All too often entrepreneurs are so focused on getting their business going and growing, that they fail to consider critical business issues like governance, ethical operation, and the sweeping influence of their moral compass – their code of conduct – and the behaviour of their team.
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While ‘lead by example’ may be a cliché – its relevance cannot be disputed – and as the role model for employees, if a leader’s behaviour is unethical, employees are likely to behave in the same way.
In a country where corruption, fraud and commercial crime regularly make headline news, it could be argued that organisations in South Africa have forgotten that good governance is good business, and running an ethical operation is in truth, an indicator of profitability and success.
Ethical vs unethical behaviour
For the sake of clarity - a distinction should be made between what constitutes ethical vs unethical behaviour.
Ethical business– the observation of legally and morally correct standards – includes operating in a way that is characterised by honesty, fairness and equity.
It’s about making good business decisions based on an established "code of ethics" that the company has developed and communicated to staff.
Staff must understand and buy into the code and be very clear on the consequences of crossing the boundaries and operating outside of it. Small businesses and SMEs don’t always have an HR department to deal with such matters, but ignoring issues like this could ultimately cost the business more than if they had just prioritised it at the outset.
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Unethical behaviouris when a stakeholder of the business (management or employee) acts in a way that contravenes the code and is considered morally wrong.
The range of behaviours that could be considered unacceptable include: misusing company time; abusive behaviour; theft (commercial crime); taking home some of the inventory or supplies, nepotism and lying to name but a few examples.
Behaviour guidelines typically address topics such as harassment, work attire and language, accepting gifts from suppliers and associates, theft, among other issues. It’s equally important to have policies in place for the contravention of ethical behaviour and this must be supplied in writing along with the consequence for not following the predetermined codes of conduct.
Instilling (or inspiring) company values
When staff behave ethically even behind closed doors, when no is one watching – they have truly bought into the company’s values. There are plenty of processes that are easy to implement at little cost – even for the SME – which will help foster a culture of accountability.
- Include values in an employee handbook / induction pack. Show new recruits you are serious about ethics by dedicating time to unpacking the code when they first join the company and set this session with the founder of the business. All staff must recognise that the business considers ethical behaviour to be as important as operational performance – so include it in their job description – and build it into KPAs.
- Hiring recruits who mirror the values of the company is probably at the core of keeping teams on the straight-and-narrow when it comes to ethics. To ensure that only candidates with value systems aligned with those of the business are ever hired, introduce the subject during the interview process. It could save trips to the CCMA in the long run.
- A culture where there are regular reviews of value systems will also help teams live and die by the company’s ethical codes.
- The code itself should always be visible, represented creatively, and placed strategically around the business so that it’s never out of sight. It’s also important to roll out team building sessions that reinforce the messages in a fun yet relevant manner.
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The cost of unethical choices
Effective management of ethical risks is a critical element of good governance. Failed corporate governance ultimately will result in problems being exposed, which if drastic enough, can end with a PR and legal nightmare, even tarnishing a brand beyond repair. Getting buy-in to the company ethics is a challenge for any business; and even more so for the time and resource constrained entrepreneur. But to ignore it is an even greater risk!