All of the following are typically addressed by an organizations code of ethics except which?

All healthy relationships are built on trust, including a relationship a company has with its clients, or employees, or partnering web development agency. If there’s something all the recent high-profile corporate scandals have shown us, it’s how fragile trust really is and how its absence can be detrimental to overall company value creation.

When implemented correctly, a code of ethics can be an important source of competitive advantage and have a huge positive effect on the company’s financial performance and all other performance criteria. Let’s take a closer look at what a code of ethics is, what it isn’t, and what its most important benefits are.

What is a code of ethics?

Investopedia defines a code of ethics as “a guide of principles designed to help professionals conduct business honestly and with integrity.” Typically, a code of ethics outlines the mission and values of the business or organization, the approach professionals are supposed to take when they encounter a problem, the organization’s core values and the ethical principles they’re based on, as well as the standards to which all professionals are held.

In the past, codes of ethics were commonly found only in non-profit organizations and other similar entities, but they have since spread into the corporate world. A code of ethics is typically employed in conjunction with a company’s specific politics and its code of conduct.

Code of ethics versus code of conduct

Because the terms “code of ethics” and “code of conduct” are often used interchangeably, there’s a lot of confusion surrounding their exact meaning. What they both have in common is that they attempt to encourage specific behavior. A code of ethics accomplishes this by providing guidance about values and choices, while a code of conducts clearly states which actions are appropriate and which are not.

Most codes of ethics have a wide scope, covering a broad range of specific and non-specific topics. Codes of conducts tend to be much narrower in their scope, dealing with a small number of particularly relevant areas, such as sexual harassment, racial discrimination, offensive language, and others.

Both codes are sometimes combined into a single document, as illustrated by the Code of Ethics and Professional Conduct created by the Linux Professional Institute.

“The LPI community is an open, safe and inclusive space fostering sharing and collaboration regardless of age, disability, ethnicity, gender identity and expression, level of experience, nationality, personal appearance, race, religion, or sexual orientation,” the document lays down some basic ethical principles before continuing with more specific examples of dishonorable and questionable conduct.

5 benefits of a code of ethics

#1. Sets the right culture

The most important benefit of a code of ethics is that it can foster an environment of trust, ethical behavior, integrity, and excellence. When everyone, from the c-suite to the people at the very bottom, plays by the same rules and behaves in a certain way toward one another, productivity tends to grow as conflicts and confusions disappear from the workplace.

In this environment, employees who might otherwise be afraid to voice their opinion feel encouraged to contribute, which is how good teams become excellent. Companies that foster an environment of trust, ethical behavior, integrity, and excellence are also better prepared to deal with unforeseen challenges because they have a very strong foundation to stand on.

#2. Builds a good reputation

Today’s customers look well beyond the price tag. With so many choices, customers gravitate toward companies they feel they can trust, and they stay far away from those companies that don’t promote ethical behavior. But it’s not just customers to whom ethics matter. Companies that pay strong attention to ethics also find it easier to establish lasting partnerships both within and outside their industry.

To see why ethical behavior is so important, we don’t need to look further than at the recent so-called Weinstein effect, which is a term that’s used to describe a worldwide wave of sexual abuse allegations against film producer Harvey Weinstein, which eventually gave rise to the #MeToo campaign. After it spent months looking for a buyer or investor, The Weinstein Company was eventually forced to file for bankruptcy because nobody wanted to touch it.

#3. Helps remain in compliance with laws and regulations

According to the landmark Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act, all individuals serving on boards and organizational leaders of public companies are required to have a code of ethics to make major corporate scandals like Enron and WorldCom less likely to happen.

Any promises a company makes and fails to comply with can make it amenable to sue for breach of contract, so companies that implement a code of conduct have a strong incentive to ensure ethical treatment of its employees, clients, partners, as well as the public.

#4. Attracts outstanding employees

Outstanding employees come from all walks of life, and they all expect to be treated justly and ethically. Companies with a code of ethics reassure potential employees that they won’t be discriminated against, sexually harassed, intimidated, bullied, or subjected to any other type of workplace harassment.

Just last month, Linux Torvalds apologized for how he had been running the Linux kernel community and adopted the Contributor Covenant, which is a code of ethics and conduct for open source project, after years of driving away talented developers with his hostile behavior.

“In the interest of fostering an open and welcoming environment, we as contributors and maintainers pledge to making participation in our project and our community a harassment-free experience for everyone, regardless of age, body size, disability, ethnicity, sex characteristics, gender identity and expression, level of experience, education, socio-economic status, nationality, personal appearance, race, religion, or sexual identity and orientation,” states the Contributor Covenant.

#5. Promotes social change

One less talked-about benefit of adopting a code of ethics is that it promotes social change. We all live on the same planet and share the same finite amount of natural resources, so we’re all responsible for the happiness or misery of one another. By promoting positive social change, companies can contribute to making the world a better place for everyone, not just a select few.

Conclusion

In this day and age, companies cannot afford to focus solely on the bottom line anymore. The ethical aspects of doing business are becoming just as important as the financial ones, and a well-thought-out code of ethics is emerging as a necessary prerequisite for success.

A code of ethics is a guide of principles designed to help professionals conduct business honestly and with integrity. A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization's core values, and the standards to which the professional is held.

A code of ethics, also referred to as an "ethical code," may encompass areas such as business ethics, a code of professional practice, and an employee code of conduct.

