Code of Ethics: Meaning, Types, Steps, Principles and Example

“The man that passes the sentence should swing the sword”

Do you remember how Ned Stark from Game of Thrones was called “The Honorable Man”? It’s because he stuck to his principles or code of ethics no matter what. (It got him killed, though)

He always knew the difference between right and wrong and stayed true to his principles, even when faced with tempting or painful situations. This idea is essentially what a code of ethics is about.

Ethics is the study of what is right or wrong, good or bad, and how individuals/societies should conduct themselves. It is a wide framework that evaluates and guides human actions based on certain principles, values, and morals. 

On the same note, a code of ethics is a clearly defined framework that articulates the expected ethical behavior within a specific context, organization, or profession.

Needless to say, different people interpret it differently.

It is a practical application of ethical principles tailored to a particular domain. It’s a way to make sure everyone is on the same page about what’s right and wrong in that specific situation.

In this article, we understand the meaning, history, and purpose of this code along with its types and examples. We further look into how to create a code of ethics in business and its global principles.

What Is A Code Of Ethics?

Meaning

A code of ethics serves as a set of principles that guide professionals and organizations in conducting business with fairness and honesty. It provides a framework to align behavior with socially accepted norms and outlines the expected approach to addressing problems in one’s professional life.

A “Code of ethics” is like a set of rules or guidelines that people agree to follow to be fair, honest, and good in a certain area of life, like at work or in a group. 

Definitions

A code of ethics is a form of standardization of workplace behavior; hence, it is a more detailed general behavioral guideline set by law. 

– (Weller, 1988; Schwartz, 2001; Bricknell & Cohen, 2005)

A code of ethics represents the organization’s expectations of employees’ work conduct, sets a clear benchmark for employees, and creates a positive influence on employees’ behavioral patterns and decisions. For these reasons, the establishment of a code of ethics is perceived as ideal and to be practiced in organizations to encourage ethical practice.

– Adams et al., 2001; Ferrell et al., 2000; Loqman, 2001.

History Of The Code Of Ethics

Historically, the code of ethics usually emerged in response to significant disruptions, particularly scandals in fields like medicine and behavioral research. These issues made societies rethink responsibility, trust, and how institutions work. This led to the creation of new society rules.

Let us look at some historical instances where the code of ethics became symbolic at the time leading to the present code.

Mid-20th Century

In the 1940s-50s, ethics codes emerged in response to Nazi atrocities, leading to the Nuremberg Code. This set the stage for subsequent research codes, including the 1948 Geneva Declaration and the 1964 Helsinki Declaration.

1960-70s

Social disruptions and ongoing research scandals (e.g., Tuskegee, Willowbrook, Milgram, Stanford Prison) prompted the need for more legal codification and enforcement mechanisms. The Belmont Report and Institutional Review Boards (IRBs) addressed the demand for skepticism and critical assessment.

1974-2000

In computing ethics, reports to Congress highlighted fundamental issues in big data ethics. However, major computing societies (ACM, IEEE, DPMA, now AITP) established ethics codes in the early internet age (1990s) that critics deemed outdated even then.

What Is The Purpose Of A Code Of Ethics?

The core purpose of a code of ethics is to contribute to the sustainable development of an organization. It makes an entity align with the universally accepted human rights standards and established understanding of ethical values. 

Furthermore, it prevents unethical behavior and reinforces organizational values. Apart from this, the goals of a code of ethics are described below. 

1. Ensure Legal Compliance: Adhere strictly to relevant legislation.
2. Create a Predictable Environment: Create a predictable and consistent ethical environment.
3. Enforce Ethical Rules: Recognize the need for enforcing ethical rules and guidelines.
4. Provide Guidelines for Stakeholders: Provide clear ethical guidelines for the behavior of stakeholders, including employees and suppliers.
5. Reassure Ethical Stance: Reassure stakeholders about the organization’s ethical stance and intent.

Types Of Code Of Ethics

There are three main types of codes of ethics:

Compliance-based code of ethics

This type of code focuses on following the law and avoiding illegal activities. It is often found in heavily regulated industries, such as finance and healthcare. Compliance-based codes typically outline specific rules and procedures that employees must follow.

Value-based code of ethics

This type of code goes beyond just following the law and focuses on upholding the organization’s core values. Value-based codes often address issues such as honesty, integrity, respect, and fairness. They may also address social responsibility and environmental sustainability.

Profession-specific code of ethics

This type of code applies to members of a particular profession, such as doctors, lawyers, or engineers. Profession-specific codes typically address the ethical obligations that professionals have to their clients, colleagues, and the public.

In addition to these three main types, codes of ethics can also be categorized by their focus: 

Content-Focused Codes

Content-focused codes lay out specific rules, providing a clear guide for employees on ethical behavior within the organization. These codes ensure everyone knows what’s expected, fostering a shared understanding of ethical conduct.

Output-Focused Codes

Output-focused codes look beyond internal operations, focusing on how a business’s actions impact society. These codes highlight the external outcomes, promoting a sense of social responsibility and encouraging businesses to contribute positively to their communities.

Transformation-Focused Codes

Transformation-focused codes go beyond rules. They evaluate how well the code changes employee behavior. These codes aim to create a positive shift in organizational culture, encouraging employees to internalize ethical values. They mostly foster a culture of integrity and responsibility.

Code Of Ethics Vs. Code Of Conduct

In different industries or organizations, “code of ethics” or “code of conduct” are often treated as the same thing. Some organizations use both terms interchangeably. 

Even though both convey a message about what’s considered “good,” there’s a clear difference between a code of ethics and a code of conduct. It is outlined in the table below.

