"A company's Code of Conduct is often the foundation of upon which an effective compliance program is built." A code of conduct is called the cornerstone of an effective compliance program because it “knowledge-sets” the “floor” across the organization. The document’s goal is to provide the tools to allow every employee, regardless of job description, to spot the key red flags for the company’s most important risk areas. The code addresses the key topics and makes clear the behavioral expectations and company values—with the best codes focusing on affirmative conduct rather than prohibitions. To read more, choose the link to download the complete whitepaper.

1. WHITE PAPER
BEST PRACTICES IN CODE OF
CONDUCT DEVELOPMENT
2014

2. BEST PRACTICES IN CODE OF CONDUCT DEVELOPMENT 3
in full, as much of that information only applies
to those whose job responsibilities require them
to act in that area. However, the code addresses
the key topics and makes clear the behavioral
expectations and company values—with the best
codes focusing on affirmative conduct rather than
prohibitions. The more detailed information is
delivered through policies, which should be cross-
referenced in the applicable section of the code.
However, organizations often view the code of
conduct as a necessary evil, mandated by various
regulatory and governmental agencies, rather
than an opportunity to educate employees about
the behavioral expectation to which they are held.1
Codes that focus on rules rather than values
tend to be overly formal and difficult to read,
having clearly been written by a team of lawyers.
Organizations that take this approach miss a prime
opportunity to pronounce their values, standards,
and expectations to both internal and external
constituents. Studies show that companies
exhibiting a pronounced emphasis on ethics and
trust have higher employee retention rates and
attract more prospective employees. Therefore,
taking time to relate your company’s values,
reputation, and success with compliance in a
meaningful way not only helps your organization
fulfill the FSG, but is also a shrewd business
decision.
An effective ethics and compliance program must
establish standards of ethical conduct, as well as
procedures to prevent and detect criminal conduct.
Those standards should be clearly drafted and
appropriate both for the size of the organization
and the industry in which the organization
operates.
Indeed, a properly assembled and distributed
code of conduct is the single most effective and
impactful part of any compliance and ethics
program. Such a code is a written record of not
only an organization’s expectations, but also its
ethical culture. This fulfills the first hallmark
set forth by the Federal Sentencing Guidelines
(FSG), which recommends “the promotion of an
organizational culture that encourages ethical
conduct and a commitment to compliance with
the law [through the establishment of] standards
and procedures to prevent and detect criminal
conduct.”
A code of conduct is called the cornerstone
of an effective compliance program because
it “knowledge-sets” the “floor” across the
organization. The document’s goal is to provide
the tools to allow every employee, regardless of
job description, to spot the key red flags for the
company’s most important risk areas. It is not
intended to include all of the information they may
need to understand each substantive risk area
“A well-written and designed Code of Business
Conduct is the focal point of an effective compliance
and ethics program.”
I. Executive Summary
A company Code of Conduct is often the foundation of upon which an effective compliance program is built.
– Resource Guide to the U.S. Foreign Corrupt Practices Guide, Chapter 5.

3. BEST PRACTICES IN CODE OF CONDUCT DEVELOPMENT 4
The code-creation or -revision process is
a daunting task and can quickly become
overwhelming without proper planning and
knowledge of the issues at hand. NYSE Governance
Services, with its team of attorneys, analysts,
subject matter experts, writers, and editors, has
provided this article as a useful reference guide
for those embarking on or considering the code of
conduct revision or development process.
The code serves as the primary means for your
organization to communicate its commitment
to ethical and legal conduct to both internal
and external stakeholders: employees as well
as vendors, customers, agents, shareholders,
and the communities in which you do business.
While a single document cannot anticipate every
possible situation that an employee might face,
your code should provide proper and effective
guideposts for behavior. To achieve this, tie the
code’s guidelines to your company’s values and
ethical commitments. Do so in a manner that
facilitates employees’ grasp of the critical nature
of compliance and ethical decision making,
consistent with the code. In addition, the code
should enable employees to quickly recognize
when to seek guidance, encourage them to report
concerns, and provide various avenues through
which they can do both.
When revising or creating the code, consider the
audience to which the code is directed. Ensure
that the language is at such a level that your
largest employee base will fully comprehend the
content. Take into account the locations where your
employees conduct business and ensure that all
code content is applicable to all of the audiences
receiving it. Scrub this content to ensure that it will
resonate with employees in foreign jurisdictions,
and be sure to provide translated versions of
the code in these locations, as appropriate.
Furthermore, in order to reach your employees in
an effective and engaging manner, allocate proper
resources to layout and graphic design.
When engaging in the code-creation or code-
revision process, be sure to account for the
many ways in which the code will be used.
For example, factors such as proliferation,
certification, and training should all be considered.
Properly distributing the code, tracking its
acknowledgement, and conducting training on its
subject matter sends strong signals to regulatory
and legal entities that your organization is making
a good faith effort to implement an effective
compliance program.

