FCPA Compliance and Ethics Blog

June 7, 2013

Codes of Conduct: what are they good for?

Ed. Note-today we have a guest post from Catherine Choe, a well known Code of Conduct maven. 

I had an interesting and frustrating conversation with a relative about the work that I do, which includes working with companies on refreshing their Codes of Business Conduct.  Despite working at a large, publicly traded, multinational corporation, I had to describe the Code twice before he recalled having certified reading the one at his company.  It got me thinking about why we have Codes and whether they’re doing an adequate job serving their purposes.

Two of the primary goals of any Code are first, to document and clarify minimum expectations of acceptable behavior at a company, and second, to encourage employees to speak up when they have questions or witness misconduct.  There have been some very compelling articles discussing how important it is to teach employees that even actions that seem like minor misconduct should be reported.  I agree with this, of course, but I think that those of us in compliance & ethics should not lose sight of how difficult the decision to report major misconduct can be for many employees.

I recently heard a story about this that drove home how much anxiety the decision to report can cause.  I was having drinks with Sara, a friend I hadn’t seen in over a year.  Sara and I used to work together, and as we were catching up (i.e., gossiping) about former colleagues and mutual friends, she told me about something that happened to her a couple of weeks earlier.

Sara was attending a happy hour and chatting with Tracy.  Sara and Tracy started at the company on the same day and were in the same orientation group, where they bonded over their shared love of celebrity tabloids and became fast friends.  Over the years, Tracy worked her way up in the sales department to become a senior manager.  At the happy hour, Tracy shared details from the latest bonus trip that she had been selected to attend along with other top sales employees as a reward for outstanding performance.

It seems that in addition to her reputation for exceeding nearly every sales goal put in front of her, Tracy had also developed a habit of dating her colleagues.  In some instances, her partners were at her level, but most of the time, they were junior to her, although not in her reporting line.  All of her relationships were consensual, and she never exerted influence, positive or negative, over their careers.  Tracy simply found that it was more convenient, given the number of hours she worked and the days that she traveled, to find romance at work.  Management turned a blind eye to these activities, despite them being in contravention of company policy.  This was in part because of her performance and in part because nobody ever complained.

Tracy became involved with a junior colleague on the bonus trip and, as friends often do, was starting to share juicy details.  Tracy, wanting to show Sara what the junior colleague looked like, pulled out her phone to show Sara a picture.  Sara expected to see a head shot.  What she saw instead was a picture of the gentleman in question in the shower, with no idea that Tracy was snapping a photograph.

Sara shared the story with her boyfriend as an example of Tracy’s continuing refusal to grow up and a reason for the growing distance between the two friends.  Sara expressed discomfort at having been shown the picture and some sympathy for the gentleman who’d had his picture taken in an intimate moment without his consent.  Her plan for the future was to minimize contact and avoid spending time with Tracy.

Sara’s boyfriend, a lawyer, told her she had a responsibility to report Tracy’s behavior.  Sara disagreed, saying that the relationship was a consensual one between two adults.  In addition, Sara was concerned that Tracy might lose her job at a time when jobs were hard to find; Sara didn’t think it was right to interfere with Tracy’s livelihood

Sara’s boyfriend insisted that Sara report the incident, going so far as to say that if she didn’t tell someone in authority at the company, that he would call the company’s General Counsel to report the behavior himself.  He also noted that she might not have been as reluctant to raise her hand if the genders of the parties involved had been reversed.

Sara felt trapped.  Despite the egregious nature of Tracy’s behavior, Sara was torn between loyalty to her friend and doing what she knew in her heart was the right thing.  After several sleepless nights, she asked her boyfriend to consider calling the helpline rather than calling the GC, which she hoped would make it harder to trace the report back to her.  Out of sympathy for her distress, he agreed but told her she should check to see what her responsibilities were in the company’s Code of Conduct.

Sara downloaded the Code of Business Conduct from the company’s website and checked the Table of Contents and the index.  Both places directed her to the first section of the Code, which stated that employees, officers, and directors had a duty to report misconduct.  Defeated, Sara called the HR business partner for her department the next day.

Two things stood out to me when Sara told me this story:  (1) Sara’s reluctance to report the misconduct despite its egregiousness and (2) the role of the Code of Business Conduct in the resolution.  It’s true that if someone had reported Tracy when she first started dating her colleagues, she might not have reached the point of nonconsensual pictures in the shower, and then Sara would not have faced the dilemma she did.  Despite the existence of HR policies either forbidding romantic relationships at work or requiring their disclosure, workplace romances continue to occur.  As adults, we spend most of our time at the office with our coworkers.  Personal relationships are inevitable.

