How to create an ethical culture in any size business

In today’s fast-paced, competitive and demanding business environment, employees in both small and large businesses can find themselves facing difficult ethical dilemmas. For this reason, every business – regardless of size – needs to provide knowledge and resources to help employees act ethically. According to the Tennessee Society of CPAs, there are several critical ways to develop and sustain an ethical business environment. Perhaps the most important is the realization that “it all starts at the top.” Leading by example, company management sets the tone by committing to integrity and requiring ethical behavior from all employees. Here are some other ways to create an ethical environment. A comprehensive code of conduct Every organization should have a code of conduct (sometimes called a code of ethics) that addresses a wide range of topics. At the very least, it should include corporate practices on diversity, harassment, the use of corporate property, the fair treatment of staff and the use of illegal drugs and alcohol. A code of conduct should also cover information pertaining to relationships with clients and vendors and deal with topics such as privacy, confidentiality, negotiations and procurement. Conflict of interest is another area where a code of conduct can guide employee actions. This section of the code typically covers such topics as accepting gifts and gratuities, engaging in outside employment and the proper disclosure of financial interest. Your code should also address environmental practices like the company’s commitment to the environment and employee health and safety. effective ethics training Conducting ethics training gives you the opportunity to raise awareness, address employee questions and concerns and reinforce the company’s requirement for ethical behavior. For a code of conduct to be successful, employees need to understand it and know why it’s important. The training should focus on the practical application of the elements in your code of conduct. Your goal is to ensure that all employees are familiar with the code and know how to apply it to their day-to-day work. Depending on the size of the company, you may need to conduct multiple training sessions to ensure that the training meets the needs of people holding different jobs in the company. Since training of any kind should be considered a process and not a one-time event, you need to conduct ethics courses at regular intervals to update information and reinforce desired behaviors. A means to measure employee compliance and accountability should also be developed. A strategic communications plan Like ethics training, communication needs to be ongoing. Design a communications plan that consistently reinforces ethical behavior and reminds employees about the resources available to them, and how to access those resources. You should also periodically communicate your compliance and disciplinary processes. Make it a point to publicize – and reward – examples of ethical behavior. An ethics hotline It’s helpful to have a hotline that employees can call to ask questions about ethical dilemmas they face or to report any suspected unethical behavior. Be sure that your processes ensure confidentiality and that you regularly communicate the hotline’s anonymity feature. COMMIT TO continuous improvement Like any good program, your company’s ethics program should strive for continuous improvement. Be sure to regularly evaluate its effectiveness, and request suggestions from all employees in adapting the program to the needs of the company. Consult with a CPA Even the best people can make bad decisions when confused or under great pressure. A CPA can help you design a plan for enhancing your company’s ethical culture. About Money Management Money Management is a weekly column on personal finance prepared and distributed by the Tennessee Society of Certified Public Accountants (TSCPA) as a part of its financial literacy initiative. Mike Heffner, CPA, is the president of the Knoxville Chapter of TSCPA. Heffner is an accountant at Pugh & Company, PC in Knoxville, Tenn.