In the course of our ethics consultations, we have run across some very provocative questions concerning ethics and the bottom line. Here are a few:

1. Can we afford to do what is right, good and fair if our competition doesn't? What good does it do for us to be more ethical, if we lose business and eventually fail in this very competitive market?

2. How can we be sure our employees are being ethical? We can't police their every move.

3. How are we supposed to react if one of our employees bends the rules - especially if he/she is one of our top performers?

Ethical dilemmas for the individual:

4. Will the boss back me up if I am ethical? What happens to me if I behave ethically and, as a result, make less profit for my company in the short term.

5. What's in it for me to be ethical? Why should I be the first one in the organization to try and do things differently? All I can see is hard times and less money in the short run.

6. What will ensure that my co-workers are ethical? If they meet their quotas without being ethical, and my performance goes flat because I do behave ethically, how will that reflect upon me?

The decision to do business ethically has some far reaching (and mostly beneficial) implications for the individual and his/her company's bottom line. In our next issue, we will provide some answers to these questions.

Part Two: A Clarifying Process
In part one of this article, we listed six questions people typically consider when deciding whether they will conduct business in an ethical fashion. The questions fell into two groups - those for business owners/managers and those for employees:

For Owners/Managers:

1. Can we afford to do business ethically? Won't we lose business to external competitors?

2. How do we ensure that our employees will follow the company's ethical policies?

3. How do we react to unethical behavior on the part of employees?

For Employees:

4. Will our superiors back us up if we choose to behave ethically?

5. What do we have to gain from ethical behavior?

6. Will our co-workers (internal competitors) gain competitively if we decide to behave ethically?

These are difficult questions, and they must be answered to the satisfaction of both management and employees before any organization can do business ethically. We don't presume to know how you will answer these questions. Yet, we can assist you in determining answers with the information and process that follow.

Competition (Questions 1 and 6)

You cannot afford not to do business ethically if your organizational goal is long term success. It is also counterproductive to assume that one's competition is unethical. Concluding for example that one lost a sale because others were unethical has two negative effects. First, it gives the individual who lost the sale an excuse not to examine his/her own performance for ways to improve. In fact, most sales are lost because a competitor was more skillful or was willing to work harder (or smarter) to win the customer (something sales people are loathe to admit). Second, claiming that one lost to cheating sends the message that cheating is required for success in your business.

Adherence to Ethical Policies (Questions 2, 3, 4, and 5)

- Determining Your Operational Philosophy The questions above assume the existence of a set of ethical policies. Yet before such policies can exist, an organization must be clear on what it truly values. There must be a clear definition and articulation of the values, beliefs and ideals that the company elects to work under. We call an organization's operational philosophy. It enables employees to know what the organization has chosen as its definitions of right and wrong and includes the following:

• What the organization believes is right and good.

• How the organization will treat its employees.

• How employees are expected to treat each other.

• How employees are expected to treat customers.

• How the organization contributes to society.

Developing Ethics Goals and Objectives

Given its operational philosophy, it is important for the organization to develop a set of ethics goals and objectives that support the business purpose and the operational philosophy. Such goals and objectives include:

• Definitions of the desired ethical standards.

• How those ethical standards will be measured.

• Action plans for reaching those ethical standards.

Developing Ethics Policies and Procedures

Once goals and objectives have been established, operational ethics policies and procedures can be developed to show individuals in the organization how they are expected to act. This gives the employee concrete guidelines for ethical behavior in predictable situations. Ethics policy statements include such things as:

• How the company expects employees to manage ethics-relevant issues.

• How the company will measure adherence to its values and ethics.

• How the company will reward employees' adherence to its values and ethics.

• How the company will respond to deviations from its values and ethics.

Testing for Compatibility

One way of assessing your organization's ethical effectiveness is to test your operational philosophy for compatibility with the organization's mission, strategy, operational goals and operational behaviors. An organization cannot experience ethical congruence if its ideals conflict with its basic mission or purpose and its methods for doing business.

Answering the Questions

Through the process of determining your operational philosophy, ethics goals, objectives, policies and procedures you will have answered all six questions from the perspective of owner/manager as well as employee. Conflict among these various elements means that people cannot be clear about what decisions and actions are expected or required for personal and/or organizational success. That ethical conflict must be reduced if your organization is to be ethically effective.

Making the Choice to be Ethical
Part Two: A Clarifying Process

In part one of this article, we listed six questions people typically consider when deciding whether they will conduct business in an ethical fashion. The questions fell into two groups - those for business owners/managers and those for employees:

For Owners/Managers:

1. Can we afford to do business ethically? Won't we lose business to external competitors?

2. How do we ensure that our employees will follow the company's ethical policies?

3. How do we react to unethical behavior on the part of employees?

For Employees:

4. Will our superiors back us up if we choose to behave ethically?

5. What do we have to gain from ethical behavior?

6. Will our co-workers (internal competitors) gain competitively if we decide to behave ethically?

These are difficult questions, and they must be answered to the satisfaction of both management and employees before any organization can do business ethically. We don't presume to know how you will answer these questions. Yet, we can assist you in determining answers with the information and process that follow.

Competition (Questions 1 and 6)

You cannot afford not to do business ethically if your organizational goal is long term success. It is also counterproductive to assume that one's competition is unethical. Concluding for example that one lost a sale because others were unethical has two negative effects. First, it gives the individual who lost the sale an excuse not to examine his/her own performance for ways to improve. In fact, most sales are lost because a competitor was more skillful or was willing to work harder (or smarter) to win the customer (something sales people are loathe to admit). Second, claiming that one lost to cheating sends the message that cheating is required for success in your business.

Adherence to Ethical Policies (Questions 2, 3, 4, and 5)

- Determining Your Operational Philosophy The questions above assume the existence of a set of ethical policies. Yet before such policies can exist, an organization must be clear on what it truly values. There must be a clear definition and articulation of the values, beliefs and ideals that the company elects to work under. We call an organization's operational philosophy. It enables employees to know what the organization has chosen as its definitions of right and wrong and includes the following:

What the organization believes is right and good.

How the organization will treat its employees.

How employees are expected to treat each other.

How employees are expected to treat customers.

How the organization contributes to society.
Developing Ethics Goals and Objectives

Given its operational philosophy, it is important for the organization to develop a set of ethics goals and objectives that support the business purpose and the operational philosophy. Such goals and objectives include:

Definitions of the desired ethical standards.

How those ethical standards will be measured.

Action plans for reaching those ethical standards.
Developing Ethics Policies and Procedures

Once goals and objectives have been established, operational ethics policies and procedures can be developed to show individuals in the organization how they are expected to act. This gives the employee concrete guidelines for ethical behavior in predictable situations. Ethics policy statements include such things as:

How the company expects employees to manage ethics-relevant issues.

How the company will measure adherence to its values and ethics.

How the company will reward employees' adherence to its values and ethics.

How the company will respond to deviations from its values and ethics.
Testing for Compatibility

One way of assessing your organization's ethical effectiveness is to test your operational philosophy for compatibility with the organization's mission, strategy, operational goals and operational behaviors. An organization cannot experience ethical congruence if its ideals conflict with its basic mission or purpose and its methods for doing business.

Answering the Questions

Through the process of determining your operational philosophy, ethics goals, objectives, policies and procedures you will have answered all six questions from the perspective of owner/manager as well as employee. Conflict among these various elements means that people cannot be clear about what decisions and actions are expected or required for personal and/or organizational success. That ethical conflict must be reduced if your organization is to be ethically effective.