Yes, it should set out rules to follow. Here’s the company position about conflicts of interest. About giving and receiving gifts. About political contributions. And so on.
But there’s something even more important and deeper than those rules.
The Code of Conduct is a statement by top management – the chairman or CEO – about what the company truly believes.
There’s something powerful in a simple statement that says, “This is what I believe. And this is how our company and everyone in it is expected to behave.” The act of declaring publicly what we believe sets the course of our behavior. Once we tell other people what we truly believe, then we become accountable. If we live up to those beliefs, we have behaved honorably. If we don’t live up to those beliefs, then we’re hypocrites.
The Code of Conduct is like a flag that declares what we stand for. It tells the stakeholders and the rest of the world what our standard of behavior must be. Then it acts as a gauge for accountability, a way to measure if we are honorable or if we are hypocrites. That accountability is one way the mere presence of a strong and clear Code of Conduct helps drive compliance forward.
Because Codes of Conduct send such a powerful signal to employees and others, often the most important words in the code come at the beginning — in the introduction, or the CEO’s letter, or the prelude.
For example, ThyssenKrupp’s Code of Conduct is introduced by a letter from the company’s Executive Board. The letter says the Code of Conduct “sets a standard for ourselves and at the same time represents a promise that we will act responsibly both externally in our dealings with business partners and the general public as well as internally in our interactions with colleagues.” That’s good. It set out the expectations for behavior. I like the use of the word “promise.”
But to be honest, ThyssenKrupp’s words are rather “industrialized.” Somehow they lack . . . . flesh and blood. They fall a bit short of being genuinely human and personal.
Compare ThyssenKrupp’s words with the message from Ian Read, the chairman and CEO of Pfizer. In the preamble of Pfizer’s Code of Conduct, he says,
Our commitment to doing the right thing, which means complying with both the spirit and the letter of the laws that govern our industry, gives us a competitive advantage. Acting with integrity depends on each of us giving our full commitment. The responsibility lies with all of us — it’s mine, it’s yours, it’s all of ours.
That’s clear, direct, and simple. And it’s personal. Mr. Read takes responsibility himself. And he gives responsibility to each employee. Mine, yours, ours.
An even stronger statement comes from Jim Umpleby of Caterpillar. In his introduction to the company’s Code of Conduct, he says: “I think our Code of Conduct is the most important document we produce at Caterpillar.” Wow. That’s a powerful statement. Any big company produces a lot of documents every day. And many of the documents are important. But Mr. Umpleby says one document — the Code of Conduct — is the most important. I believe him.
So it’s crucial to be clear and personal when telling employees and others why there is a Code of Conduct and how it should impact our daily lives. The reason, after all, is accountability.
Are we acting honorably? Or are we falling short? Let’s measure ourselves against the Code of Conduct.
Richard L. Cassin is the publisher and editor of the FCPA Blog.
A version of this post first appeared in Compliance Management Magazine and is republished here with permission.