Organizations define and document the company’s code of conduct for the management and employees. Such a code of conduct includes ethical principles and behaviors expected from every organization employee. Code of conduct is disseminated to the employees for their review and agreement. Usually, the human resource department circulates a code of conduct at the start of each financial year. Employees must read, understand and comply with the code of conduct principles.
What is the Code of Conduct?
Companies must design and implement policies clearly defining the responsibilities of their employees to the investors, clients, and stakeholders. A code of conduct is designed that identifies the broader conduct principles to be abiding by all the employees to ensure that employees perform their duties effectively. Employees are required to perform duties ethically and transparently, and to ensure and enforce these requirements, the code of conduct plays a significant role.
Code believes that giving priority at all times to the interests of customers and stakeholders is the best way of ensuring continued success, including compliance. Code requires all employees and officers to concentrate on their responsibilities during office hours, following applicable compliance policies and procedures. The company should believe that employees whose attention is distracted will not give priority to customers’ benefits and financial interests.
Code of conduct discourages employees from actively managing their personal financial affairs during business hours which may lead to regulatory risks and breaches. Management closely monitors the employees’ activities and behavior to ensure compliance with applicable regulatory requirements.
The compliance officer may determine that dealings by a particular employee are unacceptable per the organization’s code of conduct. Code requires all employees to act and behave in a prescribed manner as per applicable policies and regulations. If the employee does not comply, then the action is taken as a matter of serious misconduct or regulatory non-compliance.
The employees are required to accept the code of conduct. It requires all the employees to act and behave to comply with all applicable regulatory requirements. Employees must ensure that care is taken from those directly or indirectly concerned with financial matters to ensure fair dealings are implemented in letter and spirit. All the employees must be prudent in performing their duties. Employees should not enter into commitments that they may be unable to meet, causing regulatory non-compliance and financial losses to the organization.
Code of conduct requires that employees avoid actions involving a conflict of interest between themselves and the stakeholders. Employees must be aware of the applicable regulations and changes proposed by the regulators from time to time to ensure corporate compliance.
Final Thoughts
The Code of Conduct is a set of rules and principles designed to help employees and directors make decisions about their behavior in relation to the firm’s operations. A company code of conduct is a set of rules that are commonly written for a company’s employees in order to protect the business and inform the employees of the company’s expectations. Even the smallest businesses should create a document containing important information on employee expectations. The document does not need to be complex or have elaborate policies. Failure to follow a company’s code of conduct can have serious consequences.
