Human Resources Best Practices

Ethics Training? You May Be Surprised

By Eduardo Suarez-Solar

Research has shown time-and-time again that good business ethics/practices pay off financially and limit your legal liability. So, how do you know that there is an ethical concern within your organization and how do you promote doing the right thing as thousands of decisions are being made everyday concerning the running of your organization? You can begin by truly examining the circumstances that led to the ethical and moral violations that occurred at Enron, Worldcom, and Tyco, as well as hundreds of organizations in which such unethical behavior occurred, but which never made national, regional or local headlines.

Organizations that lack ethical behavior cost stockholders billions, rob employees of their livelihood, can weaken an organization’s competitive position, and can lead to the imprisonment of many of its top executives. However, there are lessons to be learned from the behavior of these organizations, the first of which is that it can happen to your organization just as it has to these and thousands of other organizations. Sometimes the unethical behavior occurs at higher levels within the organization such as it did at Enron, Tyco, etc., but just as dangerous and costly are those independent incidences that occur throughout the business on a day-to-day basis, i.e., inaccurate expense account submissions, the use of company property, or the request of gifts from vendors and/or clients.

Fortunately, most companies do business in an ethical and moral manner. Numerous studies have shown that those organizations that emphasize, doing the right thing not only perform better financially, but do not waste precious resources dealing with and focusing on legal issues. These organizations are better able to focus on customers as well as the bottom line.

According to a recent study, which asked employees their opinions of their companies' business behaviors, the results showed a strong correlation between companies with superior financial performance and their employees who thought their organization acted ethically. The study also showed a strong correlation between higher levels of employee engagement at these companies, which lead to higher productivity, and retention at these companies. This research goes hand-in-hand with several other studies that showed businesses that put an emphasis on ethics were worth more when sold.

In a recent study, those organizations with no ethical codes had a total market value less than half of that of similarly sized organizations that implemented an ethical code. However, those organizations that implemented an ethical code and made a public declaration to their commitment to the issue of ethics in the work place had a market value of three times (3x) those organizations with no ethical code whatsoever.

How ethical is your organization? Ask yourself the following questions:

(1) How high in the organization is the individual whose role within the organization is as the "conscience of the company"?

(2) Who is presently taking on the untraditional role of CEO, Chief Ethics Officer?

Here are some considerations from the experts to advance the cause of ethics in your organization

Is There A Potential Ethical Issue At Your Organization?

• Does your organization maintain a culture where business information is not shared within limits, and where questions raised about specific business practices are discouraged and/or viewed negatively as intrusive?

• Is there an arrogant or careless attitude towards customers, investors, or financial institutions that provide capital to the organization?

• Does the culture believe that the focus on integrity in decision-making slows the organization’s ability to compete successfully?

• Does the organization have a tendency to "spin" bad news and/or to "shoot the messenger" who has the unpleasant job of delivering bad news or unwanted news?

• Does the organization have unrealistic business or financial expectations, with a view towards focusing on the ends versus the means used in achieving it?

Ways To Avoid Ethics Issues Before They Occur

• Educate management about the positive effects of promoting ethics, including the financial advantages and reduction in risk that come from doing things the right way.

• Encourage open statements of your company's values. Then develop and enforce policies that reflect those values within your organization’s day-to-day business practices.

• Every employee communication should touch on the organization’s ethical code and/or position. This process should begin with your job offer letters, and culminate with asking ethical questions during the exit interviews.

• Conduct Employee Engagement Surveys with managers and employees, specifically asking questions in relation to the organization’s ethical behavior. Many times such surveys can reveal gaps in perception. These surveys should be conducted every 12-18 months. You must be prepared to accept, investigate and act upon information revealed.

• Create a procedure for reporting ethical violations including utilizing a third party to ensure the program’s integrity. Do not be shy in publicizing your program both internally and externally.

• Constantly remind management that leadership sets the tone of the organization’s ethical behavior and that is why top management must endorse it.

It is important to remember that when an organization is conducting training in this subject, the training is “ethics,” not “business ethics” training. Why? In this author’s opinion, business ethics does not exist. What is the difference between ethics and business ethics? There is none. Either you’re ethical in your life ventures or you’re not.

Eduardo Suarez-Solar, MMS. MPA, JD, SPHR is a practicing Labor Attorney & President /owner of IER - Integrated Employer Resources, an organization known for combining their legal backgrounds with practical HR and business experience to develop practical solutions for real-life workplace issues. You can contact Ed at www.IERonline.com or 813-289-6508

Published September 2007, Bay Area Business Magazine

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