Mariana Villa da Costa – Littler Mendelson
A few weeks ago in the first post of this series, I provided five tips to get you started in the development of a Global Code of Conduct. In this post, we are back with five more tips to help you finish your Code.
Tip #6 – What basic topics should my Code have?
Deciding what to include in your Global Code of Conduct can be a challenge. What topics? Should we have 10 or 50 pages? Again, for each company the drafting should be different and should tackle diverse subjects that are related to the company’s industry, strategy and goals.
One important resource that all companies should consult is “The OECD Guidelines for Multinational Enterprises.” This important document contains recommendations addressed by governments to multinational enterprises on how to ensure responsible business conduct. If you are drafting your Code, these guidelines are very helpful. Another useful trick is to divide the Code by subject, and then add what is necessary for your company.
Most Codes contain:
- An introduction to the organization’ mission, vision and values
- A statement from the CEO or Board of Directors
In addition to these important introductory statements, most Codes have a chapter related to the company’s expectations of employees in the following areas:
- To be compliant with laws
- Respect and promotion of diversity
- Equal employment opportunity and policy prohibiting sexual and other harassment
- Maintaining a safe and healthy work environment
- Safeguarding employee information (privacy and confidentiality)
A chapter related to the company’s consumers and customers might include the information relevant for the industry (e.g., in the food industry the Code normally will have provisions on “safe, clean, nutritious food and compliance with the food industry standards”), as well as compliance with food laws and consumer product safety laws (it also depends on the country). Most companies have provisions on marketing the products ethically, which means promote and advertise the products accurately and truthfully
A chapter related to the company’s shareholders and stockholders would include information such as:
- How to prevent conflicts of interest involving an employee and family members
- Safeguarding and use of company assets
- Maintaining accurate financial records and company books (financial integrity)
- Giving and accepting gifts and entertainment
- Crisis management and leadership
- Records management
- Insider trading laws
A chapter related to the company’s suppliers and competitors is another common one. Companies normally add provisions that describe the expectation that suppliers and business partners will also conduct operations ethically and responsibly, and a provision on antitrust and fair competition. Some companies have an addendum to their Code on “Supplier Guiding Principles.” Those normally deal with labor and employment law compliance and environmental law compliance.
An important chapter describes the company’s relationship and role in the community and to society in general:
- Engaging in sound environmental practices and complying with laws
- Avoid bribery and corruption, including compliance with the US Foreign Corrupt Practices and/or similar local laws
- Support the communities in which the company has a presence (volunteer and political activities)
- Build sustainable supply chains
Amending and Waiving the code provisions. Normally companies add to the Code information about the members of the ethics and compliance committee, law department, and the responsible parties for compliance with the Code in each location, domestic and international. This usually includes information on monitoring and enforcing the Code with the specific procedures.
Acknowledgment is the final part of the Code, in which each employee needs to sign to acknowledge they have read the Code and agree to abide by it. For some countries and cultures, this may not work, as there may not be a way of making it mandatory for the employees to sign. As we will discuss below, the best approach is to provide training to ensure the acknowledgement and understanding of every employee.
It is always important to remember that no Code can cover every situation in a company’s ongoing day-to-day operations. Therefore, there must also be a provision indicating that all situations should be managed in accordance with the core principles of the company, with the Code as a guide — for example, ethics and transparency above all.
Tip #7 – What are the proper steps to distribute a Code of Conduct globally?
Different from simply emailing or posting it on the internet, the distribution of a Code is a much more careful endeavor. Here is where the challenges of language and culture, especially, need to be considered. Distribution cannot be done in an identical fashion in each country.
The best approach is always to consult with and work closely with the staff in each country to try and understand what will work most effectively for them. For example, they will let you know that their employees will prefer to receive a printed version of the Code, while others might be fine with just a simple email with a link to an online version. For some cultures, it is necessary that the distribution comes hand in hand with an immediate training (we will talk more about that below).
The important thing to keep in mind is to have a very good understanding of your company’s culture, and national culture across all your locations, in order to be able to follow the best distribution strategy.
Tip #8 – They need to understand the Global Code of Conduct!
First of all, the Code has to be drafted with simple language and not legal jargon. It must be a helpful and educational tool that is easy to be understood by all the individuals in the company! This is a great start for the Code, and training is what it comes to reinforce that.
So what do you do after the Code is ready? Develop a training program to explain it! Otherwise, your Code will not be given the proper importance and attention. By simply distributing the Code, employees may not read it, and even if they do read the Code, it may be unclear on how it will be applied to day-to-day situations.
A training program to explain the Code and provide situational examples is the key to ensure compliance and acknowledgment. As we mentioned before, a signed acknowledgement may not be used in some countries, so participation in a training will provide the company with assurance of understanding and acknowledgement – which may be important in case of a violation of the Code and necessary disciplinary action.
Tip #9 – Monitoring is Key
If the company wants their Code to be a vital document for its operations worldwide, the first step is to monitor compliance with it. From the CEO to employees, all individuals that are affected by the Code must commit to comply with it. A Code will not be effective if it does not include a comprehensible, easy and direct way for employees and other stakeholders to report problems, concerns and seek advice on how to conduct themselves in different situations.
Most companies have some type of mechanism that is implemented inside the Code and deals with enforcing the Code by using a fair investigation system and a corrective action when appropriated.
Almost all Codes include consequences for code violations, including disciplinary action, up to and including termination and possible civil or criminal liability. Monitoring and enforcing the Code can also be directed towards suppliers, costumers and consumers.
Some of the examples of monitoring strategies are:
- Q&A – question and answers page on the internet or by phone
- “Alertline” or “Ethics and Compliance Hotline”– these are very effective means of communicating concerns or to report any illegal or unethical conduct, usually anonymously.
- Codes normally have provisions against retaliation for those that report any incidents, suspect or concerns.
Tip #10 – Keep It Up To Date!
Our last piece of advice is that the Code should have provisions describing a process to review, revise, and continuously improve the code. Updating should be done on a periodic and regular basis both to reflect new best practices, changes and improvements in law and regulations, but also to add new lessons learned from the use of the Code. An old Code is a useless Code -make sure yours is always updated.
I hope you found this series on developing a Global Code of Conduct helpful and that now, what looked like rocket science before is much clear for you. Please add your comments to this article and give examples on your company’s struggles to develop its Code.
We want to hear from you!
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