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Building an Ethical Organization for Businesses

 By Carolyn Worthington, PhD

Creating an organizational culture where leaders and employees collectively aspire to meet high ethical standards is both desirable and possible. Prevention and detection of unethical or illegal conduct is an imperative for a business of any size. This means not only dealing with misconduct but also establishing a framework that includes a comprehensive code of ethics and strategies for building an ethical organization.

Ethics is not an easy word to define. Various dictionaries refer to ethics as standards of conduct, morals, a code to live by, and good or right character. Because of the various interpretations of what actually constitutes ethical behavior, it is important that each organization clearly define its own ethical guidelines. And, as most HR professionals know, adherence to these guidelines is not possible if an organization's leadership does not "walk the talk" or if there are insufficient consequences for those who sidestep rules, policies, or guidelines. 

The importance of ethics in guiding your organization's strategy and people cannot be overstated. Whether or not your organization is subject to the Federal Acquisition Regulations (FAR) , Sarbanes-Oxley (SOx), or any of the assorted state ethics requirements, it is crucial in today’s workplace to foster a business environment that is ethical, respectful, honest, and safe. A successful ethics and compliance program must be driven by core business objectives, embraced by business owners, and followed by all employees. A well-designed program can help your organization to: 

  •  Identify the boundaries of ethical behavior

  • Ensure that your employees are aware of ethical standards and your expectations  for appropriate conduct

  • Integrate your ethics and compliance initiatives into everyday business practices

  • Engage employees in promoting and safeguarding an environment of integrity

  • Encourage employees to make principled decisions and report concerns of inappropriate actions without fear of retaliation

  • Respond quickly and appropriately once an ethics issue is identified to minimize any negative impact on the organization.  

Developing a strong open culture of accountability, integrity, and trust is the backbone of a strong ethics program and this can profoundly impact organizational performance. To ensure that your program meets your organization's needs, check for the following components:

  • A comprehensive code of ethics/conduct

  • An ethics and compliance policy

  • Ethics guidelines and training for management 

  • An employee training program

  • A communication process for ongoing awareness

  • Practical reporting and investigating procedures

  • Consequences for ethics violations

Given the recent downturn in our economy, ethical violations such as fraud and theft may become more common. These are most prevalent in smaller companies where there is a belief that "I know this person too well" or "I would know if this were happening."  To deter ethical violations, managers should be trained to spot potential fraud and employees encouraged to report wrongdoing by coworkers.  

Ethical behavior is a core value among successful businesses. Promoting and guiding such behavior helps business owners make a real difference in their organizations and in communities.


This article does not substitute for professional advice.

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Dr. Carolyn Worthington serves as a Senior Consultant for Human Resources on the Strategic Workplace Solutions Team.

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