The role of ethics in small businesses must take centre stage

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AAT is the UK’s leading qualification and membership body for vocational accountants.

Our members are represented at every level of the finance and accounting world, including self-employed business owners.

Here at AAT, we pride ourselves on our high standards of competence and professional conduct ensuring our members behave professionally and ethically at all times.

In a society that has become increasingly sceptical about the behaviour of commercial organisations, the success of small businesses depends on their ability to build relationships of trust with customers, employers, suppliers and the wider community.

Ethics is fast becoming an essential aspect of business in the modern world.

We see ethical practices promoted in advertising, and the lack of ethical behaviour condemned in the media. From scandals focused on The BBC to Barclays and Tesco; business ethics are being increasingly scrutinised.

But why does this matter?

As consumers we consider ethics when choosing a brand, supplier or service. Having a good ethical reputation can be what sets a business apart, and when it comes to ethics, reputation is everything.

Once a company’s brand is damaged by ethical scandals, it can be very difficult to re-build the trust of existing consumers and even more challenging to attract new ones. Additionally, a lapse in reputation can leave a business open to attack from competition.

So what can businesses do to be more ethical?

The benefits for small businesses of setting down a formal ethics policy are numerous.

You can expect to attract higher quality staff and to retain them for longer; you’ll see reputational benefits with customers and suppliers; enjoy lower costs for borrowing and insurance; and generate invaluable goodwill in the community.

A written policy that is available for public inspection gives you an opportunity to make your pitch to stakeholders – and gives employees a framework for thinking about how to behave in the company’s name.

How, then, to go about writing such a policy?

At AAT we recommend the following three-step approach

1. Identify the core values of your business

These may include both business values (customer service and reliability) and ethical values (honesty and respect). Think hard about what you want your business to be known for and ask employees what they think too, since they’ll be expected to live by the standards to which you aspire.

2. Draw up an ethics code

Your ethics code translates your business’s core values into practical commitments. You can’t expect to cover every possible situation that might arise, but you can establish the spirit with which your business will act.

At AAT, our Code of Professional Ethics, underpins the standards we expect our members, as professional accountants, to abide by. These standards can be used as their sword and shield in ensuring they practice in a manner that will maintain public trust and confidence in their professionalism.

3. Embed the code in your business

This is the most important step. All employees should be introduced to your code by the most senior people in the business, in order to underline its importance.

Give employees forums through which they can discuss how the code relates to their roles. And above all, lead by example – if the managers and owners of small businesses demonstrably live by its values, there’s more chance that employees will do the same.

Have you found other strategies to implement ethics in your business? We would love to hear them. Tell us on Facebook or Twitter.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.

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