What Your Code of Conduct Says About Your Corporate Culture

Ryan McConnell and Charlotte Simon

Corporate Counsel

08-31-2012

A company's code of conduct serves many purposes. It provides employees with a set of rules to follow and a set of values to internalize. It speaks to different stakeholders—employees, shareholders, the public, the government, clients, suppliers, and other third parties—about the legacy and direction of the company. It sets out the company's policies on a wide range of legal issues. A code also has to say something about the company's culture.

All told, it’s not an easy task to capture a company's culture in fewer than 20 pages. Sometimes companies have merged and produced a new culture that is an amalgamation of different entities. Sometimes a company has to overcome a past compliance failure and assure employees of a more positive future. If the code does not represent the culture of the company, employees are less likely to read it. And getting busy employees and other stakeholders to read the code at all can be a challenge.
    
Companies meet this challenge in different ways. Some organizations feature the code of conduct prominently on their website so that employees and other stakeholders are able to find it easily. Others bury the code a half-dozen mouse clicks away, deep in the "investor relations" section where Internet spelunkers are reluctant to travel. Some companies encourage employees to read by cramming the code into a few pages—acknowledging our short attention spans.

Then there are the less-officious methods to make a code of conduct more approachable. An employee photo contest is one well-tested method, with employees or photos taken by employees appearing in a section of the code. Companies believe that employees will look for one another in the code, the same way we used to look for embarrassing photos of our friends in the high school yearbook. Photos of food may tempt hungry employees to read the code. A candy company has covered the front of its code with a chocolate assortment that would embarrass even Willy Wonka.

All good ideas, but fashioning the contents of a corporate code of conduct that will draw in the reader is far more complicated.
    
How, in a document about right and wrong, do you capture how people feel about the organization or what it represents to the employee? There is no uniform template. Our review of the publicly available codes of conduct for the Fortune 500 companies found that there is no shortage of examples of codes that try to encapsulate the culture of the company. Sometimes there are amusing results: An entertainment company's code refers to employees as "cast members." In a hat tip to the AMC television series Mad Men, one technology company allows employees to drink in the workplace so long as they “use good judgment and never drink in a way that leads to impaired performance." (Roger Sterling would be proud.) A fast food company has a "nutrition and well being policy." And a clothing store touts that the values in its code are "always in style."
    
And then there’s the approach of telling the world that the company likes dogs better than cats. A technology company’s code of conduct explains "[our] affection for our canine friends is an integral facet of our corporate culture. We like cats, but we’re a dog company, so as a general rule we feel cats visiting our offices would be fairly stressed out.” This code not only says something about the company’s pro-dog values, but explains why it simply cannot be a cat company. (Indeed, the office dog policy is found in the section of the code entitled "respect each other.") The company recognizes that the best codes draw in employees because they are unique to the company and contain more than an iteration of the rules. This code says something about the company—it says, “This is who we are.”

The lesson for companies is that the most important use of resources in drafting or revising a code of conduct is to get the culture right. And that has to come from within the company. It's more important than the pronouns in the document or how you address anticorruption laws or trade controls. If you get the culture right, you create a document that employees and stakeholders believe in. They will read it, follow it, and live it.

Ryan McConnell is a partner in Baker & McKenzie LLP in Houston and former Assistant U.S. Attorney. Charlotte Simon is an associate in Baker & McKenzie LLP's Houston office and former law clerk to the Honorable Keith P. Ellison.