How to Create a Code of Ethics and Code of Conduct
How to Create a Code of Ethics and Code of Conduct
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If you’re a solopreneur, you won’t need a code of ethics or a code of conduct because the
ethical values you abide by are internal. However, things change once you hire employees
who may have different ideas about what is ethical. A formal code of ethics and code of
conduct can help ensure consistency in behavior. These documents ensure employees
don’t violate the business owner’s ethics and help avoid situations that could damage a
company’s reputation or even land it in legal trouble.
A code of ethics defines the company’s ethical standards; it gets all employees on the
same page regarding operational honesty and integrity. A code of conduct drills down to
day-to-day expectations. Together, these documents help create your company’s ethical
business culture, guide employee behavior, and protect your brand reputation from the
consequences of questionable practices.
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While related, these two documents have different takes on ethical employee behavior.
Some companies combine them into a single document because there’s significant
overlap. However, for clarity, we’ll examine each code individually.
Code of ethics
A code of ethics lays out the company’s overarching ethical principles and values. A code
of ethics does the following:
In essence, a corporate ethics code reflects your core values. It contains broad statements
that demonstrate your company’s commitment to values and goals, including the
following:
Cultural competence, including respect for cultural differences and how to respond
when customs and laws in other countries conflict with your standards and
expectations
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Your code of ethics should include easy-to-interpret language with clear parameters on
what employees should do to remain ethical at work. Here are a few examples of
directives that may appear in your code of ethics:
Be inclusive. Foster an environment where all employees from all backgrounds are
supported and made to feel welcomed.
Ensure the safety of employees and customers. Always make the safety of
Conduct yourself professionally at all times. Never act in a way that could be
construed as harassment or exclusionary.
Be lawful and just. Always follow the rules and regulations at the local, state and
Provide an honest and ethical user experience to build trust with customers and breed
confidence in your brand.
Code of conduct
attendance policies
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Conflicts of interest, such as fiduciary responsibilities, running for public office, and
In addition to reinforcing positive behavior expectations, a conduct code must spell out
behavior that is not tolerated within each category. A separate section should explain
how to report a violation of company policy or ethics and the consequences for not
reporting a violation or for providing false information to conceal the violation.
Your code of conduct allows you to be specific about what you expect from employees
daily. Here are a few examples of guidelines that may appear in your code of conduct:
property with care and respect, whether tangible or intangible. This includes
refraining from misusing company equipment, using it frivolously, or using it for
Employees should follow their work schedules, arriving on time each work day. The
company offers flexible schedules upon manager approval, so long as the total hours
worked each day equal at least 8.5. Vacation and flextime must be approved by your
supervisor at least 30 days beforehand. Any unapproved absences will result in
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Employees should be friendly and collaborate well with others. They should not
work.
Tip
While you shouldn’t have to point out that “borrowing” money for personal use from
company coffers without authorization is stealing, the line between right and wrong can
sometimes be unclear.
Consider the following: Is it ethical to partner with a company that thinks an “extra
payment” to a senior manager is a routine part of doing business?
In the U.S., we consider this a bribe and an example of unethical behavior. However, in
other countries and cultures, such payment is part of doing business. That’s where a code
of ethics comes in.
There can be no ambiguity about a policy that states: “We do not enter into side
agreements that are not clearly stated in the contract terms. Terms and amounts of all
payments are completely specified and transparent. We do not engage any ‘off-the-book’
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Most large corporations have both a code of ethics and a code of conduct, and may
combine them into one governing document. This guidance sets a consistent standard of
employee behavior throughout multiple departments that cross national and
international boundaries.
Even if your business is small now, it may grow and open new business locations. Ethical
and conduct codes will establish consistent standards throughout the organization.
The culture you create for your business impacts employees, customers and the bottom
line, for good or ill. Culture encompasses “the way we do things here.”
When you set out your values and expectations in a code of ethics and a code of conduct,
you make those expectations clear to current and prospective employees, along with an
understanding that deviating from them will not be tolerated.
FYI
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If you need to change your company culture to a more positive atmosphere, eliminate
toxic employees, hire team members who fit your vision, and stay consistent with
boundaries.
When employees know how they’re expected to treat one another — and the
consequences for acting contrary to the code of conduct — they will strive to comply.
