Trust Is a Must

Built to Last

Hoffman, Hartman and others warn against getting too smug. Hubris is your worst enemy. "Being an ethical company is a job that never has completion," says Hoffman. "It's a constant process rather than an end product."

Properly instilled ethical values become your company's sinew. Your original employees intrinsically understand the values and convey them to new hires. This is crucial because as you grow, you'll lose the ability to maintain the one-on-one relationships that engender trust. At some point past 100 employees, it becomes too difficult. That's why midsized companies often fail to instill trust, says Walker.

"Entrepreneurs put together companies by establishing relationships with people built on trust," says the University of Virginia's Freeman. "As the company gets bigger, entrepreneurs may not focus on that as much as they did in the beginning. Once they start thinking about the company as a regular business, they forget what actually made it successful in the first place."

You may inevitably have to spend more time worrying about investors and other constituencies of growing enterprises. But if you've laid the ethical groundwork, you'll be trusted in those new relationships. And your employees, following your lead, will continue to instill trust in your company among customers and suppliers.

Saving Face
Spoilers exist. Occasionally, individuals will act in ways that ruin trust in your business. Here are some steps you should take to prepare for and recover from the worst:
  • Check your standards: Join the Ethics Officer Association (, 617-484-9400), suggests Steve Walker of Walker Information. It only costs $750 per year, but it gives you access to some of the best business ethicists around. Don't have time for another association? Assign an employee as your ethics officer. Give him or her some of your time to make sure your vision matches your company's values statement.
  • Act quickly: When you encounter ethical misconduct in your firm, strongly reprimand the employee who violated your company's ethics policy. This sends a signal to other employees that you don't tolerate inappropriate behavior. And make sure to come clean to the affected customer or supplier immediately. "Bad news, unlike wine, does not get better with age," says Eric Douglas of Leading Resources.
  • Give it time: Trust is built up over time. Don't expect to repair a breech with your first efforts to address the problem.
  • Form a committee: If the rotten apple is you, says Fordham University's Paul Baard, form a compliance committee to monitor how well you keep your promises. Think of it as the ethical equivalent of a bankruptcy proceeding's creditors committee.

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This article was originally published in the October 2002 print edition of Entrepreneur with the headline: Trust Is a Must.

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