According to Investopedia, the 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. Code of ethics is also called the code of conduct.
To me, people management is one of the most challenging and complicated aspects of a business. If you look at the whole spectrum of HR functions, it starts with manpower forecasting, recruitment, employee onboarding, KPI management and performance appraisal, employee benefits, training, motivation, timekeeping policies, and payroll computation, then we have the code of ethics, disciplinary actions, rewards/incentives, and termination.
Same as KPIs and performance appraisal, the implementation of the code of ethics is often overlooked especially for small businesses.
But what is the code of ethics for really?
During recruitment and screening, it is impossible to know who and how the person really is. He or she may have an impressive resume, or the background check went well but once the employee is onboard, there are so many variables especially in the environment, the management, peers, nature of work, or the company culture that may change the person’s conduct or behaviors.
Practically, if we see an odd behavior of an employee, we talk to them, probably coach them or scold them expecting that they will change their behaviors.
If we don’t have employ the code of ethics, and its corresponding disciplinary action and the employee stil behaves inaccordingly, then it will be a domino effect to the business, it will be a precedent for other employees to adopt the same behavior and it will be a start of a culture change.
One major benefit of the implementation of the code of conduct is that it protects both the employer and the employee because of its nature of implementing the “due process” before employee dismissal.
Here’s a simple guide in executing the code of ethics (simplified version).
Step 1 – All employees should sign the company’s code of ethics.
Step 2 – The supervisor or the peer should issue an incident report to the HR should they find an employee committing an offense.
Step 3 – HR should issue a Notice to Explain “NTE” to the employee indicating the offense and its classification in reference with the code of conduct.
Step 4 – If the HR find enough evidences, they can execute the disciplinary or reprimand per the code of conduct or they can call for a administrative hearing to gather more information before a decision.
This blog post is brought to you by our free accounting software (http://freeaccountingsoftware.online) and free payroll software (http://freepayrollsoftware.online) Snap Solutions.
Want to learn more? Check out my Basic Accounting Terms and Definition
Or enroll in my Accounting Course Online