Difference Between Code of Ethics
& Conduct
by Jason Gillikin, Demand Media
Ethics rules help people make decisions, while conduct rules require specific behaviors.
Codes of ethics and conduct have
proliferated in part because of increasing public concern about the way
companies do business. Codes of ethics, which govern decision-making, and codes
of conduct, which govern actions, represent two of the most common ways that
companies self-regulate. Although often associated with large companies, these
codes provide direction to employees and establish a public image of good
behavior, both of which benefits businesses of any size.
Code
of Ethics
A code of ethics is a document, usually issued by a board of
directors, that outlines a set of principles that affect decision-making. For
example, a code of ethics might stipulate that XYZ Corporation is committed to
environmental protection and green initiatives. The expectation is that
individual employees, when faced with the option, will select the greenest
solution. The Caux Roundtable, a business-ethics think tank, argues for codes
of ethics by noting that, "The self-interested pursuit of profit,
with no concern for other stakeholders, will ultimately lead to business
failure and, at times, to counterproductive regulation. Consequently, business
leaders must always assert ethical leadership so as to protect the foundations
of sustainable prosperity."
Code of Conduct
A code of conduct typically is issued by a board of directors;
however, it outlines specific behaviors that are required or prohibited as a
condition of ongoing employment. A code of conduct might forbid sexual
harassment, racial intimidation or viewing inappropriate or unauthorized
content on company computers. These are rigorous standards that usually are
tightly enforced by company leaders. Ethics consultant Cornelius von Baeyer
notes that, "There is considerable information that codes, along
with other measures, have helped pull some companies out of the morass of
scandal, and have helped many companies build a healthier work climate and
reputation."
Similarities
Both codes are similar insofar as they attempt to encourage
specific forms of behavior by employees. Ethics guidelines attempt to provide
guidance about values and choices to influence decision-making, whereas conduct
regulations assert that some specific actions are appropriate or inappropriate.
In both cases, the company's desire is to obtain a narrow range of
acceptable behaviors from employees.
Differences
The codes attempt to regulate behavior in very different ways.
Ethical standards generally are wide-ranging and non-specific, designed to
provide a set of values or decision-making approaches that enable employees to
make independent judgments about the most appropriate course of action. Conduct
standards generally require little judgment; you obey or incur a penalty, and
the code provides a fairly clear set of expectations about which actions are
required, acceptable or prohibited.
Codes in Harmony
Large corporations often have both types of behavior code, or they
are combined into a general ethics document that mixes principles for the right
action with a list of actions that are required or prohibited. Occasionally,
large companies such as hospitals experience tension when the corporate
compliance leadership issues a "code of ethics" that
essentially is a code of conduct and another business unit (such as the medical
staff) issues a genuine code of ethics. This tension lessens for small
businesses, because it is easier for all employees to share the same basic
expectations.
Small-Business Implications
Many smaller businesses can survive without a formal code of
ethics or code of conduct. However, these documents help shape a cultural
expectation about behavior that is useful for employees and serves as a solid
marketing tool for potential business partners or clients, who may be pleased
to do business with a company that appears to take business ethics seriously.
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