In addition, we often feel more loyalty to our coworkers than we do to the companies that employ us.  Our colleagues are people.  We work on projects together, we celebrate successes with each other, and we console each other when there are failures.  The collegiality that we build can improve productivity for the company.

Companies employ us.  They provide us with the money we need to shelter and feed ourselves and our families, but companies are not people.  The relationships we have with them are not personal.  What this means for C&E practitioners is that when we tell employees to report misconduct, no matter how small, the choice we are presenting is to be loyal to our coworkers or be loyal to the company.  Respect the teamwork and collegiality we’ve built, or “tattle” on our teammates for minor infractions of a Code that most employees skim once a year.  The decision to report, even in the face of serious misconduct, is gut-wrenching, especially if the bad actor is a friend or simply likeable.

Luckily for Sara’s company, the Code specifically cited a duty to report.  Companies often struggle with the decision as to whether to make reporting a duty or something more voluntary.  Making reporting a duty puts a burden on the company to ensure there are consequences for those who do not report misconduct.  Some decide that the administrative burden is too great or that they are uncomfortable with the potential impact it will have on the company culture.  After the conversation I had with Sara, I believe that the benefits outweigh those potential drawbacks.

We all know that our companies need Codes, so that our expectations around appropriate behavior are written down for employees.  We all know the general topics that should be covered in our Codes.  The level of sophistication in interactivity often depends on the level of technology sophistication of the employee base.  Many of us have gotten savvier about adding specific examples in our Codes to provide additional guidance.  We seem to take it for granted that employees will read the Code with the same attention and focus that we do.

The reality is that employees read the Code when forced to, either because of an annual certification campaign or because they face a dilemma.  In the former situation, employees skim, then sign; in the latter situation, employees look for an answer to a specific question.  Everyone in C&E has a checklist in mind of things that the Code should have and do.  At the top of my checklist is how quickly people like Sara can find the topic of her question and how clearly the Code answers it.  If employees are unable to find clear answers to their dilemmas quickly, the Code is not serving its purpose.


Catherine Choe  is Managing Member at TFL Compass (www.tflcompass.com), a compliance and ethics consultancy.  She is an authority on the business impact of C&E programs and has lectured widely on harmonizing C&E practices with business processes. Catherine is also an experienced and talented speaker with exceptional communication and presentation skills. She tweets regularly as the Code Maven (@CodeMavencc). She can be reached by phone at  408-337-2463  or email at cchoe@tflcompass.com. 


This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. 


  1. Right on point Tom,

    We’re just beginning to revise our code and in fact will be rewriting the
    entire code and making it more user friendly!

    Hope Sarah will find the answers in our new code because the current one
    is very bad:)

    Paul E. Zikmund
    Director Global Ethics and Compliance
    Bunge Limited
    50 Main St. 6th Floor, White Plains, NY 10606
    E-mail: paul.zikmund@bunge.com
    Work: +1 914.684.3227
    Mobile: +1 914.325.3496

    Comment by Paul Zikmund — June 7, 2013 @ 4:41 am | Reply

  2. All – after 25 years devising, applying, and teaching public sector Codes of Conduct/Ethics in 15 countries and the UN, I can now put forward five propositions worth considering:
    1. There is no possibility of writing a rule for every possible situation which might arise in the workplace;
    2. Codes usually don’t say what they mean, and don’t mean what they say;
    3. Leadership isn’t everything, but it is way ahead of whatever is coming second;
    4. Reasonable people can disagree about what ‘the ethics problem’ is, as well as about what should be done about it; and
    5. We have to teach skills in moral reasoning for ‘ethical competence’ – if our people (including leaders) are not ethically competent, they won’t understand a Code of Conduct: and if they are, they won’t need one.

    Happy to discuss

    Comment by Howard WHITTON — June 9, 2013 @ 7:23 am | Reply

  3. Interesting case, but it raises the thorny question of what constitutes “misconduct”. Activity between two consenting adults in the privacy of their OWN homes (i.e. NOT on company premises)…may be more of a privacy issue than a COC one. Does the Code SAY that taking photos in the nude in an employee’s own home is a violation of company policy? Doubtful. Of course there would be nothing stopping management from putting such a prohibition into its Code. But the point is–too many Codes DON’T specific what is allowed and what is not–what IS misconduct and what isn’t. IT’s one reason so many internal frauds go undetected for months or years on end. Employees are told by their company’s COC or COE what constitutes fraudulent conduct, so they don’t know what to look for. Codes of Conduct must not only explain actions to take, as in the Sarah situation, but more impotantly, hat actually constitutes misconduct

    Comment by Peter Goldmann — June 9, 2013 @ 8:29 am | Reply

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