From the May 2000 issue of Entrepreneur

As a small-business owner, you'll encounter situations (if you haven't already) that will test your integrity and make you feel like you're walking through an entrepreneurial Garden of Eden. Perhaps you're faced with the temptation to tell "little white lies" to customers to make a sale. Or maybe it's a tendency not to be upfront with your vendors and suppliers. Sometimes, there's pressure to give your investors additional perks that don't apply across the board.

But before you bite into the apple of entrepreneurial enticement, think first about the impact those actions will have on your staff. These days, your choice of how to take care of business affects the length of time your employees choose to work for you. "Today's employees are looking at the virtue and character of their leaders," says Dick Mason of the Maguire Center for Ethics and Public Responsibility at Southern Methodist University in Dallas. "Character is really a beacon for them. They want to know that the leadership has integrity."

Integrity Equals Longevity

"Come on," you say, "my employees aren't paying such close attention, are they?" Actually, they are. For entrepreneurs faced with a 4 percent unemployment rate, character is an issue as never before. Womb-to-tomb jobs are long gone, and today's employee is expected to hold between 12 and 15 jobs over a lifetime. And as companies wrestle with retention, the personal integrity and ethics of their leaders matter more than ever before. Your employees are watching you more closely than you think. "One guy I spoke with told me that the only thing he has to go on is that his boss is honest," Mason says.

The results of a 1999 study could be a wake-up call for CEOs everywhere: According to a joint Hudson Institute/Walker Information survey of roughly 2,300 full- and part-time employees working for government, business and nonprofit organizations, more than half (53 percent) thought their company leaders lacked integrity. "We were surprised at the perceived lack of ethics in the leadership of these organizations," says Marc Drizin, Walker Information's vice president of business alliances. Even worse, only 42 percent believed their organizations deserved their loyalty, and only one in four employees was considered "truly loyal" (defined as committed to the organization and planning to stay for more than two years). The survey also revealed the things that would make these workers commit for the longer term: fairness at work, care and concern for employees, trust, and reputation of the organization. This information points to the trend that today's worker is looking for meaning in the workplace beyond money and stock options.

Salary is no longer the sole satisfier, nor the key to employee loyalty. Instead, loyalty is tied to the feelings workers get from their workplaces, and the values and ethics that are transmitted from the leadership. Just like Tom Cruise's character in the movie Jerry McGuire, employees are seeking deeper meaning and inspiration from their work, evaluating their companies' ethics and searching for their own. The new workplace compact is based on fairness and trust, on knowing that procedures are evenhanded and that leaders have character. When employees realize their organization lacks these qualities, they start planning their exit. "When you ask your employees to compromise their values, they will move on," says Anne Pasley-Stuart, a Boise, Idaho, expert on ethics in the workplace. "It may take awhile until they actually go, but they will leave eventually."

Staying In The Business

Rest assured, as the owner of a small business, you have a built-in advantage: You'll be respected until you do something that forces your employees to question your integrity, or their own. Your company is still small enough that everyone knows the leadership, which offers advantages in setting a good example. In fact, in the Walker/Hudson study, companies with fewer than 100 employees fared better than larger ones.
Creating an ethical work environment starts with defining what integrity and ethics mean to your industry, then outlining your core values as an organization. Discuss where these values could be compromised day to day, and bat around strategies for dealing with them. Let your employees feel comfortable voicing the ethical dilemmas they face on the job, as well as the ones they see facing the company. Finally, make sure that the values honored in the office are applied across the board to clients and shareholders.

"Ethics covers one word: respect," says Nan DeMars, an editorial contributor to OfficeClick.com and author of You Want Me to Do WHAT?: When/Where & How to Draw the Line at Work (Simon & Schuster). "Employers need to establish codes of conduct and tell employees that they want an ethical company."

The single most important thing you can do as a leader is to "walk the walk;" that is, you have to follow your own edicts. Remember, you're setting the example for your employees-and they're watching.


Chris Penttila is a freelance journalist who covers workplace issues from her home base in the Chapel Hill, North Carolina, area. She can be reached at chris@sitting-duck.comor through her Web site, www.sitting-duck.com.

Next Step

  • Colorado State University College of Business (http://www.e-businessethics.com): This site is a good resource for entrepreneurs looking for information on business ethics, corporate citizenship and organizational compliance.
  • Minnesota Center for Corporate Responsibility (http://tigger.stthomas.edu/mccr): This site offers events and program information, Web resources and publications on the topic of ethics in the workplace.

Contact Sources

  • OfficeClick.com Inc., (650) 213-0410
  • Walker Information, (800) 231-4904