• A code of ethics sets out an organization's ethical guidelines and best practices to follow for honesty, integrity, and professionalism.
• For members of an organization, violating the code of ethics can result in sanctions including termination.
• In some industries, including banking and finance, specific laws govern business conduct. In others, a code of ethics may be voluntarily adopted.
• The main types of codes of ethics include a compliance-based code of ethics, a value-based code of ethics, and a code of ethics among professionals.
• A focus on climate change has become an integral part of companies' codes of ethics, detailing their commitment to sustainability.

Business ethics refers to how ethical principles guide a business's operations. Common issues that fall under the umbrella of business ethics include employer-employee relations, discrimination, environmental issues, bribery, insider trading, and social responsibility.

While many laws exist to set basic ethical standards within the business community, it is largely dependent upon a business's leadership to develop a code of ethics.

Both businesses and trade organizations typically have some sort of code of ethics that their employees or members are supposed to follow. Breaking the code of ethics can result in termination or dismissal from the organization. A code of ethics is important because it clearly lays out the rules for behavior and provides the groundwork for a preemptive warning.

While a code of ethics is often not required, many firms and organizations choose to adopt one, which helps to identify and characterize a business to stakeholders.

Given the importance of climate change and how human behavior has led to severely impacting the climate, many companies have taken to include climate factors in their code of ethics. These principles include manners in which the company is dedicated to operating sustainably or how they will shift to doing so.

In many cases, this commitment to sustainability adds to the costs of a company, but because consumers are becoming more focused on the types of businesses they choose to engage with, it is often worth the cost to maintain a good public image.

Regardless of size, businesses count on their management staff to set a standard of ethical conduct for other employees to follow. When administrators adhere to the code of ethics, it sends a message that universal compliance is expected of every employee.

A code of ethics can take a variety of forms, but the general goal is to ensure that a business and its employees are following state and federal laws, conducting themselves with an ideal that can be exemplary, and ensuring that the business being conducted is beneficial for all stakeholders. The following are three types of codes of ethics found in business.

For all businesses, laws regulate issues such as hiring and safety standards. Compliance-based codes of ethics not only set guidelines for conduct but also determine penalties for violations.

In some industries, including banking, specific laws govern business conduct. These industries formulate compliance-based codes of ethics to enforce laws and regulations. Employees usually undergo formal training to learn the rules of conduct. Because noncompliance can create legal issues for the company as a whole, individual workers within a firm may face penalties for failing to follow guidelines.

To ensure that the aims and principles of the code of ethics are followed, some companies appoint a compliance officer. This individual is tasked with keeping up to date on changes in regulation codes and monitoring employee conduct to encourage conformity.

This type of code of ethics is based on clear-cut rules and well-defined consequences rather than individual monitoring of personal behavior. Despite strict adherence to the law, some compliance-based codes of conduct do not thus promote a climate of moral responsibility within the company.

A value-based code of ethics addresses a company's core value system. It may outline standards of responsible conduct as they relate to the larger public good and the environment. Value-based ethical codes may require a greater degree of self-regulation than compliance-based codes.

Some codes of conduct contain language that addresses both compliance and values. For example, a grocery store chain might create a code of conduct that espouses the company's commitment to health and safety regulations above financial gain. That grocery chain might also include a statement about refusing to contract with suppliers that feed hormones to livestock or raise animals in inhumane living conditions.

Financial advisers registered with the Securities and Exchange Commission (SEC) or a state regulator are bound by a code of ethics known as a fiduciary duty. This is a legal requirement and also a code of loyalty that requires them to act in the best interest of their clients.

Certified public accountants, who are not typically considered fiduciaries to their clients, still are expected to follow similar ethical standards, such as integrity, objectivity, truthfulness, and avoidance of conflicts of interest, according to the American Institute of Certified Public Accountants (AICPA).

Many firms and organizations have adopted a Code of Ethics. One good example comes from the CFA Institute (CFAI), the grantor of the Chartered Financial Analyst (CFA) designation and creator of the CFA exams. CFA Charterholders are among the most respected and globally recognized financial professionals. According to the CFAI's website, Members of CFA Institute, including CFA Charterholders, and candidates for the CFA designation must adhere to the following Code of Ethics:

• Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
• Place the integrity of the investment profession and the interests of clients above their own personal interests.
• Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
• Practice and encourage others to practice professionally and ethically that will reflect credit on themselves and the profession.
• Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
• Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.

All companies will have a different code of ethics with different areas of interest, based on the industry they are involved in, but the five areas that companies typically focus on include integrity, objectivity, professional competence, confidentiality, and professional behavior.

A code of ethics in business is a set of guiding principles intended to ensure a business and its employees act with honesty and integrity in all facets of its day-to-day operations and to only engage in acts that promote a benefit to society.

A code of ethics for teachers defines the primary responsibilities of a teacher to their students and the role of the teacher in the student's life. Teachers are required to show impartiality, integrity, and ethical behavior in the classroom.

An example of a code of ethics would be a business that drafts a code outlining all the ways the business should act with honesty and integrity in its day-to-day operations, from how its employees behave and interact with clients, to the types of individuals it does business with, including suppliers and advertising agencies.

A code of ethics is broader in its nature, outlining what is acceptable for the company in terms of integrity and how it operates. A code of conduct is more focused in nature and instructs how a business' employees should act daily and in specific situations.

A code of ethics is a guiding set of principles intended to instruct professionals to act in a manner that is honest and that is beneficial to all stakeholders involved. A code of ethics is drafted by a business and tailored to the specific industry at hand, requiring all employees of that business to adhere to the code.

The moral choices of businesses have evolved, from the industrial age to the modern era. In the world we live in today, working conditions, how a business impacts the environment, and how it deals with inequality are all areas that society deems important that perhaps two centuries ago it did not as much. A code of ethics helps ensure that businesses will always act with integrity.