Elements of Enterneering®/Culture/Code of Conduct
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A code of conduct (CoC) is a compilation of the most important behavioural guidelines or rules that apply to the individuals within a company. Hence, it has a formal character and embodies a moral set of rules. Although it is generally not based on national or international laws, this set of rules has established itself as an integral component of so-called corporate governance, especially in publicly listed companies. An essential remark should be made at this point: this set of rules applies not only to employees but also to all individuals working in the company. This makes it clear that the entrepreneurs themselves are not exempt. On the contrary, they are expected to serve as role models.
WHY?
When many people work in complex organisations in different ways, a general need for order and regulation quickly arises. In this context, the CoC regulates people's behaviour. It offers orientation (How should I behave?) and security (What am I allowed to do and what am I not?) to all individuals in the company. It also defines tolerance thresholds (Which behaviour of others do I have to tolerate, and which do not I?) and reporting obligations (Which incidents or circumstances do I have to report?).
An effective CoC reduces risks in the company that can result from certain actions, or even from inaction. It encourages the staff to comply with law and order. It often contains concrete rules against corruption, money laundering and the violation of data protection regulations. It increases transparency and serves as an early warning mechanism. It thus fosters a sense of community and mutual trust within the organisation. A CoC lived in this way strengthens fair and cooperative interaction within the workforce, which has a positive effect on the working atmosphere, motivation and image of the company as an employer.
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Also, the CoC helps to increase or strengthen trust among suppliers, customers, business partners and investors. In fact, customers often explicitly require suppliers to have a CoC in place. If a company commits to overarching social or ecological issues in its CoC, this increases its influence even on people who have no direct connection to the company.
Even the way a CoC is defined and implemented has a direct impact on the corporate culture. This becomes clear upon closer examination of the motives behind establishing this instrument.
HOW?
There are different ways in which companies deal with or implement the CoC. Some have not even explicitly described this element or incorporated it as a document. Nevertheless, the dominant or continuous thinking and behaviour in the company creates a kind of unwritten code. For instance, if it is a standard practice in a company to learn from mistakes in a respectful and cooperative manner and to improve together, this pattern of behaviour shapes the company's image just as much as a pattern of bashing or discrediting might in another company.
The question of how a CoC is implemented in the company is usually driven by the relevant motives for it, which can be due to external or internal influences.
| External influences
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| Internal influences Expectations of staff or applicants, works council or employee representatives. |
| Internal conviction Expectations of the top management. |
Each of the aforementioned motivations is legitimate and does not necessarily determine the quality and impact of the CoC. However, entrepreneurs should be aware of the effects and interrelationships and take them into account when implementing the code. If a company introduces a CoC solely in response to external influences and chooses an approach to implementation that primarily serves to document compliance with external requirements, it should ensure that expectations are effectively managed within the organisation. It is not unlikely for individuals within the company to quickly assess the credibility of their employer, forming a perception of the company. In contrast, if a company implements a CoC based on internal conviction, it will have fewer problems in establishing the necessary credibility.
The main contents of a CoC include general working guidelines, guidelines for dealing with customers, suppliers, authorities and people within the organisation, and guidelines for its conduct towards society or the environment.
| Working guidelines
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| Guidelines with respect to customers, suppliers and authorities
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| Guidelines with respect to society and environment
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Successful implementation of the CoC requires more than just writing down the rules and archiving them. Sustainable anchoring takes place at the following levels:
| PRESENTATION
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| REMINDER
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| CREDIBILITY
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| DOCUMENTATION
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Corporate practice shows that many young companies operate very well for a long time without having a formally established CoC. If the corporate culture can compensate for an explicitly written code in other ways, a written code may not be necessary. Presumably, for most companies that implement a CoC, external factors are typically the driving force behind this decision. In such cases, the executive management should have the earlier-mentioned awareness so that a formal requirement does not become a document for the basement archive, potentially damaging the image of the company.