Business Ethics Foundations: Key Elements of an Ethics Program

by Matthew Pike

With all the recent headlines about company misconduct and business ethics violations has come a significant, and long overdue, increase in the consideration of ethics among businesses. As a result of the recent bad press about lawsuits against companies’ “behaving badly”, there has been a rapid, almost frantic scramble among many large corporations to set themselves apart from the “wrong-doers” in the business world. Companies have quickly penned ethics codes, instituted ethics compliance monitoring programs, or have had high-level corporate officers visibly touting their company’s “new and improved” ethics focus in the hope of regaining consumer confidence in a devastated economy. And with good reason: consumers are increasingly wary of all business interactions, to the detriment of all, even the most upright of enterprises. 

While businesses are fighting for survival in adverse conditions, they need to be looking to the future and building solid foundations upon which to base their future efforts. Even without investing vast financial resources, any company can reap tremendous benefits from considering and initiating an ethics program. In addition to the widely recognized value of improved company image and a smoother, more effective and happier work environment, an ethics program can contribute to a better bottom line, through stronger and more solid client relationships and decreased expenses in a variety of areas.

A solid ethics foundation has four key elements. The first is a strong code of ethics. The Sarbanes-Oxley Act of 2002 made it important for businesses to have an ethics code, something in writing about what one ought to do, and what to strive for. This also serves to inform employees of the vision that the company’s executives have for the company’s image and goals. This helps new employees learn important aspects of how to carry out their actions at work., and provides veteran employees with something to fall back on; both as a reminder and as something to cite if they are being pressed to do something that they believe to be wrong.

A strong ethics code ought to address both general values for which the company stands, and particular principles specific to the daily operations of that particular enterprise. Thus some codes may focus on full disclosure of their own abilities, time estimates, and costs, while others might address safety and/or full acceptance of responsibility for the quality of some product. The key is to generate a code that is tailored to the activities and goals of a particular organization, while simultaneously upholding universal ethical principles.Don't be afraid to rewrite. Repeatedly.

The second key element to a solid ethics foundation is ethics training. This is where the ethics code is integrated into the workplace. After all, any ethics code, no matter how well written, that is not understood or followed is only worth the paper or disk space it is stored on. Some companies have an in-house training department that can provide the requisite training. A trainer needs to have sufficient experience and training in the field of ethics to be most effective. There are more variables in ethics than in the most complex calculus equation, and so adequate training of a workforce calls for a significant level of expertise. Everyone has already sat through “be nice to each other” lectures as a child; business-level ethics training needs to go far beyond this to add anything new.

An alternative approach to providing in-house training is to hire a specialized ethics training company for seminars or online training of employees. A word of caution-the ethics training that most companies are providing to their employees, and that most ethics training companies are offering, is compliance based. While a good start, this kind of training is meant to inform someone what not to do if they want to stay out of trouble. Recent federal and state compliance requirements have accomplished good things in specifying actions that, for the good of the public, are prohibited. While these requirements are important, they are nevertheless merely corrective in nature, ex post facto, for problems that never should have arisen to begin with. What happens when a new situation arises, that is not detailed in any federal regulation? Every day we face new experiences and new challenges. If we want people to make ethical choices in novel situations, the focus on ethics training needs to be shifted from “here’s what we have seen is bad to do” to providing the analytical tools and decision-making processes that will empower workers from the beginning. The other benefit to this manner of training extends beyond the workplace. Once people have learned how to live ethically, not just how to act ethically, the benefits of doing so carry over into all aspects of their day. The quality of home life improves, relationships are more fulfilling, and life is more enjoyable for everyone involved. Ask your perspective consultant lots of questions about their approach, and ask to see sample materials to ascertain which approach they employ.

The third key element to a strong ethics foundation is an “ethics coach”, again either in-house or out-sourced, who will be available as a friendly and confidential resource for employees facing complicated ethical dilemmas. This person needs to be available for “casual chats” when difficult situations arise to provide guidance, counseling, and advice to employees. This person needs to have sufficient expertise in employing ethical concepts, analytical skills and decision-making tools to facilitate an ethical resolution to the problem. Also essential in an ethics coach is the assurance of confidentiality. There are far too many places out there where employees are too intimidated to go see the ethics coach, either because of fear of their concerns getting back to their supervisor, or because of stigmatization by fellow employees for seeking help. This can be helped by a friendly and upstanding coach who protects confidentiality, and who speaks with everyone in the office at various times, not just when there is a difficulty.

The fourth and final key element, which ties in closely to the third, is an anonymous reporting tip-line. This serves to provide employees with a means for reporting observed misconduct or violations without fear of reprisal. This serves to further discourage ethical violations, while getting everyone involved. It also provides the all important “do something about it” option. The most important part of this is obviously the anonymity. If there is even a perceived chance that an employee’s use of the hotline will be revealed, it will not be used. This is one advantage to outsourcing your ethics program, because in both the third and fourth key elements, confidentiality is central, and an out-of-house ethics company is not accountable to, nor controlled by, the company that is being reported against. This puts the ethics company in a position to act on behalf of the reporter without divulging who the caller was. Many companies are disturbed by the thought of giving employees what they perceive to be a “complaint line”, but it is far better to deal with problems early, than to let them get out of hand, resulting in such things as lawsuits or the loss of employees; additionally, early detection and resolution of ethical problems may save the company huge amounts of money in cases such as theft or other misconduct.

The current trend of increasing focus on ethics is a much-needed change, with recent events rightly drawing attention to its importance. Now that it is here to stay, some time and resources need to be invested in determining what role ethics and ethics training are going to play in the future of business. If used well, ethics enhancement may not be just another expense for businesses that are already struggling, but the solution that reverses the economic difficulties of late and builds a better way of doing business, and of living in general.