An Ethics Policy and Programme - What Are They For?

Ethical values Organisations often have a set of ethical as well as operational or business values which they aspire to observe in carrying out their business. These values guide ideas of acceptable, desirable and responsible behaviour, above and beyond compliance with laws and regulations. An ethics policy:

sets out an organisations ethical values, standards and commitments to stakeholders that will underpin the way that it does business confirms leadership commitment to the above describes how this will be achieved and monitored through an ethics programme identifies the main ethical issues faced by the organisation/sector identifies other policies and documents that support and detail aspects of the ethics policy such as a code of ethics, a speak up policy, a bullying and harassment policy, a gifts and hospitality policy, an environment policy etc.

A policy is usually a public declaration of the above, and can often be found on corporate websites.

Ethics programme This consists of the activities and resources used to support, implement and embed the ethics policy, and so ensure that business practices and decisions are in line with ethical values and standards. An effective ethics programme will typically be made up of the following elements:

A code of ethics A central element of the ethics programme will be a code of ethics (or similar title). Its main purpose is to provide guidance to staff. Unlike a code of conduct which is generally "do this or else in tone, a code of ethics will usually be predominantly aspirational and supportive. The code illustrates how a company's values translate into concrete policies, procedures and standards.

The main aims of an ethics policy, code and programme

Values - to embed a set of ethical values into the organisations goals and strategies and the way it seeks to do what it does Ethical behaviour - to provide guidance and support to staff for making decisions and carrying out their work in a way that is compatible with the organisations ethical values and standards Corporate Culture - to consolidate and strengthen a culture of integrity and openness so as to facilitate a sustainable

business Risk - to minimise operational and integrity risks Reputation - to enhance trust among stakeholders so as to facilitate business success Sustainability - to minimise the organisations negative impacts on and maximise its positive contribution to the social, economic and environmental wellbeing of wider society

Making an ethics policy work Most large businesses have a code of ethics (c.85% of the FTSE100), yet reports of ethical lapses continue. To realise the aims of policy described above it is not sufficient to draw up an ethics policy and post it on the intranet. An effective ethics code and programme are required.

Developing an Effective Code of Ethics: Process Eight Steps for Preparing a New Code
The process for drawing up a code of ethics and its final format and content are both critical in maximising its effectiveness for embedding ethical values into business behaviour. 1. Get endorsement from the Board Corporate values and ethics are matters of governance. The board must understand the business case for an ethics policy and code, recognise their role in its success, its relevance to what they do and how, and be committed to monitoring its effectiveness. 2. Find a champion It is good practice to set up a board level (ethics or corporate responsibility) committee, preferably chaired by a non-executive director, or to assign responsibility to an existing committee (such as Audit or Risk). A senior manager will need to be responsible for the development of the policy and code and the implementation of the ethics programme. 3. Understand the purpose It is important to clarify the relationship between and understand your organisations approach to corporate responsibility, ethics, compliance and corporate social responsibility strategies. 4. Find out what bothers people Merely endorsing an external standard or copying a code from another organisation will not suffice. It is important to find out what topics employees require guidance on, to be clear what issues are of concern to stakeholders and what issues are material to your business activities, locations and sector. 5. Be familiar with external standards and good practice Find out how other companies in your sector approach ethics and corporate responsibility. Understand what makes an effective policy, code and programme from the point of view of the business, the staff and other stakeholders. How will you embed your code into business practice? 6. Monitoring and assurance Consider how the success of the policy will be monitored and to whom the business will be accountable regarding its ethical commitments. How will you know its working? What are the key indicators/measures of an ethical culture for your organisation? 7. Try it out first The draft code needs piloting - perhaps with a sample of employees drawn from all levels and different locations. The Institute of Business Ethics welcomes requests to comment on drafts. 8. Review Plan a process of review that will take account of changing business environments, strategy, stakeholder concerns and social expectations, new standards, and strengths and weakness in your ethical performance.

Developing an Effective Code of Ethics: Format of a Code of Ethics

Many codes fail because they suffer an identity crisis. It is not clear who or what they are for . They are often not designed or written with their reader in mind nor the context in which they are intended to be used. The following will need to be considered in drawing up a format for a code of ethics:

Purpose and target audience - the style of the document should be influenced by its purpose. Above all, it should be helpful. Accessibility - the language must be comprehensible and familiar to the target audience. Hard and soft copies must be available and accessible where they are likely to be needed. Relevance - it needs to recognise issues relevant to staff and be material to the businesss activities and locations Leadership and reach - it needs to convey the commitment of the board and that ethical standards are applicable to all staff Compliance or principles based - a code will normally contain "must dos, aspirations and dilemmas aimed to raise ethical sensitivity and confidence of staff. It is important to point out that what is a right and wrong decision will not always be clear.

Stakeholder v Issues Format There are two main formats for a code of ethics. The first is one that sets out organisational commitments and staff guidance based around relationships with different stakeholders.

