Improving Ethics in the Business

Corporate scandals in recent years have lead to a flurry of changes in how we conduct business at many levels. The federal government has increased regulations for companies producing financial reports through the Sarbanes-Oxley Act (SOX), and internally many companies have increased the responsibility of the Board of Directors in overseeing the managing executives.
Still, many stock holders, business owners, managers, and even employees express concern over whether their organizations are ethical and whether members at all levels hold themselves to a high standard of conduct. How can you improve the confidence you have in your organization’s ethics? There are several basic steps you can take.

Create a Plan
The first step, as should be the case with any initiative, is to create a clear plan that focuses on addressing particular situational needs of your organization. While each plan should be unique to fit the organization, typical activities would include items such as improving the hiring process, clear communication of the ethics policy and codes of conduct, establish a systems of checks and controls to ensure wrongdoing is discouraged and discovered in a timely manner, and finally a clear policy and procedure for investigating and handling breeches in ethics appropriate to its level and severity.

Follow through with Action
Once you have identified needed steps to improve the ethical environment of your organization or department, make sure you follow through by caring out the steps. Hold the training classes, circulate the code of conduct annually with each employee signing a statement that they have read it and will comply. Follow the plan for hiring even if it is inconvenient to check references and background.
Where needed, as identified by the plan, develop clear policies and procedures for key processes, and then conduct training to ensure all relevant employees understand the expectations of how processes should be carried out. This could apply to any area of the business, from cash drawer handling to proper disposal of hazardous materials in the production area.
Once again, make sure all ethical needs of the business are being addressed. Owners and executives tend to focus only on cash, accounting, and finance, but, as the above example shows, ethical behavior in all facets of the operation can be just as important.
Clear policies and procedures communicated and followed by organizational members is a critical piece of an internal control.

Ethics Is a Part of the Organizational Culture
Besides developing and executing a plan, the most important way for a business to improve ethics is for the organizational leaders to display the highest degree of ethical behavior in how they conduct business on a day to day basis. Is it fair to require employees to meet expectations of the highest ethical conduct, when day in and day out, they see the leaders of the organization showing little concern for customers, delaying payment of invoices, and blaming subordinates for their own mistakes?
While establishing codes of conducts and controls is important, many members of an organization will take their ultimate ethical cue from those who they feel are responsible for making decisions and setting the tone. The bottom line is that the organization will be as ethical as its leadership. So when developing policies and codes of conduct, the first ones in line for buy in and incorporating them into daily activities should the ones in leadership positions.