EmbedEthics_Body.jpgby Erin O’Donnell

Every one of QCI Direct’s employees and customers knows the company’s motto: “Sure, no problem.” It’s a guiding principle for the Rochester, N.Y., mail-order catalog company. Need to return something? “Sure, no problem.” Before Christmas, everyone on the staff of 110 pitches in to pack orders in the warehouse—even CEO Jane Laurence. “Sure, no problem.”

Last year, QCI Direct won the Rochester Business Ethics Award for a mid-sized company. Spokeswoman Kyra Mancine says it was because of the motto, and how the company backs it up. “We’ve won other honors, but this was Jane’s absolute favorite, because it tied into that motto. It meant so much to her.”

Mancine says the CEO’s belief in doing the right thing—being ethical—is so strong that it carries through the entire staff, from management to the call center. That kind of leadership is fundamental to developing and embedding ethics in a small business, ethics professionals say.

“Not only are the leaders doing the right thing, but all members of the organization are empowered to do the right thing,” says Christina Solomon, a financial forensics expert.

However, the 2011 National Business Ethics Survey concluded that the Golden Rule has lost some of its sheen in the American workplace, calling ethical cultures in business “at their weakest point since 2000.” The survey found, compared to 2009, that the percentage of employees who felt pressure to compromise their standards in order to do their jobs climbed five points to 13 percent. The struggling economy and the rise of social media share some of the blame.

So how can a small business foster a culture of doing the right thing? It starts with setting good examples internally, and wearing your values on your sleeve publicly.

Cultivating an ethical reputation

Solomon, a partner in accounting firm RubinBrown, specializes in forensic accounting analysis and fraud investigations. She says leadership is probably the greatest influence on whether an organization puts integrity first. If it doesn’t, real dollars are at stake. According to a 2012 report by the Association of Certified Fraud Examiners (ACFE), the median loss of a fraud event was $147,000 for firms with 100 or fewer employees.

“Small businesses continue to be the most common victims of fraud,” Solomon says.

Without a strong ethical commitment, businesses also risk losing public favor and, eventually, customers. “For a small business, their word and their reputation is incredibly important in the eyes of customers,” Solomon says. “Doing the right thing isn’t always about fraud. Is it the right thing to do for our customers? Does it send the message that we’re shady people? Is it going to leave a bad taste?”

EmbedEthics_PQ.jpgThat’s what drove QCI to keep its word when a Facebook promotion unexpectedly went viral. The company was giving away lemon-infused cleaning cloths via a Facebook post, which directed people to email Mancine. Although it was intended to boost QCI’s Facebook fan numbers, the giveaway was picked up by a website for freebies, and Mancine’s inbox was flooded with orders.

Even though the offer said “while supplies last,” QCI’s leadership agreed that they should honor the giveaway for everyone who sent a request. As a result, the company had to buy thousands more cloths than expected, but Mancine says it was more important not to alienate customers. “It also showed our employees that we’re going to stand by our word,” she says. In the end, the company gave away about 11,000 cloths. “It smelled like lemon around here for the longest time,” recalls Mancine

Greg Finkle also believes that clients want to do business with companies who are consistent in their decisions and behaviors. As a partner in Finkle | Williams Architecture in the Kansas City metro area, Finkle and his staff sometimes are approached by clients competing for the same bid. They try to handle such conflicts as transparently as possible. He explains that sometimes his firm pursues a project with more than one client, with full disclosure to both parties. Other times, if a choice must be made, company policy is to go with the client who approached them first.

“Although it doesn’t always result in winning a project, in the long run I believe this goes a long way toward gaining and maintaining the trust of our clients,” Finkle says.

Instill your values in your employees

There are four items on the Finkle | Williams statement of values. The first three mention trust, integrity, and a “servant attitude.” Only the fourth one mentions profitability.

Core values statements like these are essential to infusing ethics into your firm, Solomon says, but only if they’re discussed and referenced often. Put them in the employee handbook, but also on the wall. Ask your employees for input on when you create a statement of values, and then make it a habit to ask them for examples of how the company or their coworkers are fulfilling them.

Consider the differences among the generations in your workplace, too, and how they approach ethics. The ACFE found that Millennials appear to be more likely than their older counterparts to report wrongdoing. They’re also more likely to model ethical behavior and take those messages to heart when they come from immediate supervisors and peers.

“It might stay top of mind more if it’s coming from someone in the organization whom they perceive as a good role model, rather than strictly from the CEO,” Solomon says.

Finkle says he also looks for people who are “obsessed” with doing the right thing. “Technical skills are valuable, but people with a good moral compass are invaluable,” he adds.

S.T. Billingsley, owner of Steve's Auto Repair & Tire in Woodbridge, Virginia, wants to position his shop as the one people can trust. He’s all too aware that his industry often suffers from a reputation of being less than honest, and he combats it by hiring workers he can trust. He starts by asking job candidates their thoughts on writing up repair estimates. Billingsley says he doesn’t just listen to their response; he pays attention to how long they take to respond. With trustworthy employees on board, he says he can give customers an honest evaluation the first time, so that there will be a next time. 

“You have to have employees that understand that relationships are being built for the long term,” Billingsley says.

Getting in front of fraud

Employers can’t be shy about protecting their investment, Solomon adds. It’s critical to create an environment where whistleblowing is encouraged and protected in case of misuse or misconduct.

“Tips are by far the most prevalent way fraud is detected, no matter what your size is,” Solomon says. She recommends establishing a tip-line, such as a phone number or website, and making sure everyone in the company knows about it. (Find more guidance in the fraud prevention checkup from the ACFE.)

Just the presence of a tip-line has been shown to increase the chances that a problem gets reported, she says, especially if employees are empowered to talk without fear of retaliation.

That’s an important piece of the ethics puzzle, because retaliation is on the rise, according to the National Business Ethics Survey. Retaliation can take many forms, from getting fired to feeling excluding from meetings, opportunities, or promotions.

In 2011, the NBES reported that 45 percent of U.S. employees observed a violation of the law or ethics standards at work over the previous two years. “Reporting of this wrongdoing was at an all-time high—65 percent—but so too was retaliation against employees who blew the whistle: more than one in five employees who reported misconduct they saw experienced some form of retaliation in return,” according to the report.

Can someone vouch for you?

A number of online resources now allow businesses to be “whitelisted” for good behavior. Websites such as Angie’s List use the power of positive reviews to boost businesses with reputations for good service and practices. Check around in your industry to see if there are similar services. For instance, a website called ethicalservices.com exclusively vets carpet cleaners, in response to an expose from ABC News show 20/20 on unethical practices in that field.

Consider joining a professional association that provides ethical guidelines for your industry. Or apply for accreditation through the Better Business Bureau, which turned 100 last year.

Even with someone to vouch for you, the standard that matters most is the one you stay faithful to, Finkle says. “People have short memories,” he says.“Our most valuable asset is our reputation, and one missed step can undo years of consistent, ethical performance."