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Wyoming Business Tips for June 12-18


June 6, 2011 — A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Jim Drever, WSBDC business adviser

"What makes a business an ethical business?" Henry, Laramie

If you ask any owner whether their business is ethical, they probably will say yes.

Usually they have some reasoning to go with it, if nothing else "because I am ethical." In the same vein, almost all drivers believe they are "above average drivers" when asked. When evaluating whether your business is ethical or not, look at the organization as a whole, beyond the individual component.

There were both ethical and unethical employees at companies such as Enron, which had large-scale ethical misconduct. It is just that given the corporate culture, many were sure they were doing "the right thing," which to them often meant short-term profits or financial statement tweaking to appease stakeholders. Enron did have a code of ethics and in other cases of unethical business behaviors, some of those businesses beforehand promoted an image of being ethical without evaluating whether they really were.

The best place to begin evaluating a business' ethics is with organizational culture. What does it value -- profits first and then everything else? There is a perceived paradox in which one assumes bottom line is sacrificed in lieu of being good. The reality is that ethical companies with ethics programs on average are more profitable than companies without ethics programs. Having an ethical corporate culture among employees is foremost to being an ethical organization.

To help develop that culture, a code of ethics that doesn't get stuck on individual issues, but instead develops a framework for ethical decision-making is needed. It is impossible to imagine all the individual ethical issues that will arise and address them, so instead, have a written framework for decision-making. It also is imperative to have an escalation process for situations when the individual cannot be sure of how to handle a decision.

The next step is ethical training. Share the code of ethics regularly with employees in a meaningful way, not merely reading a document that is initialed and then filed with human resources. Discuss, interpret and try to apply the code to real life or potential decisions people in an organization may face and see how it works.

Finally, ethical leadership is needed in any business. More than anyone else, management needs to demonstrate good behavior to make an ethics program a success. Employees will make note if an owner cuts corners to make a buck and will do the same for themselves.

After a program is put in place, monitor and adjust as needed and keep the ethics program alive rather than just having a piece of paper locked away once it is written.  Wyoming Entrepreneur counselors are available to help small business owners develop their own ethics programs.

Jim Drever holds a certification in teaching business ethics from the University of New Mexico.

A blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.

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