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In: Accounting

The "tone at the top" provides a foundation upon which a more detailed code of conduct...

The "tone at the top" provides a foundation upon which a more detailed code of conduct can be developed to provide specific guidance for the organization and its employees. Components of a code of conduct may include sections on 1) general employee conduct, 2) relationships with clients and suppliers and 3) conflicts of interest. Give a narrative description of what might be included in each of the above components of a code of conduct.

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Expert Solution

The “tone at the top” is a term that is used to define management's leadership and commitment towards openness, honesty, integrity, and ethical behavior. It is the foundation upon which a code of conduct is developed. A 'Code of Conduct' is a collection of the rules, principles, values and relationships that are significant to an organization. This pool of beliefs, values, and ruled form the basis to the successful operation of the organisation and determines the culture of the organisation. It also forms the basis of all the meaningful relationships that the organisation has with its stakeholders such as employees, suppliers, customers, etc. It also serves as a communication tool between the organisation and the stakeholders mentioned above.

The Code of Conduct is the heart and soul of a company. It as an in-depth view of what an organization believes and how the employees of an organization see themselves and their relationship with each other and the rest of the world. The Code of Conduct paints a picture of how employees, customers, partners, and suppliers can expect to be treated as a result. The various sections of the Code of Conduct include:

1) General employee conduct: The employee code of conduct applies to each and every employee of the company from top to bottom i.e. the directors, the managers, officers, junior staff, etc. It encompasses the entire organisation and its subsidiaries and takes everyone's best interests into account. It is a key governanace policy that guides the business policies and procedures and interactions of the organisation with its employees. It helps to ensure compliance with the various standards, laws and regulations. The varioud components that can be included in this code are as follows:

  • Emplyoee practices conduct: Ensuring proper flow of communication from the top management to the bottom and vice versa
  • Ensuring safety standards at the workplace and hazard management techniques
  • Ensuring that there is no bullying or ragging
  • Equal rights irrespective of gender, religion, etc
  • Avoiding substance abuse
  • Mutual respect and tolerance for each other

2) Relationships with clients and suppliers:

  • Ethical and lawful business dealings with clients and suppliers
  • Client protection best practices
  • Ensure respect and courtesy towards clients
  • Maintaing and ensuring vendor confidentiality
  • Ensuring proper systems for vendor selection

3) Conflict of interest : An employee shall be considered to have a conflict of interest if he or any member of his or her family, has existing or potential financial or other interests which might impair or are inconsistent with the organisation's policies.

  • If any emplyee has such a conflict of interest, he should disclose it immediately to his superiors
  • If any emplyee has such a conflict of interest, he should not participate in any decision in which such employee has a conflict of interest.
  • The employees should promote ethical behavior among subordinates and peers and encourage employees to act responsibly
  • They should not unduly use their position for personal benefit or for the benefit of relatives or close associates

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