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Why Business Ethics is Essential for Your Company

Eric PerkinsFor this week’s Guest Post Friday here at Musings, we welcome fellow solo and suite mate Eric Perkins. Eric is a business attorney specializing in business startups, franchising, nonprofit organizations, and general business transactions and compliance. Learn more about Perkins Law at or on YouTube at

Ethics is prominent in just about every facet of today’s society. In the sports world, we recently have witnessed the near-total destruction of the storied legacies of Joe Paterno and Lance Armstrong—legacies built over the course of decades—over the perceived failure to do the right thing, off the field in the former case and on the playing field in the latter.

Ethics in business is a particularly hot topic, with an emerging consensus that maximizing profit is no longer the sole objective of a company’s leaders—doing what’s right from an ethical point of view is important too.

A growing number of universities and graduate schools have courses and programs promoting business ethics. The University of Virginia’s Olsson Center for Applied Ethics, recognized as a national leader in business ethics, is but one example of this growing movement by educational institutions to provide resources to students, scholars, and executives to help them navigate the challenges of integrating ethical thinking into their corporate decision-making.

Legislative developments like Sarbanes Oxley and emerging trends in business management have made it commonplace for companies and organizations of all sizes to have a Code of Ethics or Code of Conduct as part of its corporate governance structure. However, there is plenty of evidence suggesting that the business community has a long way to go in its effort to fully incorporate ethics into the fabric of our corporate culture and the way people conduct business on a day-to-day basis. A nationwide survey conducted in 2010 by Rutgers Business School Professor Don McCabe indicated that two-thirds of high school students admit to cheating in some form, while another survey of business professionals indicated that at least 25% of respondents believed that cheating may be necessary to succeed in business.

This undercurrent of thought that cheating is OK (just don’t get caught) in order to succeed in business would appear to be bolstered by the long list of widely publicized financial fraud and corporate scandals in recent years in which unethical behavior by a select few resulted in massive financial losses and emotional distress for thousands of innocent victims (not to mention the thousands of others—also victims—who had the misfortune of either working for, or doing business, with one of these organizations).

Even those who try to uphold high ethical principles can find themselves in trouble. A Huffington Post article in January 2012 titled “Company Retaliation Against Whistleblowers Rises to All-Time High” detailed the backlash suffered by employees who tried to do the right thing by reporting wrongdoing, only to find themselves either ostracized at work, unemployed, or subject to legal action. Sticking to one’s ethical principles in the face of adversity is not often the easiest or most profitable course of action.

How do you rate your commitment to ethics? How confident are you that you would be faithful to your standards when faced with a genuine ethical dilemma? As a business owner, how do you effectively communicate your values to employees and weave your commitment to ethics into the fabric of your organization?

If you do not surround yourself with like-minded people when it comes to business ethics, then you do so at your own risk. A business owner will often be the one who ultimately pays the price for an unethical employee—both from a legal perspective and a business perspective. Your business reputation and brand is only as strong as your least ethical employee.

Business ethics is much more than a Code of Conduct posted on a company web site or bulletin board in the employee lounge. It is both a personal and professional commitment to be applied on a daily basis. A strong commitment to ethics should permeate all aspects of an organization—hiring, training, supervision, strategic planning, customer service—from the board room to the receptionist’s desk. Only then can one reasonably expect an organization to reflect the high ethical standards set by its leaders.

Aside from written policies and procedures, a business owner should also consider holding periodic training sessions and workshops focused on business ethics and the company’s approach to identifying and addressing ethical dilemmas. Informal discussions with employees can also be effective in building a culture of compliance in your organization. An established process for addressing ethical violations observed in the workplace can also be an effective way to let employees know that a company is serious about its commitment to ethics—those who observe unethical behavior can report it without fear of retribution while those who are tempted to compromise their ethics will know that they risk swift and severe penalties if caught.

Clearly, in the long run, a business will enjoy an excellent return on its investment in business ethics—a more positive corporate culture, less risk, a more respected brand, greater employee and customer loyalty. If you are looking to bolster your company’s ethics code or compliance program, email ( or call (804.205.5162) me anytime.

As always, Eric and I welcome your comments below. Please subscribe to keep up with this and other Guest Post Fridays here at Musings.

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One Response to Why Business Ethics is Essential for Your Company

  1. I like how you say that a growing number of universities are promoting business ethics. Having worked in business, I think that it’s essential. There are so many corrupt business people out there. It’s nice to find some that aren’t. It also helps your business so that you can be more reputable.

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