Ethics audit essential for every business

Is your company looking for candidates to replace a departed executive? Is your business seeking experienced managers to handle
projected growth? Are you in search of venture capital to expand the business or finance a management buy-out?
If any of these situations apply to you, be advised both the managerial candidates and the financiers will be conducting an ethics
audit of your business as part of their due diligence effort.
Although ethics were important in the past, the recent spate of business scandals has brought ethics to the forefront. Experienced
businesspeople and financiers realize a strong ethics program is essential for a growing business in any field.
If a company is lax in its ethics reinforcement, one inappropriate decision made by a junior executive can wipe out the company's
customers and stock value overnight.
Ethics is not just about doing what is legally right; more important, it is about what is morally right. Unfortunately, we live in a time
when traditional business standards have begun to fade. Right over wrong and our sense of values and fair play are more frequently
superseded by the urge to take shortcuts to monetary success whenever possible. The justification seems to be, if no one catches
us, it didn't happen.
At a personal level, we need to look into the depths of our humanity and reflect on the behaviors that enhance life. The reward of a
highly ethical value system is not fame or fortune; the reward is the knowledge that you did what was right, which is far more life-
enhancing that money or prominence.
To ensure your business is viewed in the strongest possible light by future financiers and employees, your personal ethics must be
beyond reproach.
This means you cannot afford even the appearance of unethical behavior.
When it comes to business, past skeletons in the closet may never go away. Also, you must ensure your company has a strong
ethics foundation and lives by it.
Zero-tolerance
To pinpoint present deficiencies and potential problem areas, consider performing an audit of your company's ethics environment.
When you conduct your company's ethical audit, look for the following:
 Does your business have a zero-tolerance for bad ethics? If not, why not? The ethics philosophy at your business should
be "one strike and you are out." Nothing else is acceptable for an ethical business.
 Does your company have a formal, written code of ethics? If so, is it distributed to all employees? If your code only applies
to hourly workers and not to management, it is not a code at all, because it conveys a message to hourly workers that executives
can do as they please without fear of retribution. How loyal would you be to such a company?
 If you have a written code, is there a formal system for reviewing, updating and enforcing this code? If not, the code will
quickly be perceived as an ancient document rather than a living one. In addition, both hourly and salaried staff should be
represented on the committee conducting the reviews, updates and enforcement.
 Are employees at all levels of the company trained in ethical decision-making? This means far more than handing them
an ethics booklet. Every employee (old or new) should be required to participate in an ethics training workshop that emphasizes the
ethics ideals of your business.
 Is your ethical training a one-time thing or is it ongoing? If you want ethical behavior to stay strong, it must be reinforced.
Every employee should be required to participate in an annual ethics refresher course.
 How does your company express to employees its commitment to ethics? Does the company provide the training and
nothing more, or does the company instill in every worker the mantra that they should consider the ethics guidelines in their manual
whenever they make a decision involving the company? Are there company posters proclaiming the merits of ethical behavior?
 Are employees encouraged to take responsibility for their behavior? Are they encouraged to question authority when
asked to do something they consider ethically wrong? Are they actively encouraged to maintain a strong personal code of ethics?
Formal committee
 Do you have an ombudsman or similar confidential channel for employees to voice their concerns regarding ethics
violations confidentially and without fear of retribution? Is there a formal committee with senior executive representation that
considers ethical issues in accordance with the company's written code of ethics?
 Is ethical misconduct dealt with swiftly, firmly and justly within the company? All employees, whether executives,
managers or other workers, should be treated in the same fair and impartial manner. There should be no beating around the bush or
lame excuses when dealing with unethical behavior at any level within the company.
If employees see a senior manager terminated for unethical behavior, that action will reinforce their commitment to ethics.
Conversely, if they see the senior manager getting only a slap on the wrist, this inaction could destroy the ethical foundation you
worked so hard to establish.
 Does your company emphasize to all senior leaders the fact that they must be models of ethical behavior for the rest of
the company at all times? This means both on and off the job; therefore, you must ensure your managers all maintain and value a
high degree of personal ethics.
Uncovering existing rotten apples in your business can be difficult. One way to do this is to give a simple questionnaire annually to
all employees.
Ask three key questions:
1. How do you rate your personal ethics on a scale of 0 (worst) to 4 (best)?
2. How do you rate your supervisor's ethics on the same scale?
3. How could we improve company ethics?
Share only the collective results with supervisors. If there is a recurring theme of actions that should be taken by the company or a
supervisor who is rated poorly on ethics, take action accordingly. I define poorly as anything less than 3.
With supervisors, discuss the issues and get them to commit to a plan of action to improve their ethics. If the situation does not
improve, consider giving them the opportunity to seek employment elsewhere.
If your audit uncovers any ethical deficiencies, correct them immediately. Today you must maintain the strongest possible code of
ethics if you are to attract the best employees and capital on the most favorable terms.
Read more: Ethics audit essential for every business - The Business Journal of Milwaukee