How to Build an Ethical Business Culture Three steps to make sure your employees' behavior is above board.

By Gwen Moran

Opinions expressed by Entrepreneur contributors are their own.

How to Build an Ethical Business Culture
image credit: We Create NYC

Are business ethics in danger? A 2011 report from the Ethics Resource Center found that "ethics cultures are eroding and employees' perceptions of their leaders' ethics are slipping." Employees are experiencing increased retaliation against whistle-blowers as well as more pressure to break rules.

That doesn't surprise Michael Josephson, president and founder of the Josephson Institute, a Los Angeles-based nonprofit organization that delivers services and materials to increase ethical awareness, commitment and behavior. When the stakes are higher, such as they are in today's tough business climate, people may feel more pressure to act unethically to produce results, whether it's lying to customers, bad-mouthing competitors, or undermining co-workers.

That kind of behavior can cause significant problems with morale and could even lead to legal issues. Josephson says that it's critical for business leaders to take a stand when it comes to ethics and offers these three tips to do so.

1. Make your expectations clear. Teach employees what you mean by ethical behavior -- there's no simpler way to do so than to write down your expectations. Include your expectations when it comes to ethical decision-making in your employee handbook or in other documentation that employees receive during their first days on the job.

Related: Why Social Media May Weaken the Moral Fiber of Your Workplace

In addition to mapping out the behavior you expect, give employees some guidelines to help them when it comes to making ethical decisions, including when they should turn to their managers for guidance and how to report unethical behavior they see around them.

2. Enforce your policies. When ethical breaches happen, there should be consequences, says Josephson. If your top performer is cheating on an expense report or lying to customers, you're not just tolerating the behavior -- you're teaching your other employees to be unethical, as well, he says.

The behavior will likely multiply when others see what you'll overlook. Josephson also cautions that if your top performer is lying or mistreating others, it's likely only a matter of time before he or she does the same to you.

3. Be your own change agent. The best-laid ethics policies won't matter if you don't walk your talk, says Josephson. Employees watch you for cues about how they're expected to act. When you cut ethical corners, they notice and are likely to think the behavior is okay.

Related: How to Become a Better Leader

"Instilling ethics into your organization is probably going to cost more than you want to pay," says Josephson. It's tough to be a model citizen and rein in behavior that, while helping your business earn, isn't on the up-and-up. In the long run, however, the damage that ethical lapses can cause may cost you far more than letting go of an unethical employee or some bad business habits, he says.

Wavy Line
Gwen Moran

Writer and Author, Specializing in Business and Finance

GWEN MORAN is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

Editor's Pick

She's Been Coding Since Age 7 and Presented Her Life-Saving App to Tim Cook Last Year. Now 17, She's on Track to Solve Even Bigger Problems.
Lock
I Helped Grow 4 Unicorns Over 10 Years That Generated $18 Billion in Online Revenues. Here's What I've Learned.
Lock
Want to Break Bad Habits and Supercharge Your Business? Use This Technique.
Lock
Don't Have Any Clients But Need Customer Testimonials? Follow These 3 Tricks To Boost Your Rep.
Why Are Some Wines More Expensive Than Others? A Top Winemaker Gives a Full-Bodied Explanation.

Related Topics

Business News

'I'm Not a Very Good Businessman': Kevin Costner Is Risking a Ton of His Own Money on New Project

The "Yellowstone" star discussed how he bankrolled his new epic movies — and his accountant isn't happy.

Business News

'I Am Just Floored': Woman Discovers She Won $1 Million Lottery Prize While Checking Her Email at Work

Initially, she thought the email was a scam, but went to lottery headquarters and walked away with a six-figure check after taxes.

Diversity

How to Be an Ally to the LGBTQ+ Community During Pride Month and Beyond

Recent actions from Bud Light and Target have created more polarization on diversity issues in the workplace. Pride Month is a special time to celebrate with the LGBTQ+ community.

Growing a Business

A Teen Turned His Roblox Side Hustle Into a Multimillion-Dollar Company — Now He's Working With Karlie Kloss and Elton John

Rush Bogin, a 17-year-old fashion designer, learned firsthand how finding market gaps and listening to customer feedback can bring major success.

Marketing

The Rise of Nano-Influencers: How the Smallest Voices are Making the Biggest Impact

The bigger an influencer is, the more beneficial it is for a brand to collaborate with them, right? Not necessarily.