In the wake of such corporate scandals such as Enron, the business world has heard the term “ethics” more than ever. However, the current economic environment has made the concentration on ethical behavior in the workplace even more important, especially in the construction industry.
The construction industry faces a long list of challenges related to ethical behavior including, but not limited to, bid shopping, payment issues, asset misappropriation, accounting fraud, bribery and corruption, intellectual property infringement, money laundering, espionage, and tax fraud.
Most business owners make the mistake of thinking that “it can’t happen to me.” However, according to Ethical Advocate, 43 percent of surveyed employees admitted to doing at least one unethical act in the workplace in the last year. After observing an unethical action, 75 percent of observers did nothing about it unless they had a safe mechanism for doing so. According to Jacob Blass, president of Ethical Advocate, the median loss in the construction industry is $330,000 per incident of fraud.
Still need another reason to develop a strong ethics program? Ethical behavior in an organization can be a key to helping to ensure your company’s success. Ethisphere Institute, as noted by Andrew Patron in his article on ethics in The Contractor’s Compass, publishes the “World’s Most Ethical Companies” every year. Companies on this list such as CH2M, Fluor, Granite, Parsons, and Caterpillar will outperform the S&P 500 and the FTSE 100 by up to 50 percent based on research by the institute.
Many companies may conclude that an ethics program is important, but are overwhelmed with where to start to develop a strong ethics policy. The Construction Industry Ethics & Compliance Initiative recommends the following steps when developing an ethics and business conduct program.
- Determine your company’s values that will be the foundation of your ethics and business conduct program.
- Conduct a comprehensive risk assessment by looking closely at your particular business to determine areas of business and legal risk.
- Include a written policy on ethics and business conduct in your company’s policies and procedures.
- Establish a place for your employees, suppliers, customers and others who do business with your company to ask questions or raise areas of concern.
- Continue to communicate your company’s commitment to ethics to your employees through ethic awareness initiatives such as ethics training or incorporating ethics discussion into regular staff meetings.
- Develop a comprehensive communication plan for your ethics and business conduct program that allows you to manage the task of communicating your program’s elements to your employees.
- Conduct regular program assessments and evaluations to help measure the effectiveness of your program.
- Ensure that leaders show commitment to the program, as leaders set the tone and culture of an organization, including its attitude about ethics.
To learn more about developing a formal ethics policy for your construction company, please contact the construction professionals of McKonly and Asbury, LLP.