Acode of conduct is a set of rules outlining thenorms, rules, and responsibilities or proper practices of an individual party or an organization.
A company code of conduct is a set of rules which is commonly written for employees of a company, which protects the business and informs the employees of the company's expectations. It is appropriate for even the smallest of companies to create a document containing important information on expectations for employees.[1] The document does not need to be complex or have elaborate policies.
Failure of an employee to follow a company's code of conduct can have negative consequences. InMorgan Stanley v. Skowron, 989 F. Supp. 2d 356 (S.D.N.Y. 2013), applying New York'sfaithless servant doctrine, the court held that a hedge fund's employee engaging in insider trading in violation of his company's code of conduct, which also required him to report hismisconduct, must repay his employer the full $31 million his employer paid him as compensation during his period of faithlessness.[2][3][4][5]
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In its 2007 International Good Practice Guidance, "Defining and Developing an Effective Code of Conduct for Organizations", provided[who?] the following working definition: "Principles, values, standards, or rules of behaviour that guide the decisions, procedures, and systems of an organization in a way that (a) contributes to the welfare of its key stakeholders, and (b) respects the rights of all constituents affected by its operations."
While codes of conduct are commonly associated with organizations and institutions, individuals can also develop a personal code of conduct, to guide their behavior, decision-making, and responses to adversity. These personal codes can typically reflect a person's core values, ethical principles, and practise aspirational virtues - such as courage, honesty, discipline, or resilience.[6][7][8]
Historically, figures like Roman emperorMarcus Aurelius, through his philosophical reflections in Meditations, or the samurai class, through theBushidō code, adhered to personal codes that shaped their worldview and conduct. In contemporary settings, individuals may adopt a personal code of conduct to uphold integrity, cultivate psychological resilience, or navigate unpredictable or stressful environments. Such self-imposed frameworks of rules can offer a structured psychological anchor by reinforcing a sense of agency and control.[9]
Psychological research suggests that individuals with a higherinternal locus of control, defined as the belief that one can influence outcomes through their own actions, are generally more resilient and motivated in the face of adversity. Studies onlearned helplessness and control have demonstrated that perceived control is closely linked to psychological well-being and adaptive coping behaviors. Developing and consistently adhering to a personal code may support an internal locus of control by encouraging deliberate, value-driven responses to life’s challenges. Writing down one’s personal code and reviewing it regularly can further reinforce commitment, aid in goal-setting, and improve behavioral consistency.[8][9]
A code of conduct can be an important part in establishing aninclusive culture, but it is not a comprehensive solution on its own. Anethical culture is created by the organization's leaders who manifest their ethics in their attitudes and behaviour.[10] Studies of codes of conduct in the private sector show that their effective implementation must be part of a learning process that requires training, consistent enforcement, and continuous measurement/improvement:[11] simply requiring members to read the code is not enough to ensure that they understand it and will remember its contents.[12] Castellanoet al. describeTom Morris' bookIf Aristotle Ran General Motors as "compelling" and "persuasive" in arguing that in addition to codes of conduct and ethical guidelines, the creation of an ethical workplace climate requires "socially harmonious relationships" to be embedded in practice.[13] The proof of effectiveness is when employees/members feel comfortable enough to voice concerns and believe that the organization will respond with appropriate action.[14]
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