Understanding Code of Conduct Culture

A code of conduct is an essential part of compliance best practice. Most companies have one. What exactly does it entail, and are you obliged to read and sign it?

Key takeaways

• A code of conduct outlines an organisation’s values, expected behaviours and legal obligations. It helps ensure transparency and accountability across all levels.
• A code of conduct supports compliance, because it acts as a contractual document, guiding conduct, informing training, and enabling enforcement through defined disciplinary processes.
• A code of conduct drives ethical culture. When consistently communicated, reviewed and enforced, it helps build a strong compliance culture aligned with organisational ethics.

Various organisations use a code of conduct – regulators like the Financial Conduct Authority, the civil service, industry bodies, individual companies and other organisations, and even schools.

New joiners need to acknowledge their understanding of and commitment to the code of conduct. But what exactly does that mean, and how might it affect your employment relationship?

Decoding the code of conduct culture

• What's a code of conduct?
• What's the purpose of a code of conduct?
• How does a code of ethics fit in?
• What are the key elements of a code of conduct?
• How do you adhere to a code of conduct?
• How do you ensure code of conduct effectiveness?
• How do you build a compliance culture with the code?

What is a code of conduct?

Per the Cambridge Dictionary, a code of conduct is "a set of rules that members of an organisation or people with a particular job or position must follow".

It outlines expected behaviours and responsibilities, links them to the organisation’s core values and standards of professional conduct and ensures transparent working practices. It can cover anything from diversity and inclusion guidelines and compliance and legal duties to gifts and entertainment rules and social media expectations.

What's the purpose of a code of conduct?

A code of conduct:

• Sets clear expectations

• Helps ensure legal compliance

• Builds workplace culture

• Protects the organisation

• Guides decision-making

How does a code of ethics fit in?

Alongside a code of conduct, an organisation may publish a shorter, related document called a code of ethics.
While a code of conduct is an enforceable set of specific rules and obligations that clearly define unacceptable actions or behaviours, a code of ethics is a set of guiding principles that define an organisation’s moral position.

For example, a code of ethics might include statements such as, “he organisation is strongly opposed to bribery at any level of the supply chain.”

Meanwhile, a code of conduct could require all staff and contractors to participate in anti-bribery training, commit to the organisation's anti-bribery policy, and ensure ongoing, appropriate due diligence when dealing with any level of the supply chain.

Because a code of conduct is more explicit about expectations and obligations, it’s easier to enforce than a code of ethics. However, a code of conduct may incorporate all or part of the organisation’s code of ethics to contextualise its rules.

What are the key elements of a code of conduct?

Given a code of conduct sets values and principles, it’s often as unique as the organisation itself. Nonetheless, certain components are generally regarded as universal.

A code of conduct should always specify who is covered by its provisions, and provide details or links to relevant reporting, complaints and disciplinary procedures.

• Company policies (for example, privacy and confidentiality, equal opportunity, gifts and entertainment, etc.)
• Company culture (ensuring commitment, care, fairness and consistency, transparency, professionalism and accountability in all dealings, whether internal or external)
• Attendance requirements and meal and rest breaks
• Allowances and benefits (including holidays)
• Dress code
• Use of company equipment
• Use of personal devices during work time
• Employee harassment (unlawful under the Equality Act 2010)
• Discrimination (based on protected characteristics such as race, gender, age or disability)
• Accessibility (core values around diversity, equity, and inclusion)
• Substance use
• Conflicts of interest
• Financial integrity and responsibility
• Obedience to applicable laws (for example, financial sanctions and embargoes, anti-money laundering, fraud, competition, discrimination, insider trading, anti-bribery, safeguarding the vulnerable, etc.)
• Behaviour outside the work environment (public actions and social media posts)

Depending on the organisation, there may be more than one code of conduct covering different aspects. For example, you may have an employee code of conduct, alongside ones for suppliers, senior management and associates./connected third parties.

A code of conduct is widely considered an organic document that adapts over time, incorporating mechanisms for feedback and amendments. With that in mind, employees should reread it periodically.

How do you adhere to a code of conduct?

