By Adam Harper, Director of Professional Development of AAT
When it comes to acting ethically SMEs and microbusinesses are at an advantage compared to large companies. They are not held to the same regulatory standards as big businesses and do not have the burden of rebuilding public trust to contend with.
The two major strengths SMEs have are less responsibility and more flexibility. Freed from stringent regulatory requirements and with the flexibility to shape ethics programmes as they see fit, SMEs can focus their ethics policies to closely suit the goals and values of the company.
Another strength in the SMEs’ ethics arsenal is their pre-existing sense of community and a more accountable staff base. In contrast, big businesses need to find ways to bring a large number of individuals (sometimes spread across the world) together.
For these reasons many SMEs and microbusiness may think that it is not necessary for them to have a formal code of ethics to regulate the ethical behaviour of their employees.
Many are the risks of acting unethically, which can damage the brand reputation, or result in being disregarded by clients. This can lead a small business to go bust within days.
For this reason, we conducted research to understand the ethical behaviour and values of microbusinesses and SMEs. The results showed that the bigger the business, the less likely it is for business owners to trust their employees to act ethically. Only 37 per cent of SMEs trust their staff to do the right thing compared to 66 per cent of microbusinesses.
Our research also showed that as the number of employees increases, businesses are more likely to find a member of staff dedicated to ethical behaviour as well as having a formal code of conduct. Nearly two thirds of microbusinesses do not have someone looking after ethical behaviour and one third of these types of businesses do not have a code of ethics.
The scenario was different for SMEs. Only 19 percent of small businesses admitted to not having a business code of ethics and 39 per cent do not have someone responsible for looking after ethical conduct.
It is important that businesses of all sizes embrace a formal ethics policy. A policy reinforces the values that are part of the organisational culture and provides guidance and support to employees on how they are expected to conduct their business.
If you’re a start-up business and haven’t got a code of ethics in place then here are some top tips to help you get started:
1. Firstly… develop a code of ethics. This sets out your organisation’s ethical values to the world.
2. Get people involved. Your staff can contribute to the development of your values, but of equal importance, they need to understand how they should apply your organisation’s values in their role.
3. Designate an ‘ethics champion’. This person can be a point of contact for colleagues who need to seek advice on ethical dilemmas.
4. Regularly engage with staff on ethics. Any new employee should be aware of the ethical values you have enshrined in your code during their induction. In the same way, existing employees need to be reminded of these values on a regular basis through staff meetings or workshops with real life examples where people are asked to give their input. This is a good exercise to put employees’ training in ethics to the test.
5. Remember – customers will judge your organization based on your ethical values. It takes a lifetime to build a good reputation in the market. It only takes one ethical failing for customers to lose trust and confidence in your organisation.
6. If you work with unethical suppliers, your organisation will be judged for this. Your supply chain is as much of a reflection of your organisation as your employees are. Working with suppliers with values at odds with your own can undermine the credibility of your ethical stance.
7. Consider business ethics when planning. When planning new ventures, consider the ethical implications in light of your values and if there are any ethical risks. This will help prevent ethical problems occurring in each activity the business does.
8. Highlight the impact of your organisation’s ethical approach to the market. New clients are drawn to work with organisations demonstrating integrity. If you’re doing this – tell the world you are!
9. Remember – ethical companies are sustainable companies. Preparing your organisation to survive in the future is no easy process. But we have seen large corporate entities fail on the basis of ethics – don’t let this happen to you.
10. Most importantly… an ethical culture needs to be led from the top. Make sure your Chief Executive or Managing Director lives the values of your organisation, and expects the same of the senior management team. Staff will expect to be led by example.
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