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Ethical Business Behaviour: More Than Just Compliance

Not long ago, the word ‘ethics’ was rarely featured in the same sentence as business. Nowadays, our communities have a desire for transparency of ethical practices, in many cases demanding it, and so businesses have a greater responsibility to do more and to do it better. This means building trust and sticking to their word, and it goes beyond workplace compliance as we know it.

Employers often believe that those they employ have an inherent, active moral compass, because after all, they were given the job. But high risk is involved with this assumption. Taking for granted that a new or even long-serving employee’s internal code of ethics is organically aligned with the company’s official Code of Ethics is a precarious leap of faith that could land the company in hot water. The further assumption that the company’s Code of Ethics was ever made explicit to employees, rather than left buried somewhere within their website only to be nodded towards during employee orientation, makes for even riskier business.

Ethical business practices can be a complex terrain for organisations to navigate, with many potential situations and loopholes to be vigilantly considered to best avoid a soiled reputation. Correctly paying all employees, ensuring fairness and equality are being applied to hiring, firing and promotion practices, ensuring staff safety and psychological/emotional welfare, providing accessible avenues for complaints, and ensuring issues are promptly and judiciously addressed are all vital components of an ethical business. But reputation isn’t the only thing at stake. Events in today’s business world demonstrate how a simple momentary lapse in ethical conduct can elicit catastrophic fines and legal consequences, deter elite talent, and in some cases even destroy an entire company.

Despite the negative implications, ethical violations still occur regularly within Australian businesses. At the time of writing, supermarket giant Woolworths is awaiting possible prosecution by Australia’s Fair Work Ombudsman for underpaying staff 300 million dollars over the course of the last nine years due to an alleged systematic ‘mistake’. They join a long list of large, established corporations that have received attention for similar breaches of ethical conduct, including the Commonwealth Bank, Qantas and the Australian Broadcasting Corporation (ABC). It goes to show that even businesses that are the most established and well-resourced to invest in workplace practice expertise are not immune to the negative implications of workplace non-compliance.

But compliance is just the start and only part of the answer. Leading businesses understand that taking a more deliberate approach to compliance reaps real and lasting benefits. Conducting business with ethics and values as an afterthought, while passively following the rules, is failing to see that managing workplace practices is actually an opportunity. Instilling proactive workplace behaviours means more than just avoiding problems and penalties – it is about taking conscious steps to uncover issues that may already exist, and ultimately building a stronger company with higher employee retention, better customer satisfaction, and a superior reputation, all of which will likely equate to a more successful, more profitable business. A good example of this is Salesforce, a company that operates with total transparency of workplace culture, was voted one of the best places to work in Australia, and achieves first-class business results.

Salesforce, however, is unfortunately far from the benchmark. Australia’s Fair Work Ombudsman found that almost half of Australia’s audited businesses were non-compliant with workplace obligations between 2017-2018, owing a staggering 7.3 million dollars in court-ordered penalties, 39% of which were related to staff underpayments. More proactive behaviours must be adopted, not only to avoid penalties but to ensure that company reputation and employee satisfaction is upheld, because ultimately, happy employees are more productive, and businesses with fine reputations earn the allegiance of both customers and investors alike.

Working towards more ethical practices, businesses can engage in systematic tests, for example, to ensure that all staff members are being paid correctly, or that all leave policies are being kept up to date with changing regulations. Embracing technology that has been created for purposes such as clocking staff hours, and automatically calculating the correct employee pay grades, tax obligations, and public holiday requirements etc., is a good way to ensure company compliance, but while practical and time-effective, these systems are complex and can cause confusion around compliance and changing regulations. It is therefore essential to educate and empower employees at all levels, not just executives, to understand and manage workplace culture.

While executives can strategise to expose and tackle compliance issues, realistically, it is managers and junior staff members who are more likely to be aware of ethical lapses when they occur, for example, observing inappropriate behaviour either on behalf of the business or within it, or learning of any payment issues. It is therefore imperative to be proactive about educating and training employees at varying levels, equipping them with the knowledge and power needed to recognise and call attention to ethical misconduct. Only then can companies operate with pride and assurance, earning the trust and allegiance of communities and employees alike.

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