How to Institutionalize Ethics in a Corporation

Ethical business practices do more than create a good name for a company. They tell employees,
suppliers, investors and shareholders they are associating with a trustworthy company that will protect
their interests and make decisions not based solely on profit. Ethics reaches to every corner of a
business and requires that employees and everyone who represents the company or acts on its behalf
understands the policies and rules regarding ethical behavior. Ethics should be part of the corporate
culture and modeled at the highest levels of the organization.

Corporate Policies
Most people learn the difference between right and wrong at an early age. But sometimes the difference
between right and wrong in a business setting isn’t black and white. A company should establish
guidelines for ethical behavior and identify the proper course of action in situations that might have
several possible outcomes, according to Lumen Learning. Establishing written documents is the first
step in the ethics institutionalization process. Train employees on the policies, and provide periodic
updates when situations arise that suggest a policy might be unclear or needs to be reinforced.

Ethics Training
The institutionalization of business ethics expands to establishing annual ethics training for employees
to ensure they understand the corporate ethics policies and know how to respond if presented with a
situation that might compromise the company. Scenario-based training involving employees, suppliers,
management and others in hypothetical situations is an excellent way to learn how to respond ethically
to situations where there are several possible outcomes. Give employees a printed or downloadable
ethics manual for reference during the training and throughout the year.

Involve an Ombudsman
Even with clearly defined ethics policies, employees may face situations involving unethical behavior
but don’t want to get a coworker or supervisor in trouble. Or an employee might be afraid that
reporting unethical behavior could jeopardize his job. Corporations can reinforce ethics policies and
encourage employees to abide by ethical standards by providing an ombudsman to discuss sensitive
situations with them, advise them on the proper course of action and protect them from retaliation.

Industry Recognition
Look for opportunities for recognition among industry peers as an ethical business. Ethisphere, which
recognizes the “World’s Most Ethical Companies” each year, uses a rating system to capture a
company’s ethical performance. It found that companies that make the cut have greater return on
investment than those that don’t. Having a designation as an ethical business can attract employees and
investors and earn positive press for your company. In turn, it helps strengthen the corporate image,
build equity in the brand and position the company favorably on Wall Street and in the marketplace.