How to Improve Business Ethics

Many stockholders, 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.

Improving Business Ethics

How can you improve business ethics? There are several basic steps you can take business ethics in your company.

Create a Plan

The first step to improve business ethics, as should be the case with any initiative, is to create a clear plan that focuses on addressing particular situational needs of your organization. An organization where lots of members handle lots of cash would be very different from an organization where cash flow is only purchase orders, invoices, and checks. Where are the significant risks? If there is little risk in employees pilfering cash then why make a lot of effort in developing stringent cash controls? You should put you efforts elsewhere.

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 employee 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 will definitely help improve business ethics.

If the idea of detailed analysis of risk and risk management through an ethics plan seems overwhelming, you can consider hiring an outside consultant. Someone with expertise in this area can guide you through the process quickly and effectively so the program has legs and it is not just another great idea sitting on the shelf because no has the time. It can be well worth the money invested; imagine the devastation to your business and your reputation if a scandal makes the press.

Follow Through with Action

Once you have identified needed steps to improve business ethics of your organization or department, make sure you follow through by carrying 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 your ethics program, its 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. After all, an investigation and a fine by the EPA could be more damaging to your business finance and reputation than minor cash pilferages.

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 (found in our Accounting Manuals Template), 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, as recognized by organizations such as COSO. They can aid in meeting compliance requirements and with objective setting and measurement — the key to improve business ethics.

Ethics Is Part of Organizational Culture

Besides developing and executing a plan, the most important way to improve business 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.

If you need assistance with developing policies and procedures, Bizmanualz can help. We have a full line of off-the-shelf policy and procedure manuals that address key business segments such as Computer & Network, Accounting, Finance, and Sales & Marketing.