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Yes, business ethics can be measured

Leanne Hoagland-Smith. | Provided photo~Sun-Times Media

Leanne Hoagland-Smith. | Provided photo~Sun-Times Media

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When small businesses to even much larger ones look at metrics, one of the very rare and overlooked ones is the adherence to business ethics.

There is documented research from organizations, such as Ethics Resource Center, Gallup and various universities measuring the impact of business ethics or lack thereof on everything from employee morale to the negative impact on workplace productivity. So the reluctance to avoid business ethics as a key metric or key performance indicator (KPI) is illogical.

This begs the question of, “How does one measure ethical behavior within the workplace without being viewed as judgmental or worse yet getting sued?”

Before any measurement begins, ethics requires a definition and this starts within the strategic plan specific to the values statement. This statement is then embedded into many of the business processes such as hiring, quality, performance reviews, conflict of interest statement, etc. Then there is directed and intentional leadership behavior to both communicate and demonstrate the firm’s business ethics to all employees 24/7 as well as other shareholders.

By establishing key benchmarks including KPIs, the metrics can be determined and then monitored. Key metrics might include the number of complaints made by fellow employees about other employees to complaints by customers to those made through negative reviews and comments on social media. Yes finding those metrics is not as easy as gross sales, but to fail to do so will definitely impact gross sales.

Business ethics is first and foremost the responsibility of executive leadership. These individuals must lead with high business ethics and model as noted previously ethical behaviors 24/7. They must also hold accountable through an approved performance appraisal process those who violate the firm’s business ethics as well as provided ethics training.

The reason ethics training should be provided is because in today’s marketplace, there is a lot of gray. Most individuals know the black and white, the major right and wrongs. However, the gray areas that usually are not legal offenses, but potentially moral ones are the most confusing.

Locally, a group of concerned business professionals banded together to create the Shared Ethics Advisory Commission in 2005. Earlier this month, the group held its 4th annual breakfast meeting with former U.S. Rep. Lee Hamilton, D, Ind., as the keynote speaker. The commission brings ethics training to local businesses and organizations to ensure consistent and ethical behaviors. Additionally, some business coaches and talent management consultants include ethics training within their strategic planning or leadership development programs.

As to the legal implications, communication through personnel manuals or handbooks should be reviewed by a labor attorney. Also, the Human Resource Department needs to stay abreast of current employment law.

Measuring business ethics is necessary and is embraced by those forward-thinking leaders who recognize that people buy from people they know and trust. Having untrustworthy employees or business practices does hurt the bottom line. With the marketplace as crowded as it is, not having this metric may just become your competitive disadvantage.

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