethical dilemmas.1. Have you defined the problem accurately?2. How would you define the problem if you stood on the other side of the fence?3. How did this situation occur in the first place?4. To whom and to what do you give your loyalty as a person and as a member of the corporation?5. What is your intention in making this decision?6. How does this intention compare with the probable results?7. Whom could your decision or action injure?8. Can you discuss the problem with the affected parties before you make your decision?9. Are you confident that your position will be as valid over a long period of time as it seem now?10. Could you disclose without qualm your decision or action to your boss, your CEO, the board of directors, your family, society as a whole?11. What is the symbolic potential of your action if understood? misunderstood?12. Under what conditions would you allow exceptions to your stand?

SUMMARY

We should follow these codes to maintain a moral standard of the

company.

Code of ethics and code of conduct summary both of them and some

examples

Code of ethics – avoid discrimination against colleagues…

Code of conduct – the distance between oxygen tank and place where are

employees allowed to smoke

It is important for every company.

SOURCES

Leonard, K. (2018, November 26). Difference Between Code of Ethics & Conduct. Retrieved February 20, 2019, from https://smallbusiness.chron.com/difference-between-code-ethics-conduct-2724.html

Nieweler, A. (2018, January 26). Code of Ethics and Code of Conduct - What's the Difference? Retrieved February 20, 2019, from https://www.whistleblowersecurity.com/code-of-ethics-and-code-of-conduct-whats-the-difference/https://keydifferences.com/difference-between-code-of-ethics-and-code-of-conduct.html

Quiroga, F. (2016, February 15). The Importance of a Code of Ethics. Retrieved February 20, 2019, from http://www.cliffordpower.com/the-importance-of-a-code-of-ethics

ECI. (n.d.). Why Have a Code of Conduct. Retrieved February 20, 2019, from https://www.ethics.org/resources/free-toolkit/code-of-conduct/

Forbes. (2018, June 6). Starbucks on the Forbes Canada's Best Employers List. Retrieved February 20, 2019, from https://www.forbes.com/companies/starbucks/#6d4f659f28ac

Barman, T., & White, S. (2014, June 01). Implementing an effective corporate ethics policy. Retrieved February 20, 2019, from https://www.fm-magazine.com/issues/2014/jun/20149701.html

https://globalassets.starbucks.com/assets/eecd184d6d2141d58966319744393d1f.pdf

Tesco breached Code. (2016, January 26). Retrieved February 20, 2019, from https://www.gov.uk/government/news/tesco-breached-code

How to Build an Ethical Culture. (n.d.). Retrieved February 26, 2019, from https://www.ibe.org.uk/how-to-build-an-ethical-culture/76/52

Narvan, F. (2018, December 04). 12 Steps to Building a Best-practices Ethics Program. Retrieved February 26, 2019, from https://www.workforce.com/1997/09/01/12-steps-to-building-a-best-practices-ethics-program/

McNamara, C. (n.d.). Complete Guide to Ethics Management: An Ethics Toolkit for Managers. Retrieved February 26, 2019, from https://managementhelp.org/businessethics/ethics-guide.htm

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