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Codes of Conduct, Ethical and Professional

Codes of conduct are statements of values, beliefs, standards, legal compliance, or organizational policy and procedures that are articulated to inform those governed by the codes or hold those affected by the codes accountable to this type of ethical behavior. Every professional association has created and promulgated a code of conduct for its members. There are more than 1,000 codes of ethical conduct developed by business organizations. Recent surveys of Fortune 500 companies report that more than 97% of all large multinational businesses have codes of conduct. Codes are understood as the primary means of institutionalizing ethics into the culture, religion, profession, learned societies, or business organizations. A Touche Ross national survey revealed that their respondents believed that codes are the most effective measure for encouraging ethical behavior at work.

Historically, the Code of Hammurabi contained almost 200 paragraphs of rules governing business, moral, and social life reaching back to the third millennium BCE. Other early codes included the Codes of UrNammu (ca. 2060–2043 BCE), the Code of LipitIshtar (ca. 1983–1733 BCE), and the Code of Eshnunnia (ca. 1950 BCE). These codes were compilations of customs, laws, and rules of ancient Mesopotamia, going back to Sumerian times. The United National Universal Declaration of Human Rights (1948) is a contemporary counterpart to these early codes of conduct.

Corporate or Business Codes of Conduct

Nearly every large business organization today has a corporate code of business conduct. Many of these codes were developed in response to some legislative action. For example, in the United States, a plethora of activity manifesting itself in the development or revision of corporate codes followed the passage of the Foreign Corrupt Practices Act in 1977, the creation of the 1991 United States Corporate Sentencing Guidelines (which exonerated businesses to clearly state expected ethical behavior for their employees), and the Sarbanes-Oxley Act of 2002. In other instances, companies or entire industries responded to an ethics scandal by developing or rewriting codes of ethics, such as in the 1980s when the U.S. defense industry and the financial community on Wall Street were rocked with numerous discoveries of unethical behavior. Many non-U.S. businesses have developed codes of conduct so that their employees are in compliance with U.S. law when the company conducts business in the United States.

Types of Corporate Codes

The titles given to ethics policy statements are quite varied. Some are called codes of business conduct or guidelines for ethical behavior. Some companies have unique names for their codes, such as Johnson & Johnson's “Credo” or Hewlett-Packard's “The HP Way.” In the 1970s, when many codes were first being developed, they were called corporate directives or administrative practices until the more common terms of code of ethics, code of business conduct, or similar terminology was adopted.

Max Clarkson and Michael Deck, scholars at the University of Toronto's School of Business, separated ethics policy statements into three categories—codes of conduct, codes of practice, and codes of ethics. Codes of conduct are statements of rules, indicating for the employees what expected or prohibitive behavior is. Often included in codes of conduct are penalties for code infractions, along with a discussion of numerous ethics topics: conflicts of interest, political contributions, the acceptance or offering of gifts and bribes, and so on. These codes intend to ensure a commonality of behavior among the organizational employees or to protect the firm from the likelihood of costly unethical employee behavior.

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