Ethical Practices can be described as:
- Moral standards (as opposed to legal standards) established by a company to guide the behavior of the company, its officers, and employees.
- Business ethics that guide the behavior of corporate entities, especially regarding controversial subjects.
- Actions/conducts that protect companies from legal liability and ensure that they treat their customers and team members with respect.
- Business ethics that ensure that a company operates in accordance with applicable laws.
Ethical practices include:
- Integrity – this means adhering to a set of moral standards at all times, even if no one is aware of your choices.
- Honesty –requires a commitment to telling the truth, regardless of the consequences. It encourages trust among colleagues and between a business and the public, thereby, leading to a reputation of reliability.
- Social Consciousness – A socially conscious business/company will use its platform to bring awareness to and support change on social issues by, amongst other things:
- Paying fair wages
- Working with business partners and suppliers that source ethically
- grown products
- Applying/Utilising fair trade practices in its operations
- Leadership – is a commitment to excellence through ethical decision-making. This is demonstrated by a conscious effort to set a positive example of ethical behaviour.
- Transparency – transparency in the workplace is one sure way of promoting ethical operation, and developing trust among employees and customers. What sector/industry does the question relate to?
- Respect – Treating others with respect is a core principle in business ethics. Respect is demonstrated by a full commitment to the human rights, dignity, autonomy, interests, and privacy of all personnel. It means recognizing that everyone deserves equal respect and support for sharing ideas and opinions, without fear of any penalty or form of discrimination.
- Fairness – involves giving each his/her due, and requires avoiding preferential treatment. It is one of the surest ways of combating a culture of impunity.
- Accountability – this requires a total commitment to the ethical quality of all decisions, actions, and relationships. When an organization practices and enforces (encourages) accountability, this, in turn, drives ethical behavior and high expectations for ethical behaviour amongst officers, employees, vendors/suppliers, and clients of the company.
- Responsibility – Encouraging employees to take responsibility will lead them to take ownership of their work, and strive to be conscious of the emotional, financial, and business consequences of their actions.
- Environmental Consciousness – this comprises making choices to limit or reduce the business’ negative impact on the environment, such as:
- Limiting trash and waste production
- Encouraging energy-saving practices
- Creating more sustainable, cost-saving strategies
- Protection from Legal Liability
- Client Satisfaction
- Client Retention
- Brand Identity and Recognition
- Respect from Peers
- Healthy Work Environment
- Employee Loyalty and Retention
- Attract Investors and Financing
- Improving Operational Efficiency, Employee satisfaction, and Customer approval
- Build and Maintain trust among Employees and Customers
- Compliance with the law is the most basic level of ethical business practices.
- Legal Compliance can, therefore, be defined as the adherence by a company to the laws, regulations, guidelines, and directives relevant to its business operations and processes.
- To ensure legal compliance, the company must, therefore, create policies, systems, and controls to:
• ascertain the legal requirements;
• confirm the compliance timelines; and
• track/monitor the compliance status.
- In order, therefore, to develop and maintain an ethical and compliance culture, a company must focus on the following:
BUILDING A COMPLIANCE CULTURE
This is the first element and the pivot on which all the other elements revolve. It comprises:
- Founder(s) – envisions the business
- Board of Directors – gives effect to the vision of the Founder.
- Management Team – Oversees the day-to-day management of the affairs of the business entity. If the management team is ineffective: Orders are delayed, Clients are frustrated, the company loses businesses and its fortunes begin to decline.
- Employees – the bedrock of any organization.
- Investors – could be shareholders or lenders
- Professional Advisers – these include the company’s lawyers, accountants, and auditors
This second element is focused on:
- Business Conduct and Ethics – the principles that guide the conduct of the employees and officers of the company/business and which require them to conduct themselves with honesty and integrity in all actions when representing the company/business.
- Sustainability – concerned about the environmental, social, occupational, community health, and safety hazards, that impact the viability and continued existence of the business.
This element deals with the following:
- Records and record management, Operational processes, and policies
- Payment controls, Accountability and Transparency and Risk management
- Effective internal control mechanisms (internal audit and whistleblowing) and External audit
The fourth and last element. This element is the reason why the company continues to exist.
This element looks to the following:
- Company’s revenues
- Products and Services
- Innovation and Adaptability
- HR Processes
- Employee Retention Policies
In summary, building a sustainable governance culture in your Startup depends on your
organization’s business ethics and compliance culture. While this would require some
effort, it is a profitable and rewarding project, and in the best interests of your business.