Ethics and compliance professionals talk about “building an ethical culture” so often, that sometimes I worry about that phrase—that it can become something of a crutch, carrying too big of an idea for four small words. So let’s talk about building an ethical culture in practice. What does the phrase actually entail, when a compliance… Read More
Ethical guidelines within an organization can be influenced by law, public pressure, or a combination of both and are often executed to establish a degree of trust between stakeholders. Simply put, implementing business ethics means that the organization is committing themselves to doing the right thing.
What is Business Ethics?
Business ethics are the values a company upholds throughout its operations. Common ethical considerations include human rights, the environment, anti-corruption, and labor rights. Within each of these overarching areas, organizations typically make commitments to specific ethical standards and moral practices based on the industry they operate in and the corporate culture the company wants to promote.
What is the Importance of Business Ethics?
Ethics are critical to business because they impact both the internal organization and the external perception of the company. Internally, having strong ethics might mean having guiding values, fostering a culture of compliance, and implementing a code of conduct. While organizations cannot control each employee’s actions, they can spell out the ethical issues in business that they are held to.
Externally, an organization’s ethics have the power to impact the company’s reputation and public perception. An organization with low ethical standards is also more likely to end up under fire for misconduct or legal violations. Acting ethically as an organization is an opportunity to build trust with consumers and avoid costly legal actions.
What are the Types of Business Ethics?
There are a couple of main categories that most business ethics principles fall under. These include:
- Human Rights
- Environmental and Sustainability Concerns
- Anti-Corruption Issues
- Labor Laws
When considering the ethical issues you want your organization to represent, you should also consider the following moral pillars:
- Trust – Encourage transparency across the organization from all levels; trust takes a long time to build and only a moment to break.
- Respect – Employees should respect each other and the customers they work with.
- Fairness – In all organizations, it’s important to treat people equally and ensure no groups are benefiting from special treatment.
- Caring – Encourage your workforce to show each other empathy and lead by example by deeply understanding your employees’ opinions and struggles
How to Monitor Business Ethics within an Organization?
Monitoring ethics within an organization means establishing policies, having a whistleblower hotline, and maintaining a robust compliance program. Policies like a code of ethics or code of conduct should be distributed and signed by all employees (and third parties that act on the organization’s behalf) to acknowledge that they are aware of the standards. Another critical piece to monitoring ethics within an organization is a whistleblower hotline where employees can report potential wrongdoing witnessed in the workplace. These reports give leadership a birds-eye-view into the organization and help uncover how ethics are really being carried out daily. Finally, having a strong compliance program is the backbone of business ethics. Not only does an effective compliance program build an ethical culture but it also helps avoid fines and costly legal activities for behaviors that could have been mitigated.