Mariana Villa da Costa – Littler Mendelson
What is a Global Code of Conduct? Everybody talks about them, and they have become a necessity for global businesses in today’s environment, but truly, drafting one can be a big mystery and a lot of work. Who should draft them? A lawyer? Human resources personnel? The CEO? What content should be included? What language?
These questions, and many others, will be answered with my ten tips to develop a Global Code of Conduct. The first five tips are in this post; the remaining ones will follow soon in a follow-up post. Here we go:
Tip #1 – Defining a Global Code of Conduct
We all know that companies have implicit and explicit standards of conduct, values, responsibility and goals. But most of the time they are spread out in memos, internal communications, or as a rumor discussed during coffee break. People abide by company rules on how to perform work, dress in the workplace, how to deal with other employees, etc., but those are simpler issues and are normally addressed in employee manuals or guides. A Code of Conduct is much broader, especially a global one.
A Global Code of Conduct (GCC) will address issues that apply to global corporations as one entity. Those companies want to ensure all their global stakeholders abide by the same principles, rules of conduct, policies, corporate responsibility and a general sense of commitment to the employees and to society. Globalization is the main factor that pushed companies to initiate uniform standards of conduct in all countries in which they operate.
To summarize, here is a definition:
A Global Code of Conduct is a voluntary, formal statement and set of values, standards and rules of behavior that guide a company globally on how it deals with its employees, consumers, providers, the environment, and society, while respecting cultural and legal differences of each country.
Tip #2 – Can’t I Just Copy and Edit?
You were just assigned to coordinate the creation of a GCC at your company. How tempting it is to just Google “Global Code of Conduct” and copy and paste to use at your company. Don’t do it!
If you are in the apparel industry, your company will not benefit much from using a code that was tailored for the defense industry. Copying and pasting will create a code that will lack needed content and that does not stand for what the company really wants to promote.
So my first tip is have your GCC drafted from scratch. If you want your code to really be used as a standard for your operations and be integrated with your company strategy, you need to align it with your company’s vision and corporate objectives. Therefore the nature and content of an effective GCC will vary between organizations as will the approach to its drafting.
Tip #3 – Industry Matters
When you are drafting a GCC, you need to analyze the specific issues relavent to your particular industry or business. So, for example, if you are in the garment and footwear industry, your GCC should have provisions dealing with human rights and international labor standards, mainly to combat sweatshops and child labor.
One very famous American jeans and casual wear manufacturer adopted a very focused GCC on those issues; almost 70% of the code dealt exclusively with international labor conditions, and repeated most of the International Labor Organization (ILO) standards.
Other examples: Foreign Corrupt Practices Act (FCPA) provision for codes drafted for the engineering industry, and the Sarbanes-Oxley (SOX) for the banking industry.
Tip #4 – Who Drafts the Code?
There is no general consensus on who should draft a GCC. Most companies end up using the General Counsel, as they are usually familiar with the requirements of drafting such documents, which are similar to other legal documents.
Other companies rely on the Human Resources Director to perform the task. There is the general sense that HR professionals have a thorough understanding of the company, management and its employees to be able to express their goals, dilemmas and necessary commitments.
Maybe the CEO or the senior executives are the ones that should draft it them?
There is not a correct or an incorrect answer to this question. What we know is that the most effective way of drafting a GCC is to have a major involvement of all of the different stakeholders throughout the company, both at the headquarters and from the field.
So, we recommend the GCC be drafted through a team effort:
- CEO, top executives and board of directors – to ensure alignment with the company’s strategy, commitment and goals for the present and for the future
- General Counsel – the key individual to be responsible for the actual drafting based on the input of all the others involved, and for being the expert on relevant laws and regulations
- HR Director – to provide insights and guidance on what is expected in terms of company’s commitment to the employees and employee’s obligations
- Headquarter Managers – to add the needed understanding of the relationship with suppliers, providers and the competition
- Employee Representatives – to gain the employee’s perspectives is an important part of the drafting exercise; be sure to include both union and non-union representatives
- Local Managers from the Field – will help ensure the GCC is unbiased and sensitive to local cultural issues
The team can all be part of a code drafting committee that will in the end be responsible for monitoring and reviewing the GCC when necessary.
Most of the time, I also suggest companies to have an outside expert with experience in the drafing of GCCs.
Tip #5 – Be Truly Global
If you are drafting a Global Code of Conduct, you need to understand that using your headquarters principles and views of the world will make the code biased, and consequently, ineffective in other parts of the world.
My advice is to let go of your own perspective of how the company should be perceived and try to understand how it must be perceived on a global scale. The code has to be broad enough to display universal values for the entire organization around the world and not be centered in what works best for one country. That is why it is so important to have multiple individuals drafting the code, including some from the entities outside of headquarters. Also, it is critical for the “drafters” to have a global mindset that will be showcased in the document.
To accomplish this, I suggest:
- Have one single version of the GCC drafted in the English that applies globally to all the subsidiaries of the company. This version, as mentioned before, should be broad and unbiased enough to work in multiple jurisdictions. The company should provide this version in all of the local languages where operations exist. We want to make sure all the stakeholders have access and understand the GCC.
- Have specific country chapters or addendums for each location in which it may be necessary to insert comments, explanations or additions to the general GCC. Local subsidiaries need to be able to add guidelines and rules with locally relevant content.
- Those chapters need to be drafted locally and account for disparities between local laws and customs, and should be discussed with the headquarters before being released for consistency.
Be careful with very strict definitions — what may be considered harassment in the US – a kiss on the cheek every morning to a colleague — is perceived as customary tradition in Brazil.
One good paragraph to add to the general GCC is “where the provisions in this code conflict with local laws or customary practices please review the local country guidelines.”
The important thing here is to achieve the right balance. The GCC provides a framework of global values and guidelines that go past the requirements of local law and culture, while at the same time letting local operations add necessary local input.
Well, that’s all for now, but soon we will be coming back with five more tips as Part 2 of this topic. Please send us your comments, questions and your experiences drafting a Code of Conduct!
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