New Ethical Considerations...

Barbara Weltman

In light of the corporate culture of Enron, WorldCom and other notorious businesses, new interest has been focused on business ethics. Small businesses can set the rules by defining their ethical practices.

What is an “ethical company”?
Being ethical means “walking the talk” says Connie Marmet, MBA, who teaches business ethics at the University of California, UCLA Extension, in Los Angeles. A company may say “we go the extra mile” and then tell its customer service people to spend only a minute or two resolving customer complaints. There is a clear disconnect between what the company says and what it does, resulting in unethical practices.

An ethical company incorporates attributes such as fairness, mutual respect, reciprocity and impartiality. These qualities are reflected in the way a company deals with co-owners, employees, customers, vendors and anyone else – and by the degree to which the company keeps its word.

Being ethical requires that you tell employees and customers what they can expect and how they will be treated, and then live up to what you’ve said.

Benefits of being an ethical company
Being ethical should be its own reward; do the right thing because it’s the right thing to do. But studies have shown that there are also financial bonuses for conducting a company in an ethical way:


  • Profit rates are substantially higher.
  • There is lower employee turnover, which saves money.
  • The best and brightest are attracted to ethical companies.

    Creating a code of ethics
    It may be helpful to put your code of ethics in writing. Doing so provides a double benefit: The writing forces you to focus on the details of what you view as ethical conduct and how you want to implement it, and it provides a benchmark against which to judge your subsequent actions.

    The code of ethics should include your company’s mission – what you hope to achieve – and the actions you do and do not sanction. Clearly, some things are black and white and may seem too obvious for inclusion in a code of ethics – it does not need to be said that stealing from the company is wrong and that there will be consequences for violators. But gray issues may need to be fleshed out (for example, whether e-mail can be used for personal messages).


  • Explore standard business practices in your industry.Learn what other companies are doing in this regard.
  • Obtain employee input. If employees are part of the process of generating a code of ethics, they are more likely to respect it in operation. Employees want to know what’s expected of them, be provided with the right materials and training and receive recognition for a joy well done.
  • Designate someone to oversee compliance. While small businesses don’t have the resources to hire a person whose sole function is reviewing ethical issues, someone already on staff – you or someone else – can be the “go to” person for ethical problems, before or after they occur.

    Living with a code of ethics
    Writing down ethical practices is a worthless activity if you don’t follow through and live by the rules you’ve set. Make it clear to your staff that you and other owners are subject to the same ethical rules as they are.


  • Post your code of ethics so that employees know what’s expected of them.
  • Train employees to comply with the company’s code of ethics.Conduct meetings for all employees to explain the rules. If you can afford it, use outside professionals to conduct employee-training sessions (e.g., Integrity Interactive at
  • Maintain an open-door policy to learn about violations.While you don’t want to encourage spies and snitches, you do want to create an atmosphere where members of your staff feel comfortable discussing concerns about ethical questions. It has been noted that a third of workers don’t report clearly unethical behavior because they fear peer retailiation.
  • Follow up on violations and hold people accountable.Establish a procedure for investigating violations and giving suspected violators an opportunity to explain themselves.

    Want to start and run an ethical company but don’t know where to begin? There are some resources available to help.


  • You can find articles on ethics from the George S. May International Company, a business-consulting firm that has been in business for nearly 80 years (
  • Business Ethics Online ( is an online report on corporate social responsibility. The site also has a business ethics directory with links to like-minded organizations in progressive business.
  • The first annual Business Ethics Summit is being held in New York City on April 21, 2005. For details, go to

    Copyright © 2005 by, Inc.

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