As part of comprehensive compliance and ethics programs, many companies formulate policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly generalized language, or they can be more detailed directives containing specific behavioral requirements. Ethical codes are adopted by organizations to assist members in understanding the difference between right and wrong and applying that understanding to their decisions and actions. They are generally meant to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business.
There are three types of ethical codes: codes of business ethics, codes of conduct for employees, and codes of professional practice.
Code of Business Ethics
A code of business ethics often focuses on social issues. It may set out general principles about an organization's beliefs on matters such as mission, quality, privacy, and the environment. It may delineate procedures that should be used to determine whether a violation of the code of ethics has occurred and, if so, what remedies should be pursued. The effectiveness of such codes of ethics depends on the extent to which management supports and enforces them.
Code of Conduct for Employees
A code of conduct for employees sets out the procedures to be used in specific ethical situations, such as conflicts of interest or the acceptance of gifts. It may include specific lists of dos and don'ts, or it may provide questions to ask to help determine the proper course of action. Codes of conduct typically delineate the proper procedures for determining whether a violation has occurred and for reporting suspected violations.
Code of Practice
A code of practice is adopted to regulate a particular profession. It may be styled as a code of professional responsibility that covers common scenarios and decisions and provides a guide to what behavior is considered ethical, correct, or right in certain circumstances.
Guiding conduct
Public signage often contains messages guiding conduct. Similarly, behavior in organizational settings may be guided by organizational codes of conduct.