The Enron debacle is just the latest "worst case" scenario demonstrating the fate of a business that operated under poor ethical practices.
Many employers, particularly smaller employers, may consider that ethics policies are an issue of relevance only to larger companies, or are an issue to revisit only after the occasional high profile fall from grace, such as that of Enron.
However, despite the hullabaloo surrounding this latest incident, the lesson for every organization to learn is the dire need for a formal ethics policy, and the perils of not having one.
If an organization does not clearly implement, abide by, and enforce its stance on ethics, unethical behavior can run rampant, perhaps without management noticing until the behavior comes to an ugly head � and perhaps with serious legal consequences.
Many organizations lack formal ethics policies, considering them simply unneccessary or too difficult to enforce. However, an organization without an ethics policy is operating haphazardly, submitting itself to the ethical whims of its individual constituents. While some employees may indeed have a strong sense of ethical behavior, others may be ethically "lazy," and not follow any code. Yet others may be quite active in deliberately committing unethical acts.
In the retail sector, a lack of ethical guidelines � especially if coupled with low morale or low wages-- can lead to high rates of employee theft or other unethical behavior, as employees act to retailiate against their employers or others. According to Walker Information, the retail sector has the most workers � 62% -- aware of ethical violations, and among the fewest who respect the integrity of their senior leadership.
Further, the number one ethical violation reported in retail was stealing or theft by employees. Further, economic difficulties and the threat of layoffs can push employees to adopt an attitude that they must perform despite the ethical consequences of their actions.
Employees who are desperate to perform may be driven to cut ethical corners to "make the numbers."
To avoid re-creating the "worst case" scenario and to combat perpetual pilfering, it is essential for organizations to foster good ethical conduct.
Good ethical practices begin with the creation of unambiguous ethics policies that explain standards of behavior � and the consequences for violating those rules -- in black and white terms.
Further, for an ethics policy to hold water, managers must commit to practicing what they preach and abide by it. Studies have shown that ethics programs only succeed when employees believe that the company and management have a good ethical reputation.
After communicating policies clearly, employers should ensure that staff understand those policies and their importance. Educational workshops or other ethics training for employees can help establish and reinforce good behavior, explaining what possible ethical dilemmas employees may face, and allowing them to ask questions or otherwise explore the topic. Further, employers should communicate appropriate contacts to whom employees can address their ethical concerns down the road.
When an employee performs ethically questionable behavior, management must take clear and decisive action to investigate the matter and discipline as necessary. Allowing questionable behavior without consequences will undermine any policy.
Finally, employers must take steps to ensure that their policies are considered standards by which all actively abide, and are not just another manual to stuff in the back of the filing cabinet or another workshop to forget. An organization should regularly review practices, including making period statements or acknowledgements of compliance, reminding all of the commitment to and necessity of abiding by policies.
At times, there is a fine line between healthy competition and ethically questionable practices. The more an organization does to clearly foresee and preclude unacceptable behavior, the better the chances of fortifying a healthy organization and preventing threatening legal consequences.