DELVACCA presents:
The Ten Most Important Decisions to
Make When Drafting a Code of Conduct
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Why Should You Focus on Drafting a
Code of Conduct?
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It helps to define your organization - both internally and externally
The policies embodied therein can influence success and failure in
the marketplace
It can positively influence conduct well outside the specific policies
addressed
In a time of crisis, it is a key document to fall back upon
The Department of Justice (and other law enforcement officials) will
consider the existence and substance of an operative Code of
Conduct in determining whether to bring criminal charges against an
organization; similarly, an effective compliance and ethics program is
a mitigating factor under the federal sentencing guidelines.
Key Components of a Code of Conduct
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Robust statement of your organization’s principles
Compliance with laws and regulations
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Conduct in the workplace
Accuracy of business records
Protection of your organization’s assets
Conflict of interest
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Anti-corruption policy
Insider trading policy
Gifts and Entertainment Policy
Political and charitable giving policy
Reduce whistleblower risk by including a no retaliation policy
A hotline or other similar intake mechanism for questions or complaints
available to employees and third-parties
The 10 Most Important Decisions
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Audience
Goals
Organization Specific
Content
Practicality and
Usability
Gifts and Entertainment
Policy
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Charitable Giving and
Political Donations
Application Across an
Organization
Business Function
Participation
Enforcement
Employee Discipline
1. Audience
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Consider your audiences
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Employees
Customers
Vendors
Business Partners
Government Officials, Regulators, Judiciary
Donors
Shareholders/Investors
2. Goals
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Establish clear goals at the outset such as:
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Emphasizing the values of the organization
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Creating a culture of compliance
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Furthering marketplace objectives
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Reducing legal and operational risk
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Facilitating regulatory administration
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Protecting the organization in the event of a serious
legal violation
3. Organization Specific Content
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One size does not fit all: every code should be companyspecific
Code should reflect the following:
– Industry specific issues
– Regulated or unregulated nature of the business
– Regional, domestic or global scope of business
– Enhanced requirements of publicly traded companies
– Existence of government contracts
– Organization culture
4. Practicality and Usability
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Blend broader goals with specific policies
Create definitive guidance on common
scenarios that can easily be applied by
employees
Flexibility and predictability are not mutually
exclusive: do not attempt to anticipate/
address every specific situation, but have a
logical approach
4. Practicality and Usability (cont.)
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One example of a simple structure that blends
broader goals with specific policies:
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Principles of Conduct (compliance with laws and code, duty
to report code violations, no retaliation)
Workplace Environment (equal opportunity, no harassment)
Protecting the Company (accurate financials, conflict of
interest, gifts & entertainment, confidentiality)
Market Facing Integrity (anti-corruption, insider trading,
accuracy in communications with third-parties, social media
policy)
5. Gifts & Entertainment
(A Constant Struggle)
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Customer relationship issues must be reconciled with vendor
relationship issues
Managerial Approval - yes or no and if yes, by whom, for what,
and when
What is reasonable
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Are tickets to a Red Sox/Yankees game different than tickets to a
Yankees/Royals game? What about the World Series?
Address specific exceptions such as government contracting
restrictions
Harmonize the gifts and entertainment policy with the anticorruption policy
6. Charitable Giving and Political
Contributions (A Delicate Balance)
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Establish a strict distinction between
individual action and corporate action
Define when it is appropriate to use the
organization’s resources
Establish processes to insure compliance
with regulations and protect the
organization’s brand
7. Application Across an Organization
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C-Suite personnel
Classified/ Non-Classified Employees
Union considerations
Non-US employees
Directors
Other important relationships – e.g.,
consultants, leased help
8. Business Function Participation
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Create drafting and vetting committees with
membership from across your organization
Make sure your business functions own the creation
of the code
Diversity of thought will enhance your end product
and increase the likelihood of compliance
Unilateral pronouncements from Legal/Compliance
usually fail
Ensures consideration of practical implications
9. Enforcement
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Create an enforcement infrastructure
Consider establishing an anonymous hotline and emphasize
non-retaliation policies to encourage reporting
Design a protocol for handling inquiries:
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Ensure clear lines of communication and rules for notification up
the chain
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Harassment (HR)
Theft of corporate data (Internal Audit or SIU group)
Violations of law (General Counsel)
General Counsel, Internal Auditor, C-Suite, CEO, Audit Committee, Board of
Directors
Consider Privilege Implications
Implement guidelines for the use of outside or independent
counsel
10. Employee Discipline
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Create a disciplinary committee or similar
framework to handle senior level issues
Legal should have an advisory role to the
committee to maintain privilege
Explicit goal should be consistent application
of the policy both as to scope and discipline
Issue: Director violations
Rolling Out the Code and
Keeping it Fresh
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Establish the tone at the top
Conceptualize the roll-out as a marketing campaign
Provide a tool kit for down the chain
Use multiple channels such as e-mail, website, town halls,
screensavers
Integrate the code into employees’ annual performance objectives
Reinforce general employee awareness at least once per year via an
annual CEO podcast or letter to employees
Disseminate regular training and communications from your Chief
Ethics Officer
Have a plan for new employee training
Leverage the code for external audiences: customers, vendors,
business partners, investors and regulators
Questions?
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