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Codes of conduct in large companies less driven by legislation

Codes of conduct in many large companies have evolved from a user guide telling employees what is expected of them, to a document specifying the company’s long-term objectives, its corporate social responsibilities and how to deal with the dilemmas it may encounter during business operations. Research carried out by Rotterdam School of Management, Erasmus University (RSM) and KPMG revealed that 154 out of the world’s 200 largest companies now have their own codes of conduct.



RSM’s research indicates that increasing numbers of companies want to implement a code of conduct that encourages solidarity and a sense of belonging among staff, as well as improving managers’ conduct and safeguarding the organisation’s reputation. The full report can be found here.

Focus on employees

“Our research clearly shows that a large number of companies use their code of conduct to raise their corporate culture to new heights,” explains Muel Kaptein, Professor of Business Ethics and Integrity Management at RSM and partner at KPMG. “This means that most codes of conduct focus on employees, and more than 90 per cent of these codes concentrate in some way on the company’s responsibility towards its employees. The majority of companies also pay attention to their responsibility towards society and the environment. Just over 50 per cent  of codes also talk about the company’s responsibilities towards customers and business competitors, although only 30 per cent  actually mention corporate responsibility towards shareholders. With respect to employees, most attention is devoted to the company’s responsibility to ensure equality among its staff, while working conditions and treating one another with respect are also major topics.”

Prominence in HR policy

It emerges that codes of conduct are becoming increasingly prominent in HR policy. Compliance with a code forms part of employee assessments at more than 40 per cent of businesses, and is the deciding factor for employee remuneration and promotion at 30 per cent of businesses. “Having a code of conduct means that certain obligations are involved,” says Professor Kaptein. ”Almost 80 per cent said that non-compliance with the code ought to result in sanctions being imposed on the employee. And 40 per cent even told us that sacking employees who don’t abide by the rules would be a good indicator for the code’s effectiveness. But this means it’s absolutely essential to be quite clear about the scope of the code. Employees won’t be willing to comply with it unless they feel it’s being properly enforced.”

Relying on common sense

Professor Kaptein says that because of this, codes that are properly implemented are an increasingly important tool for businesses. “Codes make an important contribution to companies’ strategic positioning, their reputation and their corporate identity, culture and working environment,” he adds. ”Most of all, codes contribute to their financial performance. Remarkably, codes of conduct at many companies are no longer just a set of regulations. They’re often a combination of rules and principles, showing us that today’s businesses increasingly want to rely on their employees’ common sense, and they want to give them enough ammunition to make the right decisions based on the code.”

Rotterdam School of Management, Erasmus University (RSM) is ranked amongst Europe’s top 10 business schools for education and amongst the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam - a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in the Amsterdam Zuidas business district and in Taipei, Taiwan. www.rsm.nl

For more information on this release, please contact Marianne Schouten, Media & Public Relations Manager for RSM, on +31 10 408 2877 or by email at mschouten@rsm.nl.

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