Why Does Your Company Need A Code Of Ethics?

Having clear and defined rules is essential for any kind of organization. When your employees, collaborators, suppliers, and even your customers know the values and principles that govern your company, it creates an environment of greater trust and transparency, improving your company's reputation. For small and medium-sized businesses, which need to stand out even more in a competitive market, it is much more important to build this trust, as it will give you better working relationships with your customers and suppliers, as well as to ensure that clients continue acquiring your products and services.

An ideal way to define these rules and principles is by developing a Code of Ethics. Through this, you can define the rules and principles that define your company and the way you conduct your operations. Not only will it serve to build greater trust with external third parties, but it will also allow you to define the values of your own organization. This will provide a clear guide for your collaborators or employees, and even your own directives, to follow, creating an internal environment of transparency and trust.

Developing a Code of Ethics may seem complicated, and some may even think it is unnecessary. However, as an entrepreneur, it is important that you understand what is involved in the development of a Code of Ethics, how it can benefit you and your company, and what are some elements that should be included in it.

What exactly is a Code of Ethics?

A company's Code of Ethics is a document that defines and establishes the principles, values and guidelines of conduct that must be followed within an organization. Think of it like a rulebook that must be followed by all employees of a company. This Code can be applicable to anyone related to said organization, regardless of their employment status, meaning that it can include direct employees, interns, managers, partners and directives. The good thing about these codes is that, since they are specific to your company, you can limit or expand them as much as you deem necessary. For example, you can have a Code of Ethics for employees and another for suppliers, among others.

The important thing about these guidelines is that they transparently establish how your company's employees should act in different situations and what behavior is expected of each one, including executives and partners. In addition, they can be adapted to the size and corporate purpose of your company, thus defining the behaviors expected of your employees in specific situations with more clarity.

Content of a Code of Ethics

Your company's Code of Ethics is a flexible document, which means that there are no specific sections that it must contain. However, it is essential that the content of this Code does not conflict with the guidelines of the Law. Because of this, it's important to have a team of lawyers who understand your company's line of business in order to draft a document that aligns with what you need for your organization. The following are some examples of what a Code of Ethics could contain:

• Define the behaviors and values that characterize your company, both internally and externally.
• Establish rules of conduct for employees when dealing with third parties outside the organization, defining how to act in cases such as conflicts of interest, gifts to third parties, amongst others.
• Regulate the conduct of employees internally, defining how they should act and defining prohibited behaviors such as harassment, discrimination, and more.
• Provide safe, confidential channels to report any breaches of the Code of Ethics or the company's internal guidelines.

The Importance of Having a Code of Ethics

As it has been seen, having a Code of Ethics can bring several benefits to your company. First, it will promote a healthy work environment by clearly defining unacceptable behavior and allowing your employees to handle themselves better in the workplace. Similarly, it will ensure that your employees do not break the law when it comes to conducts towards external third parties. A clear example of this is in relation to gifts and bribes, as it will ensure that your employees clearly understand how to avoid these situations and prevent them from breaking the law.

Having a Code of Ethics will ensure that your company's principles and values are clearly defined and will open the door to further expanding your organizations guidelines through other internal policies (such as an anti-bribery policy). Having these guidelines will improve your company's image, generating greater trust among your suppliers and customers. In addition, it will serve as a useful tool that will protect not only yourself, but also your company and your employees. When creating your Code of Ethics, it will be important to ensure that it is tailored to your business and the needs of your company, so having the counsel of specialized legal advisors in these matters will be essential to ensure that its content is clear, understandable, and in compliance with the law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.