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Codes of ethics.


In the context of concern about high profile cases of dishonest or even corrupt business conduct, it is increasingly important for companies to demonstrate their commitment to ethical and sustainable business principles.

The introduction of a code of ethics is an indication that the organisation takes ethical issues seriously. It can provide clear guidance for existing and new employees on what is expected of them in terms of ethical behaviour, and send a signal to other stakeholders, such as customers and suppliers, that unethical practices will not be tolerated.

Ultimately, this will contribute to the organisation's reputation and inspire public confidence. But a code of ethics must be more than a piece of paper. It is vital for it to be a true reflection of the organisation's culture and practice. This will require careful consultation and preparation, and the involvement of employees at every level.

National Occupational Standards for Management and Leadership

This checklist has relevance to the following standards:

B: providing direction, unit 8


A code of ethics is a statement of the core values of an organisation and of the principles which guide the conduct and behaviour of the organisation and its employees in all their business activities.

Action checklist

1. Secure the commitment of top management

Without the absolute and public commitment of top management, a code will not be taken seriously by employees. Commitment needs to be seen and felt. A senior person who is prepared to champion the initiative and drive it forward will be a key factor in its success.

2. Gain organisational agreement on the primary purpose of the code

Is the code mainly for the benefit of employees, or is it aimed at those with a stake in the organisation, such as non executive directors, shareholders or even customers? Be clear about the major objectives and the changes that a code may imply--from a shift in culture to an openness to whistle blowing.

3. Identify and define existing statements of values

Consult any existing codes of practice, policy memoranda and founding statements within the organisation, and involve managers and employees in their evaluation. Check legal guidelines and review any available standard codes such as those published by the Institute of Business Ethics and the Chartered Management Institute), and the codes of other organisations operating in a similar context.

4. Consider what specific issues need to be covered

Consult with employees at all levels about issues specific to your organisation or area of operations, especially where these give rise to concerns, or are particularly sensitive. Gain a consensus about your organisation's traditions and unwritten rules.

5. Prepare a draft code

While drafting a code is best achieved through a small group, it should be a dynamic process, so don't exclude comments or input from employees at any level. The following should be included:

* an introduction explaining the purpose of the code, why it is needed, and expectations about how it will be used

* a clear definition of the organisation's mission, objectives and values

* guidance on handling relations with all stakeholder groups: employees, shareholders, customers, suppliers, and the wider community for example.

* expectations about acceptable behaviour

* operating principles, with realistic examples

* a formal mechanism for resolving employee questions.

6. Circulate the draft widely and take comments seriously

Consultation should be wide and feedback and comments should be sought. This will have the additional benefit of raising awareness of the code. If a significant amount of revision is necessary, then a further circulation should follow.

7. Ensure that the code is clear and understandable

The code needs to be 'user-friendly' in appearance and written in plain language without excessive use of jargon, buzz words or legalese. It should be neither too vague, nor over prescriptive and should provide realistic examples and practical guidance.

8. Once the code is finalised, devise an implementation strategy

The implementation strategy must be both dynamic and continuous. Incorporate the code into induction, staff training and management development programmes. Bear in mind that implementation, like the preceding processes, may well benefit from a project management 'champion' who can drive implementation forward with purpose, sensitivity and consideration.

9. Circulate the final code widely

The code should be sent to all employees. It should be accompanied by a letter from the head of the organisation explaining the purpose of the code and the expectations about its use.

10. Establish a procedure for complaints, concerns and questions

Who is responsible for answering these? The line manager, human resource department or an ethics 'hot line'? Ensure that there is a process for appeal to a higher authority.

11. Establish a mechanism to review the code

There is no set formula, or time-frame for monitoring and evaluating the continuing relevance and effectiveness of a code of conduct. Nine months to a year may be an appropriate period for seeking feedback and comments and assessing the impact of the code. Again, this will require further consultation, perhaps on a one-to-one basis.

Managers should avoid:

* using a code of ethics to impose new or inappropriate values

* seeing the introduction of a code of ethics as a one-off, rather than an ongoing process

* failing to involve employees in the process of drafting and revising the code

* producing a document which is ambiguous, vague, confusing or just too difficult to understand

* creating a potential gap by expressing principles in the code which do not reflect the way the organisation actually operates--this would encourage cynicism and undermine the organisation's credibility

* ignoring the code once it has been introduced, so that it is worth no more than the paper it is written on.

Additional resources


Management ethics, Norman E Bowie and Patricia H Werhane

Malden, Mass.: Blackwell, 2005

Absolute honesty: building a corporate culture that values straight talk and rewards integrity, Larry Johnson and Bob Phillips

New York, NY: AMACOM, 2003

Developing a code of business ethics: a guide to best practice (includes IBE code of business ethics), Simon Webley

London: Institute of Business Ethics, 2003

Does business ethics pay? ethics and financial performance, Simon Webley and Elise More

London: Institute of Business Ethics, 2003

This is a selection of books available for loan to members from the Management Information Centre. More information at:

Journal articles

Up to code: does your company's conduct meet world class standards? Lynn Paine and others

Harvard Business Review, Dec 2005 vol 83 no 12, pp122-133

Ethical codes require reality checks, Sue Law

Professional Manager, Jul 2005, vol 14 no 5, pp22-24

This is a selection of journal articles available from the Management Information Centre. More information at:

Internet resources

Chartered Management Institute Code of Professional Management Practice:

Look under Member Services: Professional Management Practice

Codes of Ethics Online:

Collection of codes and other resources made available by the Center for the Study of Ethics n the Professions at the Illinois Institute of Technology.


Institute of Business Ethics

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Title Annotation:Checklist 028
Publication:Chartered Management Institute: Checklists: Human Resources, Training and Development
Geographic Code:4EUUK
Date:Jun 1, 2006
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