BUSINESS AND SMALL BUSINESS ETHICS

Small business ethics are as vital to any business as are marketing or advertising.

Why, you might ask? Well, because being ethical makes good business sense.

Here are some of the facts.

Ethically run businesses tend to survive where others don’t.

A good reputation, both for the business leaders and of the business itself is worth money in the bank.

Losses through internal theft are much lower.

Good people are attracted to your business and staff turnover is much reduced.

People actually like working for and with ethical businesses based on good small business ethics.Employees who are trusted and trust their bosses are more productive.

On the other hand, dodgy businesses without business management ethics, can also be profitable, but at what cost?

Unethical practices must be hidden or are liable to discovery and inspection. People are always watching, which is a problem if you and your business are not ethically managed.

If a business is run unethically, management is always aware that all business decisions have to be made on the understanding that it is necessary to cover for any previous unethical decision and not based on what is good for business. A guilty conscience is not the best base for good decisions!

There is always present the fear or awareness that one might be caught, as so many businesses, from small to corporate giants, are.

Once tarred with the brush of unethical behavior, you and your business reputation are gone and your good name cannot be recovered.

So, if you want to sleep well at night, not find it necessary to be looking over your shoulder and just feel good, make sure that your small business ethics are sound.

Smart business people are ethical business people

I am jumping ahead of myself here, so let me regress a bit. I have always considered myself fortunate, in that both my parents were honest and ethical people, and I have, throughout my life, worked for ethical people.

That said, my first real sight of unethical business was when I, as a newly trained and promoted brewery manager, was posted to a small brewery in a small country town. One of my many responsibilities was the petty cash, which at one month end I could not balance. I was up $20, quite a bit of money 30 years ago. For the love of me I could not figure out why I had more money than I should. Anyway, I banked the petty cash balance and left the $20 in the box for the next month hoping to find a lost invoice or anything to account for the surplus cash. I did not want to bank the surplus, as being new in the job; I thought that it would show me up in a bad light as being careless! How foolish is youth!

Moving on, towards the end of the next month, I was visited by a company auditor from head office and I told him about the extra $20 in the petty cash, expecting that he would suggest a solution. He did, I should have banked the surplus, but as the books had gone through already he had the answer, he pocketed the money!

I was taken aback, but said little as he was very senior to me. It was only later that I thought how lucky I had been in that only I had known of the extra $20. If any of my staff had known that the auditor had pocketed the surplus, how would I have ever tried to maintain any standard of small business ethics in the future?

Less than a year later, my ‘pocketing auditor’ was no longer employed by the company. He had left one day without a farewell party or ceremony and no one could say why!

Thirty years on and I still cannot believe that I stood by and let it happen!

What are ethics?

Now, onto small business ethics. Before we go any further, a definition of ethics might be in order.

Google good business ethics and you will find many long winded definitions both from a moral and a business point of view.

In some cases it is stated that running an ethical business is a must in that we all have responsibilities to others, and in other cases it is stated that you can not be ethical in business as it reduces the maximization of returns to the shareholders!

My understanding of business ethics is based on the word itself. The word ethos comes from the Greek ethos meaning habit or custom, the character of a people. We in modern day business terms have come to accept it to mean the principle of right or wrong. Customs that we use to conduct our business. Choosing to do what’s right or fair.

The concept of right and wrong can mean different things to people of different cultures or religions, so I think the concept of fairness fits better and covers both words.

To put it in a nutshell, to be ethical means to be FAIR to the people that we deal with, be they suppliers, employees, customers, shareholders or the general public.

Another sure way of knowing if what you are doing or intending to do is ethical, is to ask yourself if you would like it to happen to you. If you answer no, then be careful, what you intend to do could be going against your small business ethics

Use the concept of “fairness” and “would I like it to happen to me,” in your business life and you won’t go far wrong with your small business ethics.

Often you will hear statements from people that if it is legal, it must be right. This of course is not so, it can often be legal but definitely not right.

Does profitability make all actions right and ethical? It is sometimes argued that the duty of any business person is to maximize profits for its shareholders at all costs. This based on the assumption that the shareholders would only want such actions i.e. all shareholders are unethical!

