Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.
When we mull the company we’re currently running or envision creating a new company, we may not necessarily consider whether it’s an ethical business. However, consistent ethics are essential for ensuring that a business prospers in a manner coincident with the founder’s values.
There’s no easy way of ensuring that your organization is ethical. Rather, the only viable path is the traditional one of performing over time the hard work of consistently living up to your own values and of honoring those individuals who exemplify your business’ founding principles.
Ethics are an essential part of an enterprise’s cultural fabric. They’re the backbone of each and every action which occurs at a company. They should always serve to guide decision-making when the boss isn’t in the room.
There have been plenty of high-profile ethics problems shared in the news. One of the most recent was the failure to disclose a data breach by the ethically-challenged ride-sharing company Uber. While founder Travis Kalanick stepped down amid reports of widespread sexual harassment and discrimination (among other allegations), the issues haven’t ended. Although it’s assumed that the proverbial buck stopped with him and his assumption of responsibility for the company’s unethical and negative culture, a new CEO has now inherited the transportation giant’s problems – including the aforementioned data breach that both occurred and was concealed during Kalanick’s tenure. Instilling a new, ethical culture will be a difficult task for new CEO Dara Khosrowshahi, though doing so is a highly worthwhile pursuit that can only serve to make the company a better place for both employees and patrons. Generally, though, this sort of task is best handled in a company’s earliest stages.
There are two broad perspectives from which to consider business ethics: whether a business, itself, works toward ethical ends or whether the organization of the business is, itself, ethical. By this, I mean to say whether the goals of the business are ethical in nature or whether the way in which the business functions – how it treats its employees, consumers, and the environment – is consistent with an articulated ethical code.
While social entrepreneurship is often considered to be a source of ethical businesses, such as operating toward ethical ends (e.g. providing clean water to more communities), that doesn’t necessarily mean that they’re run in an ethical manner. In this article, I’ll be focusing on the internal ethics of companies vs. companies which attempt to create ethical goods such as fairly-sourced cocoa.
Values Which Every Organization Should Espouse
Most companies have a mission statement highlighting what they do and why. The values represent the how and are often interrelated. Each one begets the next and the absence of any can erode the influence of the others.
An ethical culture functions both to nurture and encourage these values – and it requires commitment and hard work. Entrepreneurs must lead by example, as must CEOs and managers. Additionally, a concerted effort must be made to highlight the ways in which these values matter to both the internal workings of the business and the products and services it offers. Demonstrating the degree to which a company’s values are integral can help to further acculturation.
I believe that these four values are necessary in order for a business to be ethical:
It’s no surprise that honesty tops my list. When you’re open with people, a predictable and positive thing often happens: they’re open with you. Your employees should always feel comfortable sharing information, providing feedback, offering constructive criticism, and highlighting potential issues so that you can improve your work environment, products, and services. When there’s a lack of honesty, you may not be receiving the information necessary to implement changes or to move forward with innovations. Additionally, employees may feel that it’s okay to conceal information or to otherwise cheat your business or customers.
People who feel as though they’re respected by their bosses are more productive and innovative than employees who don’t feel valued. It’s important to surround oneself with respected individuals and to treat them in such a way as to garner their respect. If you don’t respect a vendor or potential hire, it isn’t a relationship worth pursuing. When you respect that person – even if they’re more expensive or require higher pay – you can build a valuable working relationship that should help your business to prosper. It’s easier to believe that a respected person is working in your best interest rather than somehow trying to undermine your business. Additionally, vendors and employees who respect you will work harder and generate better-quality work product.
Being trustworthy and possessing a high moral character can aid leaders in navigating difficult situations and in keeping the business headed in a positive direction. Those who lack integrity are more likely to cut corners. While this may help business growth in the short term, it can impart incalculable damage in the long term.
Dedication to your business and goals will likely result in long hours and plenty of blood, sweat, and tears. That dedication can help to propel your enterprise forward so long as you remain dedicated to the right things and elevate your values and mission in accordance with those standards. Likewise, dedicated employees who feel valued and so treasure their work life can help your business to prosper over time. Cultivating this sort of employee connection to the company is invaluable. It helps employees to make choices – when faced with a dilemma – which are both in the company’s best interest and in line with company values.
Nurturing an Ethical Work Culture
It’s not sufficient to merely share your values with coworkers. Running an ethical business requires an ecosystem that nurtures positive traits and values.
In order for your values to be understood, they must be shared. Values should be consistently highlighted throughout the interview process, orientation, and training. Values are the guidelines for how things get done, therefore, they must be ingrained so that every decision is made in accordance with company ethics. They should be second-nature to your team. Additionally, your team must believe in the importance of these value and commit, both individually and as a group, to abiding by them.
People, regardless of industry, appreciate a pat on the back after they’ve done a good job. When employees exhibit a company’s values, they should be recognized, whether in person by their coworkers and supervisors or in written reports. Having a system in place which recognizes and encourages behaviors in line with company values can serve to reinforce such behavior.
Honoring standout employees can help to further illustrate the ways in which certain situations should be handled. Honoring an employee should go beyond the simple back pat of mere encouragement. Elevated honorifics can include plaques, special luncheons, or other treats to showcase positive behaviors in the workplace.
Dealing with Ethical Lapses
While no one cares to dwell on those instances in which something goes wrong, it’s essential to have a plan for those times when the company’s values are violated. Consider when an individual should receive disciplinary action or retraining, as well as when employment should be terminated. Create a process for dealing with issues in accordance with company values that reinforces their importance. This process should always be shared during a new employee’s initial training phase so that everyone is crystal clear on the consequences of prohibited actions or behavior. Many companies have a zero-tolerance policy for discrimination, violence, or harassment.
You can create a viable company consistent with your personal values. While it may take more work to ensure that your business culture is an ethical one, it’s well worth the effort. Understand your values, live them daily, share them with your associates, and hold your employees responsible. With time, they’ll be second-nature to all involved.
About the Author
Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).
Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.
Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.