Cracking the code (of conduct)

Employment Law Column - 18 April 2017

"We are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner."  

"We treat others as we would like to be treated ourselves."  

"We work with customers and prospects openly, honestly and sincerely." 

"We are satisfied with nothing less than the very best in everything we do.  We will continue to raise the bar for everyone."

Lofty statements, no?  Surely if you worked at a company with these esteemed values and goals, you could rest assured that your employment and financial future would be safe and secure.  Except these statements are taken directly from Enron's code of conduct, published July 2000. 

Less than 18 months later, Enron would file for bankruptcy, following a series of revelations of insider trading and fraudulent accounting practices.  Enron’s employees lost not only their jobs, but also their company pensions; professional services firms which had advised Enron closed their doors, given their association with this 'powerhouse of corporate ethics'…

So what purpose does a business's code of conduct serve?  Do its employees take its proclamations and commandments to heart, perhaps tucking the precious document under their pillows for the occasional spontaneous late night review?  Are its proud corporate values burnt into the memories of every individual who has completed even the shortest period of work at its office?  Or is it not really clear why the code exists at all?

Charlotte Hogg, a senior executive at the Bank of England, recently learned (to her great cost) the potential perils of not being familiar with her employer's code of conduct.  Ms Hogg resigned from her position in the face of criticism for failing to disclose that her brother works at a bank regulated by her employer.  This failure to disclose was in breach of the conflict of interest provisions in her employer's code of conduct (which incidentally weighs in at a not inconsiderable 20 pages in length).  In the wake of her public and embarrassing departure, her employer announced that it would now require its General Counsel to "ensure the policies under the Code of Conduct are fully understood and adhered to".

Apart from potentially serving as a trap for employees which might lead to red-faced exits, some people view codes of conducts as serving a more deliberate, ulterior purpose: to act as a conveniently complex rulebook which may be brought into use at an unforeseen time.  After all, if you throw enough rules and regulations into a document, you'll be sure to find one that's been broken by the alleged mischief-maker in question. 

Over-reliance on code of conduct as a reason for dismissal can be counter-productive and result in an atmosphere of fear and uncertainty within the business.  Everyone starts to wonder if their necks might be next on the chopping block for breaching a rule they weren't previously aware of, buried deep within the code.

Consider: does your business need a code of conduct?  What does the code achieve?  Would it be better if its contents were simplified, removing ambiguous language and providing specific instructions? 

We recommend reviewing your code of conduct with these questions in mind.  After all — it's better to have fewer policies that everyone is familiar with, rather than having one large impenetrable document which no-one can even pretend to fully comprehend!

This article is part of a regular employment law column series for HRM Online by Workplace Relations & Safety partner Aaron Goonrey and Lawyer Luke Scandrett.  It was first published in HRM Online on 18 April 2017. The HRM Online version of this article is available here.



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