Code of Ethics Design & Implementation
A corporate Code of Ethics may be regarded as the main instrument to institutionalise ethics within organisations. The Code of Ethics states the rights, duties and responsibilities of the company towards all its stakeholders. It contains behaviour principles and rules of conduct enriching the decision-making processes and orientating corporate activity. The Code of Ethics expresses the "ideal social contract" between the company and its stakeholders, which puts into practice, through principles and rules of conduct, the ethical criteria for balancing stakeholders' expectations and interests. For this reason the Code of Ethics is both a governance tool for the organisation's relations with its stakeholders and a strategic management tool as it provides guidance for decision-making. Moreover, the corporate Code of Ethics provides to external stakeholders a reference parameter on which they can reasonably form their opinions concerning the company's reliability and reputation (Sacconi, de Colle & Baldin: The Q-RES Guidelines for Management, 2002). Therefore, we can identify a twofold meaning of the Code of Ethics:
- The code represents the company's constitutional charter, a "charter of moral rights and duties" that defines the responsibilities of each participant in the organisation, stating the ethical principles and rules of conduct through which the principles are put into practice, guiding individual behaviour;
- The code constitutes a governance and strategic management tool for the organisation: by identifying the guiding criteria for the fair and efficient governance of the organisation's relations with its stakeholders, the Code of Ethics promotes relations based on trust, induces co-operation with the stakeholders, and thereby upholds the company's reputation and its moral legitimisation.
A good Code of Ethics is characterised by the presence of implementation mechanisms associated with it. These include activities that the organisation needs to set up (or revise) in order to support the diffusion and knowledge of the code, to foster the sharing of values and rules of behaviour, and to monitor the effective implementation of the code and manage its periodic review. Such activities are for example:
- Introduction of Ethics Training activities;
- Appointment of an Ethics & Compliance Officer;
- Creation of an Advisory Board with tasks of supervision and specific decision powers, e.g. in terms of sanctions (Ethics Committee);
- Creation of a "whistle-blowing" mechanism (for employees as well as external stakeholders to send warnings or to report unethical activities);
- Setting up an internal Ethical Auditing function, which broadens the financial and management auditing activities in order to check the ethical nature of the company's behaviour and procedures;
- Developing corporate reporting activities (social accounting, social and ethical accountability, sustainability reporting), with which the organisation periodically communicates a measure of the social, environmental and economic impact of its activities to the outside, as well as an evaluation of the results obtained in relation to the commitments undertaken the Code of Ethics.
The Institute of Ethics experts have extensive experience in working with organisations to develop and implement a Code of Ethics. The methodologies we apply in the development process include management interviews across the various functions and levels of the organisation, focus groups with selected stakeholders, and workshops with internal working groups to analyse 'critical issues' and elaborate values, policies and standards of conduct addressing them. We approach the whole process of developing Codes of Ethics as an opportunity for organisational learning and change.
For more information please contact us: firstname.lastname@example.org