The Code of Conduct as a Recruiting Tool

by Jason Lunday for Corporate Compliance Insights, May 30th, 2011.

A company code of conduct can serve as an important tool in forming and sustaining strong relationships with employees, customers, suppliers and other stakeholders.

A company’s code of conduct can serve as a strategic tool for recruiting and retaining the best employees, customers and suppliers and engaging effectively with communities. But too many companies do not see the true value in a code of conduct in how it can set expectations for both the company and its constituents and stakeholders. This greater recognition offers a company further opportunities to develop and sustain trust in its business relationships that can help it to achieve greater success.

So many companies miss the real value of a code of conduct.  We see this clearly in where most companies place their codes – on the company’s “Investors” webpage.  While this placement may appease regulators and investors, it does little for the many other constituents and stakeholders which contribute to a company’s success. In fact, this placement also may signal the role that leadership envisions for its code – more of a ‘regulatory filing’ than as a strategic tool to help win and retain the best constituents and stakeholders by establishing the expectations of the way the company conducts business.

A code of conduct can and should serve as an important tool for recruiting and retaining employees and other key parties. While this is not an obvious objective for a code of conduct, it fits well with the way that a code works. First, a code sets expectations regarding a company’s working relationship with its constituents – such as employees, customers and suppliers – and other stakeholders.  A code also communicates the company’s responsibilities to these parties. When a code performs these roles well, it can help to attract and hold onto these valuable groups.  The best employees, customers, suppliers, communities and other business partners always have a choice in the companies with which they do business. Likewise, the best companies are able to attract and retain the best talent, win and serve the best customers, hire and work with the finest suppliers and engage with those stakeholders that help to reinforce the company’s value.

In this light, a code should serve as more than a regulatory filing. It should actively seek to engage a company’s stakeholders in the pursuit of building trusting relationships based on the promise of mutual success. Likewise, the message that a code conveys should actively influence the way that a company’s stakeholders perceive the company.  The company should not permit a poor message – or no message at all – to set the tone for others’ perception of it.  Instead, leadership should set expectations up front so that a company’s relationships are established based on a shared understanding and expectation of trust. As ethics and compliance expert Frank Navran often quotes: “Trust is the residue of promises fulfilled.” A code can and should play a critical role in developing and sustaining that trust. (continue reading… )

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