How to Build Business Ethics

Many businesses use code of ethics to promote good behavior and fairness in the marketplace.

Since the Sarbanes-Oxley Act of 2002, passed as a response to the Enron scandal, ethics has become a very important subject in the business world. Even though the Act related to mostly public firms, many smaller businesses have embraced ethics as a guide to their operations, helping to promote goodwill. Businesses may have an informal sense of ethics, such as the accepted behavior in the workplace; however, making it "official" can help firms build a good reputation with employees, vendors and customers.

Instructions

1. Develop and write a code of ethics that reflects the values of your firm. Make it realistic by involving employees as you write it down. A code of ethics usually involves an honesty clause in dealing with vendors, customers and each other. Another topic may be to show fairness and respect at all times. A code of ethics should be general enough to be applicable to all business transactions with no exceptions. Once the code of ethics is set up, you could develop policies and procedures as well. For example, if your code of ethics includes a statement about integrity and respect of vendors, you may create a policy about paying bills within 30 days, which is compliant with your ethics statement.

2. Follow the code of ethics and make it important. If you don't comply, it becomes meaningless. For instance, if your business has an ethical value of honesty, and you lie to customers regularly, then your code of ethics is useless, and will not help you build business ethics or a good reputation. When employees see you lying and breaking your own official ethics code, they may feel that they can also lie, not only to customers, but also to you. As the saying goes, "walk the talk," and create a culture that embraces ethical values by starting at the top.

3. Train employees on the code of ethics. If the code is just for adornment, its value is negligible in building character or reputation. Train employees in the ethical ideas by giving real-life examples of ethical behavior. For example, suppose you have an ethical value of keeping your word. If something was promised, it must be delivered or remediated within a reasonable time. You can give examples of promising delivery of an item within 10 days and if it's not possible, to tell the customer right away and not make excuses or try to blame the customer for the delay.

4. Create meaningful consequences when code of ethics is not followed. Employees must know the risk of not following ethical precepts. Let them know that non-adherence to the rules will be noted, and be part of their yearly salary review. Prompt termination should also be included as a possible consequence of not following the these rules --- be sure to modify the employee handbook to include the code of ethics and possible results of noncompliance. Put the code of ethics in visible places, so employees do not forget it. You can also post it on the business' website to make it important, and to help you build a sense of business ethics within your firm.

Tips & Warnings

• Have an attorney or a specialized human resources professional review your code of ethics before you make it official.

References

• "Information Week" magazine; Down To Business: Does Business Ethics Make Business Sense?; Rob Preston; February 2009
• "Inc" magazine; How to Write a Code of Ethics for Business; Josh Spiro; February 2010

Resources

• "Inc" magazine; Business Ethics: Sample Policies; October 2000