Institutionalizing of Ethics, Traditional View

Institutionalizing of Ethics

Ethical business practices do more than create a good name for a company. They tell employees, suppliers, investors and shareholders they are associating with a trustworthy company that will protect their interests and make decisions not based solely on profit. Ethics reaches to every corner of a business and requires that employees and everyone who represents the company or acts on its behalf understands the policies and rules regarding ethical behavior. Ethics should be part of the corporate culture and modeled at the highest levels of the organization.

Corporate Policies

Most people learn the difference between right and wrong at an early age. But sometimes the difference between right and wrong in a business setting isn’t black and white. A company should establish guidelines for ethical behavior and identify the proper course of action in situations that might have several possible outcomes. Train employees on the policies, and provide periodic updates when situations arise that suggest a policy might be unclear or needs to be reinforced.

Ethics Training

Establish annual ethics training for employees to ensure they understand the corporate ethics policies and know how to respond if presented with a situation that might compromise the company. Scenario-based training involving employees, suppliers, management and others in hypothetical situations is an excellent way to learn how to respond ethically to situations where there are several possible outcomes. Give employees a printed or downloadable ethics manual for reference during the training and throughout the year.


Even with clearly defined ethics policies, employees may face situations involving unethical behavior but don’t want to get a co-worker or supervisor in trouble. Or an employee might be afraid that reporting unethical behavior could jeopardize his job. Corporations can reinforce ethics policies and encourage employees to abide by ethical standards by providing an ombudsman to discuss sensitive situations with them, advise them on the proper course of action and protect them from retaliation.

Industry Recognition

Look for opportunities for recognition among industry peers as an ethical business. Ethisphere, which recognizes the “World’s Most Ethical Companies” each year, uses a rating system to capture a company’s ethical performance. It found that companies that make the cut have greater return on investment than those that don’t. Having a designation as an ethical business can attract employees and investors and earn positive press for your company. In turn, it helps strengthen the corporate image, build equity in the brand and position the company favorably on Wall Street and in the marketplace.

Traditional View


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