Building ethical business environment is essential for successful investment

Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.

RESEARCH TRIANGLE PARK, N.C. - In a small business where the founder/owner's presence is felt by everyone, it may not be necessary to document his or her values. However, it is necessary to act appropriately on those values with ethical behavior.

Large or small, the leaders must establish a culture that fosters ethical behavior in the context of the company’s values.

Establish an Open Environment

If something serious happens in your company, you want people to feel safe in coming forward and talking it over. The CEO or business owner is often the last person to hear about such things. A strict "no retribution" practice for people wishing to express their concerns will instill the trust required to encourage open communications.

Other actions toward building an ethical environment are:

• Communicating what ethical conduct is to everyone in the company is essential so they know where you stand on ethical matters and don’t just assume what it is. Misunderstandings will be avoided when the leader speaks clearly and forthrightly about the importance of ethical behavior as part of the company’s vision and mission.

• Decisively addressing issues must be a priority of a responsible executive who is charged with investigating the problem and taking appropriate action. As part of the process, examine the types of behavior that may have caused the problem in the first place.

Accountability

Ethical conduct flourishes in an environment of openness and leadership-by-example. Unethical conduct flourishes in an atmosphere of secrecy and misinformation. For this obvious reason the goal should always be to create accountability in decision-making. This applies first to the people at the top and then throughout the organization.

When decision making is done in the context of clearly communicated and demonstrated values and code of conduct, it is much harder for employees to fall prey to bad behavior and to blame others when something goes wrong. Each individual should be held accountable for their actions, regardless of rank or seniority.

The Rewards of an Ethical Company

In an ethical environment, employees and business partners understand that ethical behavior is the means by which business success is achieved. They see through example after example that ethical behavior is rewarded and unethical behavior is not tolerated. They understand that leadership holds itself to the highest standards and that absolutely everyone, no matter how vital to the company, is responsible for the safe-keeping of the ethics of the company. All good things will follow.

About the author: Bill Warner is the managing partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.