How to build and maintain an ethical start-up

Starting a business is one thing, but having an ethical one is another. Building an ethical business is about more than just compliance and meeting legal requirements. There’s a tricky balance between the profit motive of start-ups, and the desire to achieve something worthwhile.

But if you get it right, a business will be profitable, while creating social impact.

Your business ethics will be tested throughout your journey as an entrepreneur. The way you react to situations and problems will determine your reputation as a company, so it’s important to set your standards from the start.

Experience has shown that new entrepreneurs tend to focus only on getting the product right, and assume the right culture and ethics will come later simply by hiring good people. But they need to focus early on developing their moral compass, as well as setting the right ethical tone.

What defines an ethical leader? Using the description from the Institute for Ethical Leadership, an ethical leader understands that positive relationships are the gold standard for all organisational effort.

Good quality relationships built on respect and trust — not necessarily agreement, because people need to spark each other — are the single most-important determinants of success. The ethical leader understands these kinds of relationships germinate and grow in the rich soil of the fundamental principles of trust, respect, integrity, honesty, fairness, equity, justice and compassion.

The following five tips go a long way in helping you build and maintain an ethical start-up:

1. Actions speak louder than words: Make sure your actions are visible to employees and to your customers, who have the final say in your start-up reputation and overall perception. Customers are the ones giving referrals, and knowing you sail an honest ship is of utmost importance. If your clients are ethical too, they’ll give you credit where due.

2. Ethics must start at the top: You set the bar for your start-up. If you cut corners, so will your employees. Don’t assume employees know right from wrong. Clearly communicate from the beginning how you expect them to behave when it comes to internal work and dealing with clients. Set and manage these expectations.

3. Always keep your door open: Establish an office environment where employees can voice their concerns, including issues with the business policy, without fear of recrimination.

4. Reward: make sure you reward your team on the basis of exhibiting company values. Be it through money or shares in the start-up.

5. Deal decisively and immediately with breaches in conduct: It is important to make sure you know the full, two-sided story for any breach and when you do, deal with it quickly and without delay.