Ethics Q & A for Small Business
How do the following areas affect a small business’s workplace and overall productivity?
- Managers lying to employees
An ethical culture – and a high performing one – depends on a high degree of trust between employer and employee. It is a psychological contract to achieve a number of things together in exchange for rewards, recognition and whole host of personal values that people seek to have met when they join the organisation. In small organisations where relationships are even more important, trust is essential. When the employer, or a manager appointed by them, is found to be lying, it undermines that trust and directly affects productivity. Employees are likely to “downshift” and do the minimum rather than go the extra mile.
- Expense account abuses at high levels
This is a common factor in many businesses, what we call “the politics of envy”, or “tit for tat” bargaining. People who feel cheated by the organisation then cheat the organisation themselves. Many small businesses talk about need to cut back on expenses, especially in times like these, but then staff sees the “bosses” going out to lavish lunches, treating their family and friends to expensive gifts or indulging in expensive toys like cars, etc.
That’s not to say that such expenses are not legitimate business expenses – if nothing else the ATO would have a keen interest in them if they were not – but they are often symbolic of double standards that apply in other aspects of the business. During the Global financial crisis, we all saw pictures of representatives of the big car companies and stockbroking firms flying down to Washington in their private jets to ask for billions of dollars in handouts.
Business owners need to be mindful that people will take their lead from the actions they see not the words they hear. We say that staff ‘listen with their eyes’ and find it hard to rationalize staff layoffs or cutbacks when they don’t see any pain, or “skin in the game”, coming from higher up the tree.
- Office bias and favouritism
It is, of course, easy to accuse people/ managers of bias and favouritism in the workplace. If someone is passed over for promotion or doesn’t get the bonus or pay rise they were expecting they’ll sometimes look for reasons other than their own performance. That said, people do have a basic expectation that they will be treated fairly and promotion, bonuses, etc. be awarded on the merits of the individual. There are now laws in place to protect many workers’ rights in the workplace but the law should always be seen as a last resort. Bias or favouritism undermines the morale of not just those discriminated against but many others who see it and ask, “Could this happen to me?” A happy, productive and inspired workplace is one where the rules are clear to everyone, are applied fairly and with a great degree of transparency, and where people know that they will get a fair return for the effort put in. Otherwise they’ll go elsewhere and the company will have wasted a lot of money in recruiting, training and developing them.
- Taking credit of another’s work
This is a hard one as most workplaces these days work on teams and collaboration. Often, many people will have contributed to the whole and it should be a case of shared recognition for a job well done. However, there are many workplaces where people do claim credit for others’ work and the best thing to do is the individual to “brand’ their work in some way. If you’ve done a good piece of work, got a particularly juicy order or suggested an improvement in a system that could save or make the company a lot of money, make sure that the boss knows where the idea came from. Put it in writing, or save the announcement for public forums such as sales or production meetings, or better still suggest that the company sets up a structure for generating new ideas where it will be clear where the good idea came from.
Companies, for their part have to set up mechanisms for proper recognition of individual and team contributions. And, of course, in claiming credit for your own work you have to make sure that you do it in a subtle but assertive way so as not to get a reputation as a braggart!
2. What sort of programs or processes have you seen that work best for small businesses in:
- Maintaining a moral course in turbulent times. (Especially during the GFC)
People often confuse morals with ethics. Morals are about how we individually make decisions about what’s right or wrong in society; ethics is fundamentally how we behave and how our actions may impact on others. In business ethics is about how we treat each other and how we manage relationships with everyone who has an effect on the business or how is affected by the business. Increasingly, we are seeing big companies and government purchasers trying to manage ethics through their supply chain. So, ethics will affect small businesses in a number of ways. What’s important to remember is that good ethics are good for business; if you manage your staff relations well; if you manage your supplier relations well; and you manage your customers well you will have a sound business no matter what the circumstances around you.
