Many people review their businesses at the beginning of the year. Most look at markets, sales trends, and operations. One area that can use periodic review are the ways that business ethics are implemented throughout the company. It helps to look at why these business ethics are valuable for the company and why ethical reviews are needed.
Business ethics are beneficial because customers prefer doing business with ethical companies. Ethical companies have higher profits and have better long term survival. When dealing with entities they perceive to be unethical, people want large discounts or other considerations that lower the profit.
Around the world, ethical companies do better than their peers. Even in developing countries such as China, ethical companies do significantly better (reported by professors at Peking University and The University of Memphis).
One reason why ethical companies do better is that they have far fewer "Black Swan" incidents. Ethical lapses are the cause for many a company collapse. In a crisis, the company reputation is more important than any amount of cash or profit.
A Wall Street Journal article described some social research where what people said they would be willing to pay for something was measured against the stated ethics of the firm that produced it. People demanded far lower prices from the places perceived to have lower ethics. Likewise, unethical companies have far more demands on them for kickbacks or for "protection money".
An ethical tune up can be as simple as going over the company's ethics statement with each employee or it can be an in depth analysis of how the company is operating in every area.
When doing an ethical review, we can to look at how the whole company is structured. Andrew Leigh in RealBusiness suggests that we do well to consider a number of factors. While the ethics statement and checking for compliance is important, it is actually a minor part of the whole way to be an ethical company. Other factors include how the company governance is structured, company reputation and leadership, company behaviour in the public square, and the internal corporate culture. He states that the culture is often more important than the company strategy in determining the corporate ethics.
It is not sufficient to just have a strong ethical statement in place. Business ethics can erode under pressure. Many a company has strong ethical guidelines, but has front line managers who have "bent the rules" or even broken laws in their quest for profits.
We see more problems with business ethics in the sales force. The constant pressure to "make quota" brings many a sales person to compromise. People from the just hired sales person to the CEO can try to manipulate the numbers so that they get their bonus.
Ethics - a big part of corporate success.