Make It Right.

In today’s business environment, the topic of ethics is more important than ever. We have witnessed erosion of our banking and financial institutions, a huge crisis in our mortgage markets and Wall Street has lost a great deal of its credibility.

Ethics in business is a system of moral behavior.  It establishes the rules of conduct for the organization.  Major accounting misdeeds have raised grave questions about business ethics.  The lack of accounting ethics not only gutted the following companies, but also ended up destroying the world’s largest accounting firm, Arthur Anderson:

• Enron
• WorldCom
• Lehaman Brothers
• Tyco
• HealthSouth

So why have so very many large companies, financial institutions and Wall Street been lacking in ethical behavior?  Is it all greed?  No doubt that is a major driving force.  The other major driving force is the obsession people have with being financially successful.  Our society has become so fixated on monetary reward that ethical behavior, in many cases, seems to have gone by the wayside.  The notion that “everyone else is doing it” does not provide justification for a business decision.  The culture within the company very often creates the atmosphere that doing things “on the edges” is not only OK, but also that it is expected.  This creates the real impression that you will not get ahead unless you follow suit.

The CEO, President or Business Owner is responsible for creating the ethical environment within the business.  A publicly posted Code of Ethics that lays out the rules of ethics and conduct is a good place to start.  The code, however, doesn’t do much good if top management does not walk the talk. The key toward achieving a highly ethical organization is by first educating your employees in how to behave ethically.  The first step in educating the employees in your business is to have the leader explicitly and publically commit him/herself, as well as the team, to high ethical standards.

There are a couple of aspects in training are important to how successful it will be to establish the right culture.  Top management must be present during training sessions.

By members of the organization seeing that top management is actively involved in the training sessions, it sends a strong message that management is committed to ethical behavior.   Another important component of training is to have real world, believable examples.  If the examples are perceived as “academic rather than realistic, employees will most likely view the training as an exercise and as a result, do not end up really committing themselves to the program.

The second key step in keeping your organization living by its code of ethics is to discipline employees who do not follow the rules.  Rewarding employees who skirt the rules will destroy the creditability of the ethics and conduct code in a heartbeat.

There is a good financial reason for promoting an ethical culture within a company.  A company’s reputation, honesty and integrity draw and keep better people. Better people improve performance and improved performance increases the bottom line. A business does not have to “go out of bounds” to be successful.  More importantly, employees who play by the rules should be the ones rewarded and promoted.

Businesses who “make it right” for their customers and their employees are usually the ones who are very successful.

“Making it right” isn’t always about legalities.  Many times there are “gray areas” in business.  I’m not talking about giving away the store here, but rather doing the right thing even though it may cost money in the short run.

I once was brought in to turn around a $30 million business losing money.  Within two months, we started making a good profit.  The owner ended up selling the business for $10 million.  He said our bonuses were the responsibility of the new owners.  The new owners said that the previous owner was responsible for our bonuses.

Since the contract did not specify who was responsible for paying our bonuses, the previous owner stepped up and paid them, even though he was not legally responsible to do so.  He made it right.

Don’t fail an opportunity to “make it right”.