Where the GFC has impacted over the last year or so is in shrinking the market for many services. We were lucky in Australia that we did not see the extremes witnessed in America or Europe and the contraction in the market was not as severe as the recession of the early nineties. Nevertheless, when some of the excess is sucked out of the market, small companies have to put ethics on the agenda and ask themselves on a continual basis: are we the employer of choice; are we the supplier of choice; are we the neighbour of choice? Ethics needs to be managed in the practice not in the breach.
- An ethics program encourages strong teamwork and productivity.
We have seen an upsurge in demand for ethics in the last 3 years. That’s largely because the community is talking about it and the media is increasingly talking about it. Even politicians, never well known for being ahead of the game, are starting to think about how they can introduce ethics into the business of government (although I have to say that the Victorian Government is at least 5 years ahead of NSW in this regards).
The first and most important aspect of an ethics program is that it makes sure that everybody in the business is on the same page. We live our ethics through our values and increasingly businesses of all shapes and sizes are putting together Values Statements. A fair bit of our work is in helping companies do this. If a company has a set of values – usually 3 to 5 at most – then people have a right to expect that they uphold those values and live their lives according to those values. For employees it establishes some rules about how they will be treated and how they are expected to treat each other. For customers, they know that the company is setting out its stall for how they will provide the service or product to them and they also want to know that people are fairly treated inside the company. Increasingly, reputation is seen as a vital asset of the business and one unsavoury story in the media about how a company mistreats its employees can lose it al lot of business in the short term. Look at the case of the café in Melbourne where an employee was driven to suicide by persistent bullying by her workmates. For shareholders, or the owners of the business, they want to know that the business is being properly run, that people are happy working there and are being treated fairly. The Values Statement is their comfort statement that this is the case.
- Ethics programs support employee growth and meaning.
When people join a company they are looking for a sense of belonging, a sense of meaning. The social side of business, especially for young people, is an important part of how the company does business. Research shows that this is an increasing consideration as other aspects of our society – the extended family, organised religion and community – are in decline. One other consideration is that people have a basic need to grow and to get a sense of meaning from the work they do and what their company does; this particularly so in the case of Gen Y. Ethics programs, if properly designed and implemented, provide a structure for people to discuss the bigger things in life, the principles of why we do things the way we do them in work and who might be affected positively and negatively by our actions. Businesses, and relationships, are becoming increasingly complex and the explosion of social networking has taken relationship management to a whole new level. Unless we discuss these pressures in an open and constructive forum they can sabotage the goodwill of the business and adversely affect its capacity for healthy growth.
- Ethics programs promote a strong public image.
There is no doubt that ethics programs contribute significantly and positively to the culture of an organisation. There is a huge body of research on this in the U.S. and in Europe. Businesses that manage for their broader stakeholders than simply for their narrow set of shareholders perform significantly better financially, too. But we must be careful to avoid the suggestion that an ethics program can be used as some sort of cynical PR exercise. Employees get very wary of their company trumpeting about an award winning ethics program when they see blatantly unethical acts inside the business. As the Americans say, you have to walk the talk.
And:
- How does corporate social responsibility related to small businesses?
In one sense, corporate social responsibility is a subset of ethics. As I have said earlier, managing relationships with external stakeholders is crucial to the success of any business, large or small. Being the neighbour of choice is all about managing the impacts that you have on the community of which you are a part. At the extreme, people won’t buy from you if you are seen to pollute the environment, have a total disregard for waste management or are known to exploit your employees. But increasingly society is asking for more. How can you positively contribute to creating a better society by supporting local causes, by allowing your employees to volunteer at charity events such as Clean Up Australia day, by becoming an advocate within your local business association? The business benefit is that you are seen to be an active participant in the local community, you are doing more than the minimum in terms of managing your environmental and social impacts and you have created a great place to work. Let’s face it, we all want to buy from companies like that and we all want to work for companies like that. Work should be fun, and rewarding, and satisfying and we need to have a sense of being part of something bigger than us. Corporate social responsibility provides all of these.
This Q&A appeared in the online newsletter of Big Fish, a recruitment company based in Parramatta, NSW. It is reproduced with their permission
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All data and information provided on this blog is for information purposes only. Managing Values makes no representations as to accuracy, completeness, suitability, or validity of any information on this blog and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.