Developing an Effective Code of Ethics: Content of a Code of Ethics Stakeholder Model and Issues Model
Introduction (signed by the Chairman or Chief Executive Officer or both) Start with a sentence on the purpose of this Statement and the code - mention the values that are important to the top management in the conduct of the business - such as integrity, responsibility and reputation and what they mean for the business. Describe the leadership commitment in maintaining high standards both within the organisation and in its dealings with others. Set out the role of the organisation and end with a personal endorsement of the code and the expectation that the standard set out in it will be maintained by all involved in the organisation. The Purpose, Values and Impacts of the Business Describe the service which is being provided, the nature of the business, its location etc. A. How to use this code Describe its purpose, relevance, audience and context. Describe other supporting documents, tools or sources of support. Provide a summarised ethical decision making framework. B. Employees How the business values employees. the company's policies on: working conditions, recruitment, development and training, rewards, health, safety & security, equal opportunities, diversity, retirement, redundancy, discrimination and harassment. Use of company assets by employees. C. Customer Relations The importance of customer satisfaction and good faith in all agreements, quality, fair pricing and after-sales service. D. Shareholders or other providers of money The protection of investment made in the company and proper 'return' on money lent. A commitment to accurate and timely communication on achievements and prospects. E. Suppliers Prompt settling of bills. Co-operation to achieve quality and efficiency. No bribery or excess hospitality accepted or given. F. Society or the wider community Compliance with the spirit of laws as well as the letter. The company's obligations to protect and preserve the environment. The involvement of the company and its staff in local affairs. The corporate policy on sponsorship as well as giving to education and charitable appeals. G. Implementation and reinforcement The process by which the code is issued and used. Means to obtain advice. Awareness raising examples (Q & As).Training programmes for all staff.

H. Assurance, reporting and reviews Suggest ways of knowing if the code is effective. Report to the board or board committee at least annually. Review procedures for updating the code. Issues model The content of this kind of code will include the preamble described above and sections A, G and H. It will offer guidance around current issues. Key ethical issues to include

How we compete Bribery and facilitation payments Gifts and entertainment Conflicts of interest Use of company assets Safeguarding important information Political involvement and contributions The application of human rights standards in our business Our environmental responsibilities Timely payments of suppliers Other issues

Making It Work A policy and code will not be effective in influencing decisions unless they are accompanied by a wider programme to reinforce a culture of ethics
The programme for integrating the code into the running of the business needs to be promoted at the time that the code is issued. This programme might involve awareness raising and understanding; leadership example and monitoring. Below are some suggestions for this. a) Communication and awareness raising 1. Send the code, or a summary of it, to all employees in the company and to new employees as part of induction. 2. See that the code is translated for use in overseas subsidiaries or other places where English is not the principal language. Ensure that the code is communicated in a way that is compatible with local culture. 3. Use all communication channels to raise awareness of the policy and code. 4. Ensure that employees are aware of the consequences of breaching the code. 5. Ensure that employees are aware of how to make enquiries or to report suspected breached of the code. 6. Make copies of the code available to business partners (suppliers, customers etc.) and explain how they need to comply. 7. Reinforce an ethical culture with reports in newsletters on ethical issues and dilemmas faced by the organisation and its employees. 8. Consider the use of desktop gimmicks to remind staff of ethical values.

b) Understanding through training The aim is to raise the ethical sensitivity of staff so that they know when a decision they are faced with involves an ethical choice and how they can find support for their decisions. They will also be clear about what is acceptable business practice and what is not, and why ethics and integrity are important to their organisation. They will want to know why and how ethical conduct is relevant to their jobs. 1. Include ethical issues in all training programmes. 2. Ensure that all levels of staff, including the Board, are trained to understand the ethics code and policy and how it works. c) A supportive corporate culture A code and policy will be most effective in their aims where a culture of ethics exists and is reinforced consistently across the organisation. 1. Leadership example

Make sure that the code is endorsed by the Chairman and CEO, but also that all senior staff are aware of the importance of example in establishing normal business practice. Ensure that staff are aware that the Board takes ethical values into consideration when formulating strategy for the business

2. Contracts and reviews

Consider making adherence to the code obligatory by including reference to it in all contracts of employment and linking it with disciplinary procedures. Make reinforcement of or acting in accordance with an ethical culture an element of staff development reviews and bonus evaluations. Consider having a self-certification procedure for managers and supervisors regularly to state that they and their staff understand and apply the provisions of the code.

3. Speak Up

Promote a spea up policy and procedure that employees are confident in An employee should know how to react if he or she is faced with a potential breach of the code or is in doubt about a course of action involving an ethical choice.

d) Governance, monitoring and accountability 1. Governance

It is good practice to establish a board level committee with oversight for establishing, reinforcing and monitoring the ethics policy and identifying ethical risks and opportunities.

2. Monitoring

The board needs to establish a programme of assurance to consider the extent to which the organisation is living up to its ethical values. Consider against what criteria performance will be assessed. Tools include staff surveys and establishing performance indicators for each section of the code of ethics. Consider any external standards you wish to comply with. The board should receive regular reports on ethical performance, ethical issues, breaches of the code and use of speak up lines.

3. Regular Review

The code of ethics and ethics programme should be regularly reviewed to ensure that new issues are covered and that its relevance is maintained.

4. Reporting

Identify audiences that will need to be informed of your ethics performance. Consider how to maximise the credibility of any reporting.

Simple Ethical Tests for a Business Decision

Transparency Do I mind others knowing what I have decided? Effect Who does my decision affect or hurt? Fairness Would my decision be considered fair by those affected?