Promoting values like collaboration, mutual respect, courtesy and communication creates
a good work atmosphere that leads to success. A positive work environment will improve
job satisfaction and reduce employee turnover.
Once you’ve established a code of ethics, you can use it externally as a marketing tool.
Publish it on your website’s About page, write a blog post about it, and include it in
product packages.
Seeing that your company is concerned with being ethical makes customers feel more
comfortable doing business with you. Additionally, many potential customers and
partners prefer to do business with those who share similar values.
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Having and disseminating a code of ethics and a code of conduct won’t guarantee that
your company will never get into trouble with the government or regulatory agencies.
However, it will drastically reduce your risk.
These documents will clarify to employees how they should act in certain ambiguous
situations and reduce the likelihood that they will make poor snap judgments
In the hiring process, you seek the absolute best possible candidates for the position. A
public code of ethics helps job candidates determine if they want to work for your
company. When their values align with yours, you’ll find yourself with new hires who fit
the company culture and have an excellent chance for success.
A code of ethics is a more general document, so consider writing that one first. Here’s
how to do it:
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These values may depend on your priorities and business type. For example, Amazon’s
top priorities are compliance with laws, rules and regulations and avoiding conflicts of
interest. But for Ford Motor Company, quality and safety for customers and employees
are top priorities.
How employees should act toward each other (e.g., no workplace bullying)
Ask them what they think you should include in your code of ethics to create a
positive workplace.
Discuss what kind of workplace culture they would ideally like to have and whether
or not your current culture is living up to their expectations.
Share your list of top values and solicit their opinions. They may think of principles
Add, subtract or modify your draft code of ethics as you receive employee feedback.
Having a code of ethics your employees accept is essential since it will make them more
likely to implement it in their behavior.
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Once you have a complete list of the values you want your company to embody, work to
prioritize them. Which are the most important?
Some values may be important in general but not when applied to your specific industry
and company. For example, it’s wonderful to be safe. Safety should be a top priority for a
manufacturing or food service company, but it isn’t really a relevant value for a resume-
writing business. Likewise, collaboration may be necessary for a consulting company but
not as critical for a dry cleaner.
After this exercise, you can focus on the most critical values that should go into your code
of ethics.
Everything in your code of conduct should spring from the values laid out in your code of
ethics. Follow these steps to create your code of conduct document.
For each value in your code of ethics, identify specific employee behaviors that put the
value into action. Depending on each value, some of these behaviors will be in relation to
co-workers, customers, the work itself, the company, vendors and stakeholders, and the
community and environment.
For example, the value of collaboration relates mainly to how employees act with each
other. For that value, your code of conduct may include the following:
Break down silos. While each department has its function, we’re all part of the
same team, working toward a common goal. Cooperate and communicate with
Let’s say a co-worker is harassing an employee, and the code of conduct prohibits
harassment. How should this employee report this violation? Should the employee report
the incident to the department head, the employee’s immediate supervisor, or the human
resources department? Who will write up the employee who committed the violation?
The code of conduct should make the reporting protocol clear. Specify the procedure in a
section of your code of conduct.
Rules are useless unless they’re enforced. A section of your code of conduct must inform
employees about your disciplinary action policy. This shows employees that you’re
serious about enforcing these rules and that the company will fairly evaluate any
accusations to protect employees from being falsely accused.
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Jennifer Dublino is an experienced entrepreneur and astute marketing strategist. With over three decades of
industry experience, she has been a guiding force for many businesses, offering invaluable expertise in market
research, strategic planning, budget allocation, lead generation and beyond. Earlier in her career, Dublino
established, nurtured and successfully sold her own marketing firm. At business.com, Dublino covers customer
retention and relationships, pricing strategies and business growth. Dublino, who has a bachelor's degree in
business administration and an MBA in marketing and finance, also served as the chief operating officer of the
Scent Marketing Institute, showcasing her ability to navigate diverse sectors within the marketing landscape.
Over the years, Dublino has amassed a comprehensive understanding of business operations across a wide
array of areas, ranging from credit card processing to compensation management. Her insights and expertise
have earned her recognition, with her contributions quoted in reputable publications such as Reuters, Adweek,
AdAge and others.
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