When determining how to adhere to a code of conduct, start by establishing whether it applies to you. If it does, you most likely committed to it when you initially signed your employment contract, meaning you’re bound by its terms. To adhere, ensure you:

• Read, review and understand the code
• Flag uncertainties to your manager and/or human resources (HR)
• Reflect the spirit of the code
• Report suspected violations
• Raise concerns if you’re pressured to act against the code

The code should be easily understood and accessible. The onus falls on the organisation to provide adequate training if needed.

How do you ensure code of conduct effectiveness?

Organisations should regularly monitor and audit code of conduct implementation. Feedback from employees helps refine them.

To enhance transparency, share audit results with stakeholders (respecting contributor privacy) and highlight metrics such as suspected breaches, reporting mechanisms, whether concerns were substantiated, and the company’s response.

Regular code reviews are also important to ensure changes in the law or the organisation’s policies or norms are incorporated.

How do you build a compliance culture with the code?

A code of conduct is a powerful tool to help an organisation develop a strong compliance culture. It gives clear instructions on what they do and don’t permit. It also feeds into the company’s policies and procedures and highlights appropriate reporting channels.

Take codes of conduct seriously – read and ensure you understand them, and adhere to their provisions. Indeed, a company can face regulatory fines if a breach also violates external laws or industry regulations. To help prevent penalties, alongside encouraging employees to adhere to the code of conduct, organisations should:

• Stay informed of ever-evolving laws
• Carry out regular internal audits and assessments
• Make the most of technology to automate and streamline processes
• Keep detailed compliance records
• Establish robust reporting

They should also invest in training. For information about Skillcast and the services we offer, get in touch.

Code of conduct culture: FAQs

Is a code of conduct a legal requirement?

There isn’t a general legal requirement for every organisation to have a code of conduct. However, it can help set clear behavioural expectations, support compliance and demonstrate your approach to ethical conduct. 

What happens if an employee breaches the code of conduct?

It may result in disciplinary action, depending on the nature and seriousness of the misconduct and the company’s policies and procedures. Serious breaches may impact an individual's employment or contractual relationship.

Who should follow a company's code of conduct?

A code of conduct can apply to employees, directors, contractors, suppliers and other third parties, depending on how the business defines its scope. It should clearly state who is covered by its requirements.

How does a code of conduct support ethical behaviour?

A code of conduct translates an organisation's values into clear expectations for workplace behaviour. When it’s communicated, understood and consistently enforced, it can help employees make appropriate decisions and raise concerns about misconduct.

What’s the difference between a code of conduct and company policy?

A code of conduct sets out broad standards and expectations for behaviour, while individual policies provide more detailed rules and procedures for specific areas such as conflicts of interest, data protection or anti-bribery.

What real-life compliance stories help illustrate code of conduct non-compliance?

There are numerous, including:

• The Wolf of Wall Street – Jordan Belfort’s rise to riches through a financial scam. Covers unethical behaviour, such as financial misconduct, dishonesty and conflicts of interest.

• The Loudest Voice in the Room – The rise and fall of Fox News CEO Roger Ailes. Covers workplace behaviour, sexual harassment and abuse of power.

• Rogue Trader – Nick Leeson bankrupting Barings Bank in 1995 through fraud. Covers dishonesty, concealment, financial controls and individual accountability.

• The Informant – Lysine price-fixing conspiracy in the mid-1990s. Covers competition law, conflicts of interest and the importance of reporting misconduct. 

• The Whistleblower – Kathryn Bolkovac's experience in post-war Bosnia as a UN peacekeeper with DynCorp. Covers ethical culture, safeguarding and the consequences of failing to protect people who raise concerns.

• Philadelphia – AIDS discrimination lawsuits involving attorneys Geoffrey Bowers and Clarence B. Cain. Covers equality, discrimination and treating colleagues fairly.

Looking for more compliance insights?

Our compliance topic hubs contain e-learning content designed to help organisations meet fundamental compliance requirements.Courses in the hubs include:

• Code of Conduct Training Course
• Business Ethics and Integrity Training Course
• Environmental, Social and Governance Training Course

Our e-learning courses are designed to engage employees, including our microlearning library, which supports knowledge retention.

Our Compliance Portal also features a range of tools to digitise and automate your compliance learning. These include our:

• Learning Management System (LMS)
• Policy Hub
• Compliance Registers
• Compliance Surveys
• Compliance Declarations
• Aida by Skillcast

If you’d like to access leading insights and compliance tips, browse our free resources by topic to find guides, modules, compliance bites and more.