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What makes a business an ethical business?

May 27, 2011

If you ask any business owner whether their business is ethical, they will probably tell you that they think it is ethical.  Usually they have some reasoning to go with it, if nothing else “because I am ethical”.  In the same vein, almost all drivers believe that they are “above average drivers” when asked.  When evaluating whether your business is ethical or not, you need to look at your organization as a whole, beyond the individual component.  Rest assured there were both ethical and unethical employees at companies such as Enron, which, as you know, had large-scale ethical misconduct. It is just that given the corporate culture, many were sure they were doing “the right thing”, which to them often meant short-term profits or financial statement tweaking to appease stakeholders.  Worth mentioning, Enron did have a code of ethics and in other cases of unethical business behaviors, some of those businesses beforehand promoted an image of being ethical without evaluating whether they really were.


The best place to begin evaluating your organization’s ethics is with your organizational culture.  What does it value?  Profits first and then everything else?  There is a perceived paradox in which one assumes bottom line is sacrificed in lieu of being good, but the reality is that ethical companies with ethics programs are on average more profitable than companies without ethics programs.  Having an ethical corporate culture among your employees is foremost to being an ethical organization. 


To help develop that culture it helps to have a code of ethics that doesn’t get stuck on individual issues, but instead develops a framework for ethical decision-making.  It is impossible to imagine all the individual ethical issues that will arise and address them, so instead have a written framework for ethical decision-making, plus it is imperative to have an escalation process for situations when the individual cannot be sure of how to handle a decision.


The next step is ethical training: Share this code of ethics regularly with your employees in a meaningful way, not merely reading a document that is initialed and then filed in HR.  Discuss, interpret and try to apply the code to real life or potential decisions people in your organization may face to see how it works.


Finally, you need to have ethical leadership.  More than anyone else management needs to demonstrate ethical behavior to make your ethics program a success.  Your employees will make note if you cut corners to make a buck and will do the same for themselves.


After you have your program in place, monitor and adjust it as needed and keep your ethics program alive rather than a piece of paper locked away once written.  If you need help writing a code of ethics, please contact us at Wyoming Entrepreneur for help.


Jim Drever

Holds a Certification in Teaching Business Ethics, University of New Mexico

Category: Ethics

Jim Drever

Jim Drever is a counselor with the Wyoming SBDC.

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