By Zafar I. Anjum MSc, CFE, Intl. Dip. (Fin. Crime)
Group Chief Executive, CRI Group
Business leaders are usually quick to communicate their expectations to employees, especially when it comes to financial goals or tasks that they want accomplished. However, what is often lacking is a clear, concise explanation of what the organization expects in terms of ethical behavior.
Does your organization have an ethical code of conduct? If not, you might be making assumptions that your employees know to conduct themselves in an ethical manner, when, in fact, this expectation only exists in a gray area in their minds – if at all. In fact, some employees who have engaged in fraud, corruption or other unethical situations have claimed that while they knew their behavior was wrong, they thought it was implicitly accepted by their bosses and, in some cases, their company on the whole.
Rather than assume that ethical rules “go without saying,” every organization should spell out what they expect of their employees when it comes to ethical behavior.
What should be covered?
An ethical code of conduct should be tailored to your company and your organization – no two will be exactly the same. What are the risks inherent in your organization? What about in your industry? A pharmaceutical company will have some different risk areas than a retail store, for example. A nonprofit organization might have concerns that relate to fundraising, a government agency might be focused on preventing bribery or collusion.
The goal of an ethical code of conduct is to help all employees understand the expectation that they behave in a legal and ethical manner at all times, and that the organization has zero tolerance for unethical behavior. It should include the following focal points:
- Business values. The opening might include your organization’s mission and vision, and should help set the tone for how the organization relates to its clients, partners, its own employees and the public at large.
- Guiding principles. The principles that guide your company likely include customer satisfaction, financial success and profitability, improvement and growth. Your company might also follow policies of corporate responsibility, such as respect for social and environmental issues, and support of the community and/or nonprofit efforts.
- The role of leadership. This section of the code of conduct should state that management has clearly endorsed the code, and that employees can approach any manager or executive with ethical concerns or complaints.
- Regulatory and compliance standards. This section should communicate the organization’s commitment to meeting all compliance requirements, from OSHA and EPA to Sarbanes-Oxley and Dodd-Frank. This reinforces leadership’s expectation that employees must act diligently and ethically to uphold those standards, as well.
- Employee responsibility. Every employee, from top to bottom, shares the responsibility toward upholding the ethical standard defined in the code. Contractors and volunteers are also expected to follow the standard of behavior. Furthermore, the code should make clear that if unethical behavior is detected, turning a blind eye or deciding “it’s not my problem” is unacceptable. That, in itself, is a breach of the ethical code.
After the ethical code of conduct is approved by company leadership, it should be read and signed by all employees (with the signed copies kept on file by the organization). And it should be displayed prominently in the office. Unethical behavior, including fraud and other malfeasance, is everyone’s problem, and it must be prevented, detected and reduced.