Drafting and Implementing a Global Code of Conduct
Oct 14, 2010 QuickCounsel Download PDF
The Global Code of Conduct ("Code") is your opportunity to make it clear to your company's employees and stakeholders how the organization intends to do business. For an international business working across different cultures in different languages this is both particularly important and challenging. You will need to assemble a strong team from across the business to assist in the drafting, roll out and monitoring of compliance with the Code.
What to Cover
Most Codes begin with a statement of the company's mission and core values. But deciding what particular subjects to cover in your Code can be difficult. The trick is to strike the right balance between producing a huge document that covers every possible base but runs the risk of not being read and producing a short, snappy Code that does not really communicate enough and leaves you exposed in a number of areas.
Thinking about your industry sector and risk profile will help you to prioritise. For example, if you are in construction then health and safety and environmental protection will be high on your list of major issues. Also consider where your business has activities that may pose particular legal risks or expose your employees and management to severe sanctions. Is corporate manslaughter in the UK a major risk for you? Are you exposed to extreme sanctions for bribery in China? Do you or your suppliers have manufacturing operations in countries where working conditions may be deemed unacceptable elsewhere? Are you active in jurisdictions where national laws and practice may conflict with your policies on diversity? Thinking carefully about how you address this minefield of potential issues is key to developing a successful Code.
Also look at how other multinationals that operate in similar sectors have approached these issues (but bear in mind the things that make your organisation and its risk profile unique). Perhaps the first resource to consult is the OECD Guidelines for Multinational Enterprises. This is essentially a guide for multinationals on ensuring responsible business conduct. It runs through a series of general policies covering: Disclosure; Employment and Industrial Relations; Environment; Combating Bribery; Consumer Interests; Science and Technology; Competition; and Taxation. It then goes on to provide commentaries on these policies. Another resource that will be worth studying if you have large numbers of employees overseas is the International Labor Organization website.
The main body of the Code should contain sections that address the organization's and employees' relationships with the following groups:
The following list of topics, drawn from an analysis of existing Codes, is a good place to start when considering what substantive areas your Code should cover:
Explain why your company has these policies in place and why they matter. Some companies focus on what happens when things go wrong – jail time for bribery, for example – while others focus more on the aims of the Code in terms of achieving the company's goal of ensuring business is conducted in an ethical way. The primary purpose of a code of conduct is usually to regulate employee behavior, but a good code of conduct can also serve as a strategic tool for recruiting and retaining employees, customers and other business relationships.
Explain who is responsible for the administration and enforcement of the Code. Make it clear as to how employees can seek guidance on the Code and its implementation as well giving clear information on enforcement. Almost all Codes include consequences for violations, including disciplinary action, running to termination and possible civil or criminal liability.
Consistent Global Message
The Code is your key ethics communication with the business but when considering the above potential areas, think about which you can feasibly cover globally and which you will have to keep fairly broad brush. For example, labour and employment rules vary hugely from country to country so don't get too granular when looking at this. A global code of conduct should be less about how employees act with regard to the laws of their local jurisdiction or country and more about the value system that the global company as a whole uses. With some issues such as anti-corruption it may be worth looking for the strictest standard worldwide and adopting that globally to simplify things and to ensure compliance with laws with extra-territorial effect.
Every time you update your Code it will need to be updated in all the languages in which you have made it available. There are two factors at play here: ensuring that you have communicated effectively to all employees and ensuring that you do not create an unmanageable burden. The translation from your main language of business will not be straightforward and will need a combination of professional translators working with local business managers to ensure that the nuances are caught correctly. Of course, if you have drafted a lean and clean Code in plain language avoiding legal jargon you will reap the benefits when it comes to translating it.
The Code will also need to be global in the other sense – it must involve all business lines, employees and departments. The legal department and/or compliance department might have ultimate responsibility but work with HR, finance, audit, security, the Board and local business heads on the drafting and implementation of the Code. As it is unlikely to be possible to cover everything at a global level, consider adding sections or addenda for different jurisdictions in conjunction with local subsidiaries.
While the drafting of the Code has it challenges, it is with the roll out, training and evaluation of the Code's effectiveness that the work really begins. Setting the tone from the top is essential. Many multinationals circulate their Code with a letter from the CEO to give it more impact. They then ensure that all heads of lines of business and local senior managers are prepared to reinforce the message; getting buy in can require some legwork.
Many global codes of conduct end with a page for employees to sign, acknowledging that they have read, understood and agree to follow the Code (some companies even require employees to complete a short quiz to ensure they have read the Code). But global employee acknowledgements raise a number of logistical problems. Some of these can be mitigated by adopting a form of electronic acknowledgment. Consider this carefully though, as your company may run into trouble if those who have not signed go on to violate the Code. Many multinationals have now decided not to strive for global acknowledgment, perhaps focusing on other more specific Codes that are of particular significance for their business, for example, a separate anti-corruption policy for those that regularly contract with governments. Instead some are using software to track readership of the Code, keep training records and monitor for breaches. Being able to show a robust approach to these three activities will stand you in better stead than a significant but still incomplete percentage of acknowledgements.
Bear in mind that not all your employees may work in front of a computer all day. You will need to be creative about how you communicate and the ways you get the message out to the business. Look for opportunities to feed bite size reminders to people on a regular basis. You may want to task someone in your organisation's corporate communications team with working on the roll out.
Monitoring and Keeping Up-To-Date
If the Code is to be a living document that has real impact on the way the company does business, it is absolutely vital to monitor compliance with it. A Code will not be effective if it does not include a comprehensible, easy and direct way for employees and other stakeholders to report problems, concerns and seek guidance on how to conduct themselves in different situations. Most companies have some type of procedure built into the Code that deals with enforcement through a fair investigation system and necessary further steps where appropriate. Some examples of monitoring strategies include:
Your Code will need to move with the times and you will have to communicate changes to employees too. For example, the US Foreign and Corrupt Practices Act has driven most multinationals' approach to anti-bribery but now the UK Bribery Act with extra-territorial effect and more stringent rules on facilitation payments is leading many companies to update their policies.
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Additional ACC Resources
Leading Practices in Providing In-House Legal Support for Corporate Governance Initiatives and Compliance and Ethics Programs
ACC Resource Library - Leading Practices Profiles
ACC Resource Library - Sample Form & Policy
ACC Resource Library - Program Material
ACC Resource Library - ACC Docket
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