How To Create A Code Of Ethics: 6 Steps

To create an effective code of ethics, involve everyone in the organization. A practical approach is to form a committee or task force with representatives from different employee levels and stakeholders.

Here are the six most important steps for creating the code of ethics along with the details involved in it:

Gather Information

Start by collecting ideas for the code of ethics. Review corporate values from the mission statement and hold brainstorming sessions. Examine sample codes from the industry for insight. 

Ask questions like:

• What laws impact us?
• What ethical dilemmas have we faced?
• Are there ethical “gray areas” to address?

Consider business-specific topics like conflicts of interest, integrity, harassment, fraud, customer relations, and more. Get input from employees through surveys or focus groups to understand their ethical challenges.

Create the Draft

Once the content and structure are clear, create a positive, values-based draft. Avoid legal jargon for clarity. Use a consistent format, including:

• Identification of the provision or topic
• Definition of the core principle
• Intent of the provision
• Guidelines for decision-making
• Examples of typical scenarios and resolutions

Review the Draft

Conduct a thorough review by the code development task force. “Test drive” the code with a select group of employees and stakeholders for feedback. Submit the draft to top management and, if needed, legal counsel for compliance verification.

Formally Adopt the Code

Present the code to the board of directors for formal adoption. Legitimize the code and demonstrate the organization’s commitment to an ethical culture. In smaller companies, ownership or top management takes responsibility for approval.

Introduce the Code

Ensure a widespread introduction to members. Leadership, ideally the CEO, unveils the code at a company-wide event. Distribute written copies to all members. HR can include them in new employee orientations and use various communication channels for awareness.

Enforce the Code

Establish mechanisms for effective enforcement. Assign an ethics/compliance officer, possibly from human resources or management, to monitor and address code violations. 

Implement an anonymous hotline for reporting misconduct, and regularly review and update the code based on feedback and changes in the operating environment.

What Are Some Examples Of Codes Of Ethics?

Example of Code of Ethics in Business

Google Code Of Conduct

Costco Code of Ethics

Infosys Code of Conduct

Example of Code of Ethics for Teachers

The National Education Association believes that the education profession consists of one education workforce serving the needs of all students and that the term ‘educator’ includes education support professionals.

Example of Code of Ethics in Journalism

Example of Code of Ethics in Research

10 Principles Of The UN Global Compact

The UN Global Compact lays out ethical codes to ensure businesses follow the law and prevent fraud. Organizations must align their ethical codes with the UN Global Compact’s ten principles.

They are as follows:

The Universal Declaration of Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and 

Principle 2: Businesses should make sure that they are not complicit in human rights abuses. 

The International Labour Organization’s Declaration on Fundamental Principles and Rights at Work

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 

Principle 4: The elimination of all forms of forced and compulsory labor; 

Principle 5: The effective abolition of child labor; and 

Principle 6: The elimination of discrimination in respect of employment and occupation. 

The Rio Declaration on Environment and Development

Principle 7: Businesses should support a precautionary approach to environmental challenges; 

Principle 8: Undertake initiatives to promote greater environmental responsibility; and 

Principle 9: Encourage the development and diffusion of environmentally friendly technologies. 

The United Nations Convention Against Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. 

Wrapping Up

From the past to now, how businesses make moral choices has changed a lot. Today, people care about working conditions, environmental impact, and inequality, which wasn’t as important a century ago. Ethical codes make sure businesses always act with integrity.

A Code of Ethics should strongly say everyone should have equal chances at work, no matter their race, caste, gender, or religion. Companies should make sure the workplace is safe and comfortable for all workers. The code should also talk about following laws, supporting whistleblowers, and letting employees speak up without fear to top management.

However, even if a code is well-designed, it won’t affect an organization unless it’s properly communicated, embraced, and supported by leaders at all levels. It needs to be consistently applied throughout the organization. 

Codes of ethics require an “ethics ecosystem” to be effective. In the end, a code is just words on paper. It comes to life and gains legitimacy through the decisions and actions of people.

Frequently Asked Questions (FAQs)

What is a code of conduct?

A code of conduct is like a set of rules for how people should behave in a certain group or organization. It helps everyone understand what’s expected and how to act properly. It’s a guide for making good choices and treating others well.

Are the law and code of conduct the same?

No, law and code of conduct are not the same. Laws are set by governments and apply to everyone, everywhere. A code of conduct applies to a specific group of people, like a company’s employees, and it might have more specific rules than the law.

Why is a code of conduct important in a professional setting?

A code of conduct is crucial in a professional setting because it sets clear expectations for how people should behave. It helps maintain a positive work culture and respectful environment, ensuring that everyone understands the standards of ethical and professional behavior. Additionally, it helps prevent misconduct, promotes accountability, and safeguards the reputation of the organization. 

What are the consequences of violating a code of conduct?

Violating the code of conduct can have consequences, ranging from a verbal warning to termination of employment. The severity of the consequences depends on the nature of the violation. The code outlines a clear process for addressing concerns and ensuring fair outcomes.

How often should a code of conduct be reviewed and updated?

The code of conduct should be a living document that reflects the company’s evolving needs and industry best practices. It is recommended to be reviewed periodically (e.g., annually) and updated as necessary.  This ensures it remains relevant and addresses any emerging concerns.

Is a code of conduct legally binding?

No, the code of conduct might not be legally binding in the same way as a law. However, it is a formal agreement between the company and its employees. By signing the code, you acknowledge your understanding and commitment to its principles.  Violations may still lead to disciplinary action, up to termination of employment.