Most Popular

Why Your Business Needs a Code of Ethics?

Why Your Business Needs a Code of Ethics

“Ethics is, knowing the difference between what you have a right to do and what is right to do”. – Potter Stewart

Majority of entrepreneurs usually ask, “Do we really need a code of ethics?” The answer is Yes. The Code of Ethics is nothing else, but a set of standards adopted to govern the conduct of a group of people. In a nutshell, it is a rule book.

A Code of Ethics outlines the ethical principles that rule decisions and behavior at a company. For instance, Code of Ethics explains how employees should behave and provides specific guidance for handling issues such as harassment, safety, and conflicts of interest.

There are several reasons that why one should consider adopting a Code of Ethics for their company.

  • Responsible

Adopting a Code of Ethics shows that you are running a business in a responsible manner. Your employees will come to know your company’s standards and expectations.  If your company’s management adheres strictly to the Code of Ethics, then your company’s culture creates a kind of positive peer pressure to maintain a high level of work consistent with your company’s values.

  • Encourages Customers

Code of Ethics encourages your customers; they feel that your company values its integrity and will operate accordingly when doing business. When you adopt a Code of Ethics, even third-party company tends to look more favorably upon your company.

  • Encourages Employees

Code of Ethics is a guide and reference for employees to make their official decisions. A code encourages ethics and compliance and empowers employees to handle ethical dilemmas they encounter in everyday work. Not only that, it helps employees to locate relevant documents, services, and other resources related to ethics in the organization. In a nutshell, a well-written code of conduct explains an organization’s mission, values, and principles, linking the employees with standards of professional conduct.

Code of Ethics is a benchmark against which individuals and organizational performance can be measured.

  • Serves as a Reference

If your company has a proper Code of Ethics, it will serve as a reference in future so that you can pinpoint any individual who goes against the company’s policies. A Code of Ethics will serve as a reference for corrective action or even termination for employees who fail to meet the standards set by the company. 


Last but not least, how to create your code is very important. When creating a Code of Ethics for your company, always make sure it should be as simple as possible. Get right to the point. Avoid big legal sounding words. Avoid using strong adjectives and advanced vocabulary usages.  Use bullet points instead of long winded paragraphs. The bottom line is that each and every employee of your company has to understand the Code of Ethics as each has their own levels of understanding of such documents.

If you have Code of Ethics in place, your business always have several benefits. For example, you can avoid potential problems and can even address problems when they arise. 

Comment here