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Start Business Ethics
When I began planning this website, I did a lot of research to decide what topics to cover that would be interesting to you. I looked at magazines, blogs, web sites and, of course, Google. The one topic that NEVER came up was start business ethics. I assume that means no one is going to read this page, but I wanted include it anyway. To me defining your business in an ethical manner is probably a key difference between successful and failure. Ethical businesses succeed unethical businesses don’t! My business and consulting career has been shaped by ethics. My first job out of college (which lasted eleven years) was at an accounting firm you may have heard of called Arthur Andersen.
Thrilled to be hired!
It was a “Big Eight” audit and consulting firm and I was ecstatic to get the job. I joined the consulting division and went through all of their first year indoctrination. Much of the focus of that training ironically was ETHICS and something they called STEWARDSHIP (making sure the company survives and prospers for the next generation) . I was told that the entire focus of the company was ethics and that without ethics the company was doomed. They had no idea how right they were. By the time of the Enron debacle they had probably violated every ethical standard documented in their manuals and that I was trained on. What caused such a huge ethical transformation? I believe it was the pace of business change and their inability to keep up with it caused them to begin to compromise their ethics. The advent of personal computers, spreadsheets and accounting software significantly cut into their ability to generate audit fees and Sarbanes Oxley hadn’t been invented yet. So Arthur Andersen needed to figure out new and creative ways to generate fees. They only had to look across the aisle at their sister company Andersen Consulting to get ideas. Consulting companies commonly bill for things that are never produced or for systems that are never installed. In my experience, ethics and consulting rarely go together especially at Andersen Consulting. The partners at Arthur Andersen were astonished the Andersen Consulting could generate HUGE fees and deliver NOTHING. So they decided to try to do the same thing. If you wanted to get a CLEAN audit your company would need to hire them, your auditors to review some aspect of your business. That ethical compromise was the beginning of the ENRON problem. Look for ways to get fees and don't worry about ethics! How does that relate to starting a business? If you compromise ethics, either in the beginning or after you’re established, your business is very likely to fail. It’s that simple.
Why start business ethics matter
Why are start business ethics so crucial? The minute you compromise ethics to obtain some part of your business, you will have to repay it. Let me give you two examples of ethical problems that I’ve seen first hand. Let’s say you’re in the software business. When customers review your software you are OVERLY optimistic about its features. Furthermore, let’s say you sell the software based on those assertions. You’re now going to spend time covering up the fact that those features aren’t there and if another potential customer asked you about the same features you’ll have to lie. Why? Because they may be a referral from one of your current customers and you can’t risk having any of your current customers finding out that you lied. You’re constantly covering your tracks. Let’s take another example of start business ethics. You figure out how to FIX your billing software to “add wrong” in your favor. You have to do certain THINGS to the invoice when you’re creating it, but you’re a small company and it doesn’t take you that much time. Fast forward two years and you grow a lot, but you have to hide the invoicing issues from ALL of your employees. You have many things you’d rather be doing, but you HAVE to do the invoicing because no one can know.
What other problems does it cause?
I just went to the new off-Broadway version of Fyodor Dostoevsky’s “Crime and Punishment,” a classic story about ethics. The lead character, Raskolnikov, kills two old women because he needs money. He believes he is justified, but it eats away at him until he confesses. Compromising ethics in your business puts you in the same dilemma as Raskolnikov. You’ll spend more effort hiding what you’ve done and worrying about being discovered. This extra effort is not time well spent, so it ultimately ends up hurting your business more than helping it.
How to avoid issues with start business ethics
The best way to avoid problems with start business ethics is to use your GUT! Believe it or not you’re the best judge of whether or not something is ETHICAL. There are times in business when you can’t be brutally honest with a customer, otherwise you may lose them. When does not telling the whole truth become an ethical problem? Here’s a good rule of thumb: “If it has financial impact either negatively for your customer or positively for you,” it’s a problem. Always be on guard against slipping down the ethical slope. When you’re just getting started, it’s easy to do. But it can happen at any time, so BE CAREFUL and try to never introduce ethical problems into your business.
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