No one bothers however to ask the shareholders if they, in fact, agree with such assumptions. Shareholders are ordinary people too and as such are as ethical as the rest of us.

The ethical management of a company is possible and will lead to sustainable and higher profits, provided the business is managed ethically for the long term.

How do we manage our businesses ethically? A simple answer, I suggest, look at the people we will impact on with our business and manage it to satisfy them.

Let’s look at who our business will impact on:-

1. Our stakeholders

Anyone who has anything to do with us, suppliers, partners, employees, customers, shareholders and the general public.

Treat all of them right and you will have employees who produce good products, to please your customers. Your suppliers will know what you expect and that if they deliver efficiently they will get paid promptly. Your partners and shareholders know that they do not have to worry about your company as its small business ethics are sound.

The general public at large knows that your production processes do not pollute their environment.

2. Our processes

Do you and your employees take pride in your product or service? You don’t take shortcuts to prune costs, use poor quality material or make false claims on or about your product or services.

All your stakeholders must trust the end product to be of good quality.

3. Your leadership

It is obvious, but the point is often missed, that the need for small business ethics must start at the top, if there are to be any ethics in a business at all. You cannot claim that you are managing ethically if you yourself take free work out of your business, arrive late to work, punish unfairly or favor certain employees.

You cannot expect employees to follow you if they don’t trust you; you have to lead by example.

Remember also that any unethical decision by you, as the boss, is going to have consequences far more serious than any employee stealing some company paper or falsifying his time sheet. Your unethical behavior could lead to the entire business collapsing and the loss of everyone’s job!

Small business ethics must run from the very top to the very bottom of your business.

4. Conservation

How can you think that you are ethical if your business is damaging our environment? You dump your waste, you pollute the air with your smoke, your waste water or chemicals contaminate the water systems.

You cannot consider yourself ethical if you do not care for your environment. Conserve, recycle and prevent waste, it makes good sense.

For more information try the Institute of Business Ethics

The management of your small business ethics starts with a code of ethics for your business, contained within your company’s mission statement.

This code is the ethical standards that are set for all members of your business, from top to bottom, without exception.

Contents for a small business ethics code

• Is it fair to all our stakeholders?
• The truth, all the truth and nothing but the truth.
• Dishonesty will not pay? We are honest.
• Quality is king.
• If we have to do it by the law, we will do it right.
• If we have to do it to meet our standards we will do it better.
• We do not expect or accept gifts of any kind from our suppliers. Bribery will not be tolerated.
• Customers are to be satisfied, be treated with respect, honesty and good service.
• No one will be treated badly or unfairly.
• We will not turn a blind eye to unethical behavior.
• As individuals we will do our best at all times.
• Everyone will be trusted, until they show that they cannot be trusted.
• Respect will be shown towards all people.
• We will compete on quality, service, price and position.
• Company assets will only be used on company business.
• There will be no sexual discrimination or harassment.
• The safety and health of all stakeholders shall be paramount.
• Confidential information of all kinds will be kept in house.
• The environment and how we impact on it will be our concern.
• The company will not contribute to political causes.
• Staff discounts will apply to all, equally.

And more, as you find it applicable to you and your small business ethics.

You might find further help at the Center for Ethical Business Cultures.

Any code of ethics, to be effective, must be drawn up by the people who will be expected to abide by it. It is never a job for the boss alone.

Consult your management team, which could be just yourself in a small business, your suppliers, your employees and even some of your customers if appropriate. People seldom take to being told what to do, but will willingly do what they have helped decide.Get consensus from your stakeholders that your Code of Conduct is right for your business. Only then will people take it seriously.

Always remember that being ethical in business has its advantages.

• Customers grow to trust its products and people, so remaining loyal.
• Ethical leadership tends to lead to higher business profits.
• Ethical companies tend to attract the best people
• Employees’ theft is much, much lower when the small business ethics of the company are good and known to be so.
• Conflicts are reduced.

Make sure your codes’ aims are ‘doable’, check decisions against your Code and watch for lapses.

Manage your ethical code like you would your other responsibilities, it is just as important.

Finally, you will be happy to know that, being a good human being makes good business sense as well as letting you sleep well at night.

A small business ethics code is very much a part of any progressive business.

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