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Ethics and Credibility -- What Now?
The most recent series of scandals in the corporate world – Enron and
Andersen being just two of the leading examples, now seem to have been
put behind us. Sarbanes-Oxley and similar legislation in almost every
country around the world has been enacted and for a while at least the
genie is back in the bottle.
But this round of failings in ethics and credibility is just one of many
throughout history, and there’s every reason to be confident it’s going
to happen again. When it does a lot of businesses will go under with it,
and not all will be household names. How can you keep your organization
away from temptation and on the side of the ‘good guys’?
Strangely enough, a lot of the illegal and unethical activities took
place under the guise of ‘delivering shareholder value’. To look good in
the eyes of their shareholders a number of senior executives utilized
questionable accounting practices and constructed forecasts far too
optimistic to have ever been achievable.
In organizations with flatter structures the outcomes have been much the
same. Dishonest brokers touted worthless stocks to their clients;
foreign currency traders took risks with other people’s money and lost
billions. What it all comes down to is that some people are just plain
unethical. They abuse their positions of trust and wind up destroying
businesses and the life savings of employees and investors.
Unfortunately this also takes place at the small business level. Owners
and managers of some small enterprises have made promises to customers
they never intended to keep, or borrowed money they could never repay.
The result is that the unsuspecting people who trusted them lost
savings, homes and even their own businesses.
We can’t allow ourselves to forget that all of this was caused by
people, not the businesses they controlled or exploited. This had
nothing to do with a change in the way businesses should be conducted;
in many ways it was something that had built up for years and only
peaked with the fall of some big players. And it was all caused by
people behaving improperly.
If they had thought further ahead than the next profit projection or
about what they could make out of the next deal they’d have realized
that it couldn’t go on forever. They were always going to be caught
eventually and when they were they’d have to pay the penalty.
Unfortunately they also dragged a lot of innocent victims down with
them.
It’s up to the owners of any business to create and maintain a culture
of ethics that will create and protect the firm’s credibility. Your
business, regardless of its size, can and should have a means of
encouraging ethical behavior among all the members of the team, from
senior management to the office junior.
It might cost a bit to do whatever’s necessary to create an ethical
business climate within your business, but the option is to accept that
you can lose your business almost as quickly as the business can lose
its credibility.
Business ethics are really about ensuring that our relationships with
others, both within and outside the business, are conducted in a way
that is moral and consistent with all applicable legislation. It’s not
about ways to stay within the boundaries of the law; it’s about wanting
to comply with it.
Think of the benefits of being known as a business that actively pursues
ethical behavior. The public perception will be one that tells all
stakeholders the business can be trusted. It’s something you can
publicize with pride.
You’ll also avoid the increasingly heavy penalties that most
jurisdictions apply to those whose ethics are called into question. Even
if you, the owner are unaware of an employee’s wrongdoing you can still
be held accountable for allowing transgressions to take place.
By encouraging ethical behavior the business is also protecting itself
against fraud by team members who might see something going on at the
top of the organization and take their own actions to get a share of the
spoils. As may owners have discovered at their own expense, it starts
with stealing things like pens and paper and grows from there.
The most successful programs targeted at creating an ethical culture
within a business are based on values, not on simply complying with
policies, rules or guidelines. The business must have clearly defined
values that determine the way it should conduct itself commercially –
with its suppliers and with its customers.
It follows that the business has to act in a way that is consistent with
these values in everything it does. Just having a statement of values
isn’t enough; communicating them and gaining the buy-in of all team
members is required.
Identify the Organization’s
Values
Begin by making a thorough examination of the values underlying the way
the business behaves. This includes both good and not-so-good values;
most businesses have both kinds.
Correct the Negatives
When you turn up anything that is unethical or could lead to unethical
behavior find a means of correcting it that will result in the creation
of a positive value. If, for example, ‘loading’ invoices is a common
practice, make it a business value to ensure that all relationships with
customers are conducted accurately and honestly.
Prepare a Code of Ethical
Conduct
Work with your entire team to produce a code of ethical conduct that is
all-encompassing. It should cover everything your business does, even
down to the way team members interact with each other. Put it in writing
and make sure everyone has a copy.
Train the Team
Prepare a training session (or more than one if required) that will
communicate and reinforce the values of your business to everyone on the
team. It will tell them how to comply with the code of ethical conduct
in their day-to-day work. This should also be part of every new team
member’s induction to the business.
Monitor and Follow-Up
If there are any suspected breaches of the organization’s code of
ethical conduct you need a means of investigating and resolving them.
This should be a part of your overall code and not be taken lightly.
Establish a clear set of responses to proven violations that go all the
way to dismissal.
If you go about it with sincerity and a determination to get it right
you’ll be able to build a culture of ethical behavior that will be a big
positive for your business.
You will remove the potential for people in your business who are now
behaving ethically to later yield to temptation and cause damage to your
business. Your credibility till be greatly enhanced and you can go to
sleep at night knowing that you and your organization are perceived as
ethical and credible members of the business community.
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