If your company says it’s an ethical business, make sure to practice what you preach by keeping these four things in mind.

Creating an ethical business is more important than ever, says leadership coach Brendon Le Lievre.

A trying couple of years has led people to reflect on the kind of work they want to do, the impact they want to have and which organisations can help them achieve this.

“When we create an ethical workplace, people with similar morals, values and beliefs are more likely to want to join us, bringing their skill set, expertise, knowledge and motivation with them,” says Le Lievre.

So how can organisations ensure that ethical decision-making and practices are at their core? 

Alison Michalk, B Consultant and CEO of marketing company Quiip, says it depends on how willing and able organisations are to implement change. 

B Corporation certification is the ultimate ethical stamp of approval, she says. It measures for-profit businesses against a set of criteria across five impact areas: governance, work practices, the environment, the community, and its customers.

“It’s about getting companies to raise their standards, so they go above and beyond what’s expected of them as a business in the current economy,” says Michalk.

While some organisations may not be able to run the whole gamut, they can begin by understanding where and how to make business improvements. 

Starting snapshot

A good starting point is using the B Impact Assessment tool (sign up required), says Michalk, which is free to access. This will give you a snapshot of how well your organisation measures up to the B Corp criteria.

Organisations should also consider what they already do well and what they’re passionate about, such as ethical decision-making around who they do business with.

“Usually one of those areas is a natural fit and the business can lean into that more,” she says.

1. Reconfiguring governance

Running an ethical business requires sound policies that are built into the organisation’s ethos, championing transparency and anti-corruption.

This includes processes such as a whistleblower policy, where employees feel they can safely report decisions that are not in the company’s best interests, and a code of conduct that employees live by.

To ensure these policies are understood from the get-go, Michalk recommends including them in the organisation’s onboarding package, and reiterating them via company-wide events, such as lunch and learn sessions.

Financial transparency is also part and parcel of good governance.

“This should go beyond sharing the company’s quarterly earnings with staff, and include training around understanding a profit and loss document and how the company functions financially.” 

2. Improve work practices

People-focused policies that transcend the norm can have a profound impact on your employees’ lives.

“For example, the B Corp movement looks favourably on companies that have employee stock ownership plans to redistribute wealth and share some of the profits,” says Michalk.

While she concedes this isn’t always easy to implement, there are other ways to make a financial impact.

“You can pay bonuses to everyone or increase the lowest-paid employees’ salaries, improving the ratio of the lowest to the highest paid workers.”

Increasing parental leave pay is another important area to consider. Michalk will often ask clients if they’re willing to top up the difference between the government allowance and the employee’s normal wage, or offer more than two weeks’ pay for paternity leave.

Life-skill training, such as financial literacy, cultural competence and diversity and inclusion initiatives, can also have a big impact, she adds.

“There are so many great online courses and resources out there now, so this is something that’s quite easy for companies to implement.”

3. Community outreach 

Organisations can have a positive impact on the community by evaluating their supply chains and finding ways to give back to local businesses.

“A lot of B Corps are also members of 1% for the Planet, which asks organisations to give away one per cent of their revenue.”

Other community-focused initiatives can include pro bono work or volunteer time that employees take up.

“Some companies do this really well by hosting annual events such as tree-planting days, where the entire company gets the day off to participate.”

Organisations should not only look at the ethical impact of their company, but also that of their clients and customers.

“This could include looking at how purpose-driven your clients are, or considering if your customers are a disadvantaged or underrepresented group.”

4. Environmental impact

Addressing climate change means not only reducing your company’s carbon footprint, but fine-tuning your practices.

This could include bringing products in via ship versus flight, instituting a travel plan that limits carbon-intensive travel, or sourcing catering from sustainable companies.

Organisations in lease spaces can open up a dialogue with their landlord about making the switch to renewable energy, ensure they have recycling in the vicinity and reduce the use of single-use plastics.

Knowledge and frameworks

While it’s crucial to upgrade policies to create an ethical business, shaping them and making everyday decisions requires a keen understanding of ethical theories.

One such theory is the Utilitarian Approach, says Le Lievre. 

“This focuses on the balance of providing the most good while doing the least harm,” he says.

Then there is the Justice and Fairness Approach, which helps us to analyse decisions and understand why some that seem unfair are actually the opposite.

Le Lievre says the Common Good Approach helps people make decisions that benefit us the most as a connected whole, and that the Virtue Approach is about practicing what you preach by demonstrating honesty, courage, compassion, generosity and tolerance.

Knowing these theories is important, he says, because when policies and decisions are inked out, we can often fall afoul of our best intentions.

Take scoreboards, for example. Celebrating employees at the peak of success and motivating those at the bottom might sound like a good idea in theory. But we need to consider how people get to the top and if they are using unethical measures to stay there. 

“Did they cut corners, and if they identified a new innovation, why weren’t they sharing it with the group?” he asks.

In this case, HR should question the impact of the policy, whether it’s the best practice for everyone, what else should be measured and if it demonstrates the organisation’s values.

HR can also process decisions through ethical models before coming to the most appropriate course of action, says Le Lievre.

The Ethics Centre’s A Guide to Ethical Decision-Making poses questions such as: Would I be happy for this to be front-page news? What would happen if everyone did this? How does this impact my character, or the character of the organisation?

For a six-step approach to an issue, HR could apply the DECIDE model, which entails defining your problem, establishing the rules, considering your options, investigating the likely outcomes, deciding on your course of action, then evaluating the results.

“In my experience, these frameworks help to bring structure and vocabulary to the ethical situations we face in the workplace,” says Le Lievre. “When you’re unsure of something, running it through an ethical lens will help you to see how well it holds up.”

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This article first appeared in the November 2021 edition of HRM magazine.