Your Small Business Needs a Code of Conduct

Code of conduct

Every company needs a code of conduct, regardless of its size.

You expect your employees to know right from wrong, but as a business owner, you still need to explicitly communicate your expectations regarding their behavior. You instinctively know that it's important to tell employees what you expect them to accomplish regarding their workload. It's just as important to communicate to them the boundaries within which you expect them to achieve it. You wouldn't hire a product designer and say, "Go design some products." You'd tell her what kind of products and how many you expect her to design over a specified period of time. You also need to make sure she understands the values and rules she must keep in mind as she performs her job.


What is a Code of Conduct?

A small business code of conduct is a set of principles or rules that define the way in which you expect your employees to behave. A well-written code of conduct provides guidance upon which employees can base their decision-making. Additionally, if an employee engages in an act of malfeasance that lands your business in legal hot water, having a code of conduct in place can serve as a mitigating factor with regulators or prosecutors. Conversely, not having a code of conduct in such a situation potentially exposes you to greater liability.

Writing a code of conduct doesn’t have to be a daunting undertaking. It's something you can do with your team or with your advisors. Your goal should be to produce a code that reflects your company's values. If you haven't articulated your company’s values yet, then that's where you'll want to start.

Be sure to keep your code simple and as concise as possible. If it's too long or if it reads like it's been written by a lawyer, no one will find it useful. And therefore, it won't be used.

The Ethics & Compliance Initiative has an excellent resource on its website for first-time code writers. This guide walks you through each step of the code writing process starting with defining your company's values. It also includes common code provisions that you should consider adopting. It’s a great starting point if you need help getting started.


What purpose does it serve?

A well-written code of conduct can serve as:

  • guardrails that define the boundaries within which you expect employees to operate;
  • a decision-making rubric that helps to keep employee decisions aligned with your company's values;
  • a risk mitigator if acts of malfeasance committed by an employee land your company in hot water; and
  • the foundation of the kind of small business culture you want to establish

With benefits like these, how can your company afford to be without one?


Learn more about defining your company’s culture, creating the right policies for your business, and crafting your code of conduct in my new book, Twelve-Minute Risk Management: Strategies and Tools Small Business Owners Need Right Now to Navigate Today’s Business World. Purchase it here. Explore the book’s contents (and get a small business code of conduct template) on here.

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