4. Many an organization has fallen prey to
miscalculated budgets, poorly planned timelines,
and improper preparation of or delegation to
project stakeholders. Taking the time to properly
define the scope and reach of the code-creation or
code-revision process will save your organization
substantial time and money—not to mention
headaches—later on in the process. Knowing that
you want to end up with a best in class Code of
Conduct is the easy part. Getting there involves
understanding your starting point, assessing the
Company’s long and short-term goals, planning
the process, and ensuring consensus from all
internal parties, especially those who will be part
of the review and/or approval teams.
Determine The Starting Point
Is your organization in need of its first ever Code?
Does your organization have a Code that needs to
be updated? If the latter, when was the Code last
reviewed?
Best practices are for the Code to be updated
every 2 years. Even if the laws haven’t changed
for your industry (which is fairly unlikely), you’ll
want to freshen up the content in light of new
company initiatives and recent accomplishments,
reinvent the leadership letter, create new learning
aids in line with emerging risks and company
demographics, also taking into account recent
mergers and acquisitions. The Company should
formally distribute the Code document to all
employees and include an acknowledgment form
that must be signed, collected, and maintained.
The Importance Of Benchmarking
Under the U.S. Federal Sentencing Guidelines
(FSG), an organization can be held criminally
responsible and prosecuted for acts committed
by employees based on the quality (or lack) of the
organization’s efforts to prevent unethical behavior.
Guideline §8B2.1 requires regular monitoring
and auditing of your program, as well as your
compliance risks.
One of the best ways to identify risk is to conduct
periodic benchmarking exercises against your
industry peers, as 82 percent of WME winners
did in 2013 (a number we expect will continue to
rise). Benchmarking provides your organization
with valuable perspective into how others are
addressing emerging risks such as conflicts
minerals, supplier relations, or data privacy.
Further, and most importantly, it gives insight
into varied risk priorities of other organizations.
In the event your organization faces, for instance,
a government investigation, if your organization
is seen as having fallen behind the curve with a
subpar code and overall compliance program,
any penalties resulting from the investigation are
likely to be more severe than if a code and overall
program on par with industry peers was in place.
While having a solid code is only one step on the
road to an effective compliance program, it’s the
foundation, and it touches every corner of the
organization.
Stakeholder Selection
Decide whether you will engage a vendor or
create the code in-house
First, you will need to consider whether you will
engage an external vendor to handle the code-
creation process. Working with an external vendor
that has a dedicated focus on writing, editing,
and designing compliance- and ethics-related
documents can significantly benefit the average
organization. Generally, engaging outside vendors
to develop the code is more cost- and time-
effective than creating or revising in-house. The
right vendor will bring to the table the collective
view of expert attorneys, risk analysts, and subject
matter experts on applicable compliance risks as
well as a team of writers, editors, and designers
with expertise on best practices for code drafting,
language selection, formatting, and graphic
design. A vendor should also be able to provide
project management resources to guide you
through the process from inception to completion.
II. Developing A Plan
BEST PRACTICES IN CODE OF CONDUCT DEVELOPMENT 5

5. BEST PRACTICES IN CODE OF CONDUCT DEVELOPMENT 6
and various other operational departments. For
international organizations, establish key contacts
from each major geographical region for location-
specific feedback. Where applicable, be sure to
involve any European works councils, as council
representatives may need to review the code before
it can be disseminated to the employees they
represent.
Determine at what point stakeholders will be
involved
It is advisable to involve internal stakeholders
as early in the process as is feasible. Involving
reviewers on an ad hoc basis may potentially lead
to radical or sweeping changes to the second or
third iterations of the draft, which can significantly
prolong the drafting process and quickly exhaust
your company’s resources. Gathering feedback
from critical stakeholders as early as the
outline phase will help mitigate the likelihood of
substantial changes occurring late in the drafting
process.
While it can be difficult to involve international
reviewers before the code has been translated,
keep in mind that engaging these stakeholders
at the earliest possible juncture will help your
company avoid future difficulties. Often, it is
helpful to provide these groups with a summary
list of the pertinent risk topics addressed and
policies cited (in the case of a code creation) or of
the major revisions made (in the case of a code
rewrite). Doing so allows international reviewers to
formulate an understanding of the final product’s
look and feel, and gives them a sense of ownership
in the project.
Project Timeline Development
It is critical that your organization establish a
realistic process timeline before embarking on the
project. This requires budgeting adequate time for
the various integral phases of the code-creation
and code-revision processes, such as outlining,
drafting, reviewing legal content and subject
matter, and editing. Be sure to factor in additional
time for translations (generally 15 weeks), a step
Ensure that the process of engaging a vendor is
thoughtful and carefully planned; failure to do so
can result in unmet expectations and strained
relationships on one or both sides.
Determine who will be involved in the process
If you choose to draft the code in-house, you will
need to coordinate a code-writing team, commonly
comprising attorneys, writers, editors and subject
matter experts. To avoid falling victim to the
obtuse, legal language that commonly results from
asking inside counsel to handle drafting duties,
be sure to involve professional writers and editors
(see “Readability and Tone”). Clearly, the content
of the document will also need extensive legal and
subject matter review. Thoroughly establish who is
responsible for writing or editing each draft of the
code, as this will reduce confusion and simplify the
code-creation process.
Furthermore, you will need to establish a review
team. Whether you are engaging an external
vendor or writing the code in-house, it is important
to involve all applicable internal stakeholders at
the outset of the process. If these individuals share
a cohesive vision for the final product’s look and
are apprised of the timeline for code drafting, they
will be more likely to provide effective and timely
feedback. The input and involvement provided by
key internal stakeholders will also translate into
increased buy-in from these groups when it comes
time to roll out the code—an invaluable asset.
It can be difficult to determine exactly which
internal parties should be asked to contribute
feedback throughout the creation process.
Obviously, this list will vary from one company
to the next, based on factors such as size and
corporate structure. For larger organizations
with legal subject matter experts, it’s advisable
to include those experts whose areas directly
relate to the Code content. To develop a list of
internal stakeholders whom you will involve in
the code-creation process, identify key contacts
among your ethics and compliance function,
human resources department, legal department
BEST PRACTICES IN CODE OF CONDUCT DEVELOPMENT 6

6. want to read more?
Please click the link below for
the complete
Best Practices in
Code of Conduct
Development
Whitepaper
View the detailed 5-part code of
conduct development process:
 Developing a plan
 Developing the code
 Communicating the code
 Bringing the code to life
 Maintaining the code
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