In business, as in life, knowing exactly the right course of
action can be challenging.
In business, as in life, knowing exactly the right course of action can be challenging. To guide employees, every organization should have a code of ethics that defines appropriate and correct behavior.
According to the California Society of CPAs (CalCPA), a well-written code clarifies the values and principles of an organization and helps employees understand how these cornerstones support everyday decision-making.
For example, some codes in organizations, where people work closely to deliver a product or service, are likely to emphasize teamwork and mutual respect.
In a business that thrives on creative solutions, creativity and innovation may be emphasized as predominant values.
For organizations interested in creating a code of ethics, CalCPA suggests the following steps.
THE FIRST STEPS
To demonstrate the organization’s commitment to creating and implementing a code of ethics, the effort should be led by an individual on the senior management team.
However, the process must be an inclusive one, drawing upon ideas, input and support from individuals at all levels of the organization and representing a wide range of functional areas.
WRITING THE CODE
Typically, a code of ethics has two components. The first section, which sets the tone, is often a preamble and states the organization’s aspirations and overall mission. The second section specifically outlines guidelines or principles to which members of the organization are expected to adhere.
It’s important that the code be written in language and a style that employees can easily understand, avoiding legal jargon and empty generalizations.
It also should include wording that indicates all employees are expected to conform to the behaviors specified in the code.
CUSTOMIZE AND INVOLVE
A code of ethics should be tailored to fit your organization’s specific line of business.
Consider identifying different kinds of ethical problems your employees are most likely to encounter and be sure that they are addressed in the code. Include examples that reflect real-life situations.
To gain maximum support of the new code, employees should be given a role in drafting it.
GENERATE AWARENESS
Promoting your code of ethics sends the message that ethics is a critical issue – one that shapes the organization’s culture. Send the code to all employees, partners, suppliers, customers, and other relevant stakeholders.
It’s a good idea to require that employees sign the code. You may also want to distribute it to employees in a portable form.
Also consider framing and displaying your organization’s code or sharing it publicly by posting it on your Web site.
IMPLEMENT IT COMPANY-WIDE
For the greatest effectiveness, the code of ethics should be integrated into policies and procedures throughout the organization.
A good practice is to introduce the code in company training and orientation programs. You might also consider making adherence to the code obligatory by including it in employment contracts and linking it with disciplinary procedures.
It is crucial that leaders set a good example and live the code to its fullest, referring to it whenever appropriate (e.g., during employee performance reviews).
PROVIDE SUPPORT
The code should include the phone number or email address of a contact person in the organization who can provide interpretations. You might also consider establishing an ethics “hotline” employees can call to ask questions or report suspected unethical activities.
KEEP IT UPDATED
CPAs point out that a code of ethics is a living document and thus should be reviewed annually for relevancy.
Changes in society, the organization, and the environment within which the organization operates need to be reflected in the code.
Be sure to establish a system for regularly updating your codes of ethics.
Bill Spaniel is the public relations manager for California Society of CPAs. His email is bi**********@****pa.org.
