This lecture is explained in the following video.

https://www.youtube.com/watch?v=yD8eA7ah2Ho

Code of Ethics:
Sometimes referred to as a Value Statement, it behaves like the Constitution with general
principles to guide behaviour; outlining a set of principles that affect decision-making. For
example if an organization is committed to protecting the environment and “being green”, the
Code of Ethics will state that there is an expectation for any employee faced with a problem,
to choose the most “green” solution. It works on the bases of “treat others as you would like
to be treated.” When faced with ethical dilemmas or debatable situations, what’s articulated in
the Code of Ethics can help guide decision making.

Code of Conduct:
Provides the bottom line to the Code of Ethics. A Code of Conduct applies the Code of Ethics
to a host of relevant situations. A particular rule in the Code of Ethics might state that all
employees will obey the law, a Code of Conduct might list several specific laws relevant to
different areas of organizational operations, or industry, that employees need to obey.

The Code of Conduct outlines specific behaviours that are required or prohibited as a
condition of ongoing employment. It might forbid sexual harassment, racial intimidation or
viewing inappropriate or unauthorized content on company computers. Codes, along with
other measures, have helped some companies dig themselves out of scandals, and have helped
many companies build a healthier work climate and reputation.

Similarities:
Both a Code of Ethics and a Code of Conduct are similar as they are used in an attempt to
encourage specific forms of behaviour by employees. Ethics guidelines attempt to provide
guidance about values and choices to influence decision making. Conduct regulations assert
that some specific actions are appropriate, others inappropriate. In both cases, the
organization’s desire is to obtain a narrow range of acceptable behaviors from employees.

Differences:
With similarities, comes differences. Both are used in an attempt to regulate behavior in very
different ways. Ethical standards generally are wide-ranging and non-specific, designed to
provide a set of values or decision-making approaches that enable employees to make
independent judgments about the most appropriate course of action. Conduct standards
generally require little judgment; you obey or incur a penalty, and the code provides a fairly
clear set of expectations about which actions are required, acceptable or prohibited.
Ethics and Conduct Similarities and Differences

It is easy to see why a code of ethics and a code of conduct may be confused or used
interchangeably. Both have goals of setting a standard of behaviors from employees. The
primary difference is that a code of conduct is less morally driven than a code of ethics. For
example, the code of conduct might require all employees to wear a specific color or a
company shirt when in the office. This is not an ethical issue, but it is a conduct issue
designed to create cohesiveness among employees.

In other words, the code of conduct may not always be ethically driven, but every code of
ethics scenario should have a corresponding set of rules in the conduct code. Every business
should have a clear vision, when it comes to ethics and conduct. What that happens, then
employees work better as a team, job satisfaction increases and performance improves when
companies set the tone with meaningful ethical and conduct standards. The result is a positive
corporate culture, in which people want to go to work and that consumers enjoy working with
these employees.

Definition of Code of Ethics

Code of Ethics is a document issued by the top-level management, which consist of a set of
principles, designed to guide the members of the organisation to carry out business honestly
and with integrity. It describes the core values of the organisation that guides the decision-
making. It provides ethical standards which are to be followed by the members. It sets out
general guidelines to assist individuals to apply their judgment, concerning a suitable
behaviour in a given situation.

Code of ethics helps members in understanding what is right or wrong. The codes are
disclosed publicly and hence addressed to the interested parties to know the way the company
does business. Violation of the code of ethics by any member may result in termination or
dismissal from the organisation.

Definition of Code of Conduct

Code of Conduct is a document that expresses the practices and behaviour of a person,
required or restricted as a condition for becoming a member of the organisation or profession.
The code sets out the actual rules, so it lays down the do’s and doesn’t s of an employee. The
members are responsible for its adherence and held accountable for its violation.

Every organisation has its code of conduct issued by the Board of Directors (BOD) that
determines the social norms, regulations and responsibilities. It is in the form of written
statement; that contains rules for behaviour, which are supposed to be followed by the
employees of the company. The document directs and guides the employees in various
matters.
 Key Differences Between Code of Ethics and Code of Conduct.

BASIS FOR
CODE OF ETHICS CODE OF CONDUCT
COMPARISON

Meaning An aspirational document, issued A directional document containing

Nature General Specific

Scope Wide Narrow

Governs Decision making Actions

Length Short Comparatively longer

Disclosure Publicly disclosed. Employees only.

Focused on Values or principles Compliance and rules

Writing a great code of conduct requires a thorough understanding of the company, its culture
and vision. But no matter the company, all great codes of conduct share certain
characteristics.

A great code of conduct is:

 Written for the reader. It is easy to understand and doesn’t include any technical or legal
jargon.
 Comprehensive. It covers all important details that may impact the daily lives of employees
and answers common questions that arise.
 Supported by leadership. It has been acknowledged and approved by the company’s senior
management team. This is often demonstrated in the form of a foreword written by the CEO
or President.
 Accessible. It is available to all employees, current investors and potential investors.
 Visually appealing. It follows a style that is clean and reflective of the organization.