Does your ethical code of conduct work?

For most organisations, the answer is no. Here is what we suggest you do.
This article was originally co-authored by

8 December 2020

You probably already know this. If you want to create behavioural change or ensure compliance in your organisation, having a policy or a set of rules is rarely the most effective way to achieve it.

Yet, most organisations have gradually established one or several codes of conduct even though their impact is limited. This review from 2018, for example, finds little to no evidence that a workplace bullying policy leads to a reduction in bullying.

Unfortunately, we see the same lack of effect when it comes to codes of conduct that are meant to reduce unethical behaviour in the workplace.

An ethical code of conduct is not enough

An ethical code of conduct outlines an organisation’s principles for expected and “proper” conduct in the workplace. Usually, a code of conduct contains descriptions of processes related to unethical behaviour and perhaps even a list of unacceptable behaviour as well as what employees should do if they observe examples of unethical behaviour.

Policies describing proper conduct in the workplace are relatively common in organisations. But the problem is that most studies find only little or no effect of these policies.

In fact, a meta-analysis found that the existence of an ethical code of conduct in some cases may be linked to more unethical decisions.

We know less about why these policies have limited effect, but it could be because many organisations introduce policies without employees knowing about it. Further, it could be that the policies are never fully implemented, are misunderstood or misinterpreted and ultimately not properly enforced.

Employees’ perceptions are crucial

Ethical codes of conduct are not necessarily without any effect. Research suggests that policies concerning ethical behaviour can be effective, however, only in cases where employees perceive the policy as enforced.

If, on the other hand, employees perceive the organisation’s ethical policy or compliance procedures as purely symbolic initiatives, it may lead to a growing cynicism among employees, which leads them to feel justified in behaving unethically (Treviño et al., 2014).

Thus, organisations that establish codes of conduct not only risk that their policies have zero effect. They risk that the policy will counteract what it sets out to do if employees do not find the policy legitimate.

Are the ethical requirements legitimate?

When assessing a policy’s requirements for ethical behaviour, employees also assess the requirements based on fairness. If employees consider the requirements unreasonable or inauthentic, the compliance rate drops.

In highly regulated industries such as the banking sector, there may be a particularly high risk that employees perceive new requirements (internal as well as external) as excessive, unreasonable or simply as something that is not consistent with the way they normally do things. Employees are less likely to embrace a behavioural code of conduct if their perception of the policy does not correspond to their reality and experience of their leaders’ and colleagues’ behaviour and the organisational culture at large.

When employees assess the legitimacy of a requirement, it is not only about whether they consider it a good idea or not. It is also about whether they consider it as “authentic”. Is the organisation serious about this? Or is it just pretending?

The problem with the 100 pages

It is not unusual for behavioural codes of conduct to consist of more than 100 pages. However, only few people actually read these extensive documents from start to finish. In fact, an American study carried out by Deloitte showed that 91% of consumers accept legal terms and conditions without reading them. Similarly, studies have shown that far from all employees read company policies and procedures.

Therefore, if an organisation asks its employees to sign a 100-page ethical code of conduct thinking that a signature is an acceptance of having read and understood it, it could not be more wrong.

“So, why have a code of conduct?” you might ask.

Some companies use the signature in an attempt to place the responsibility for errors and fraud on employees. This is an extremely reactive strategy that neither helps companies nor their employees to avoid errors and fraud.

Here is what you should do instead

If you want to successfully implement an ethical code of conduct, we suggest that you follow the advice below.

Brief ethical reminders

If you are implementing an ethical code of conduct, it is about setting a clear framework for your employees’ behaviour. This means that you should take a behaviour-based approach, in which you provide brief ethical reminders that are intuitive and easy to understand at a time when they are most important and relevant.

Culture and the tone of the management

The tone of the management is one of the key factors in promoting ethical behaviour in the organisation. Leaders who act as role models and display authoritative behaviour have a great opportunity to steer employees in an ethical direction.

Thus, ethical management – relating to your own behaviour and the way you communicate and reward others – reduces deviations from compliance and overall unethical behaviour. In addition, it seems that ethical management has other positive effects such as increased engagement (Treviño et al., 2014).


Legitimacy is about enforcement, among other things. Even though an ethical code of conduct in itself does not have much of an effect, there is a link between the employees’ perception of the enforcement of the policy and their perception of the legitimacy of it. To have a policy that works, employees need to feel that you are doing something about it. If employees do not believe in the purpose of the policy, there is a risk that it will backfire.

One way to show your employees that you are acting on your ethical policy is to adapt your performance management to ensure that everyone (particularly the leaders) in the organisation commits to the rules. This is a way of signalling that the rules are not just for show, and it enables better self-governance, which plays a major role in your employees’ perception of the legitimacy of the rules.

Detection vs deterrence

You should focus on detecting unethical behaviour rather than deterrence. Obviously, the threat of punishment will have no effect if the chance of getting caught is very low. Some studies indicate that better detection of unethical behaviour deters more than the threat of a severe punishment. For the rules to seem authentic, it is important that you actually want to catch people who behave unethically.


Ferris P.A., Deakin R., Mathieson S. (2018).
Workplace Bullying Policies: A Review of Best Practices and Research on Effectiveness. In: D'Cruz P., Noronha E., Caponecchia C., Escartín J., Salin D., Tuckey M. (eds): Dignity and Inclusion at Work. Handbooks of Workplace Bullying, Emotional Abuse and Harassment, vol 3. Singapore: Springer.

Kish-Gephart, J. J., Harrison, D. A., & Treviño, L. K. (2010). Bad apples, bad cases, and bad barrels: Meta-analytic evidence about sources of unethical decisions at work. Journal of Applied Psychology, 95(1), 1–31.

Treviño, L. K., Nieuwenboer, N. A. Kish-Gephart, J. J. (2014). (Un)Ethical Behavior in Organizations. Annual Review of Psychology 2014 65:1, 635-660

Cakebread, C. (2017). You're not alone, no one reads terms of service agreement. Business Insider, Nov 15, 2017.

The Security Company (2018). Why do employees avoid reading policies? At, retrieved 6 July 2020.

See also
”Compliance Fatigue”: Ernst and Young. 2014. Overcoming Compliance Fatigue. Reinforcing the Commitment to Ethical Growth – 13th Global Fraud Survey.

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