Up to Code: Does Your Company's Conduct Meet World-Class Standards?

Lynn  Paine; Rohit   Deshpandé; Joshua D. Margolis; Kim Eric Bettcher

Article | Harvard Business Review | December 2005

Up to Code: Does Your Company's Conduct Meet World-Class Standards?

by Lynn Paine, Rohit Deshpandé, Joshua D. Margolis and Kim Eric Bettcher

Abstract

Codes of conduct have long been a feature of corporate life. Today, they are arguably a legal necessity—at least for public companies with a presence in the United States. But the issue goes beyond U.S. legal and regulatory requirements. Sparked by corruption and excess of various types, dozens of industry, government, investor, and multisector groups worldwide have proposed codes and guidelines to govern corporate behavior. These initiatives reflect an increasingly global debate on the nature of corporate legitimacy. Given the legal, organizational, reputational, and strategic considerations, few companies will want to be without a code. But what should it say? Apart from a handful of essentials spelled out in Sarbanes-Oxley regulations and NYSE rules, authoritative guidance is sorely lacking. In search of some reference points for managers, the authors undertook a systematic analysis of a select group of codes. In this article, they present their findings in the form of a "codex," a reference source on code content. The Global Business Standards Codex contains a set of overarching principles as well as a set of conduct standards for putting those principles into practice. The GBS Codex is not intended to be adopted as is, but is meant to be used as a benchmark by those wishing to create their own world-class code. The provisions of the codex must be customized to a company's specific business and situation; individual companies' codes will include their own distinctive elements as well. What the codex provides is a starting point grounded in ethical fundamentals and aligned with an emerging global consensus on basic standards of corporate behavior.

Keywords: Business ethics; Standards of Conduct; Globalized Firms and Management; Cross-Cultural and Cross-Border Issues; Values and Beliefs; Corporate Accountability; Corporate Governance;

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Citation:

Paine, Lynn, Rohit Deshpandé, Joshua D. Margolis, and Kim Eric Bettcher. "Up to Code: Does Your Company's Conduct Meet World-Class Standards?" Harvard Business Review 83, no. 12 (December 2005): 122–133.

Boards are facing a complex new reality as a result of COVID-19. The new environment is characterized by pressures and demands from various stakeholder groups, heightened expectations for societal engagement and corporate citizenship, and radical uncertainty about the future. These factors are complicating board decision-making and challenging the shareholder-centric model of governance that has guided boards and business leaders for the past several decades. A board’s ability to deliberate in a thorough and thoughtful, but efficient, manner and come to a considered conclusion around key issues will be a critical aspect of its effectiveness in the post-COVID era.

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Up to Code: Does Your Company's Conduct Meet World-Class Standards?

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