In the research study, “Does Business Ethics Pay?” by The Institute of Business Ethics (IBE), it was found that companies displaying a “clear commitment to ethical conduct” consistently outperform companies that do not display ethical conduct. What is the impact for companies that do not?

In his foreword to Murdock & Ogden’s “Business with Integrity,” Stephen R. Covey cites a number of startling statistics that illustrate the monetary cost of lack of integrity in the US. The number one cost to American businesses due to unethical behavior is employee fraud, costing nearly $400 billion a year, followed by time theft at $230 billion and counterfeiting at $200 billion.

When all is said and done, over a trillion dollars is lost each year! Consider the impact this might have on consumer prices, job market stability and company growth. Moreover, if this occurred in your business, consider the impact to your bottom line and your customers. Right here at home we have seen news articles about employees embezzling from small businesses, customers spending fake twenty dollar bills in our shops, and employees surfing the net in lieu of doing their jobs. Small businesses cannot afford the fallout of unethical business practices.

Even ethical employees contribute to this problem. In a KPMG Corporate Integrity Survey of businesses across America it was found that 76 percent of employees had observed a high level of illegal or unethical conduct at work. According to the Society of Human Resources Management, 65 percent of employees do not report ethical problems they observe. Have you considered what is going on in your business?

When it comes down to it, business owners must make a conscious choice to do business in an ethical manner. How a business conducts itself is directly reflected in its growth, customer loyalty, and ultimately its competitiveness. As you can see it goes beyond the hard dollars. In a 2006 presentation to prospective MBA students, the Marriott School of Business at Brigham Young University highlighted the “soft” costs to businesses that address issues of employee integrity such as loss of physical assets, increased cost of security, loss of customers or employees, loss of reputation, increased legal costs, and more.

We live in a country where free enterprise is at the center of our economics. Pay your taxes, follow the law and the basics are covered. Is that enough? Accountability and integrity are not reserved for the Enrons and Arthur Andersons of the world. Frequent, frank conversations about ethical behavior in the workplace should be the norm in businesses of all sizes. Employees and customers should be clear about a company’s commitment to business integrity, and they should observe those principles in action every day. When was the last time you examined your company’s policies and procedures enforcing ethics? You can’t afford to wait.

If you have best practices in ethics, please share them with us.

(Editor’s Note: Wendy Miles, Director of Customized Training and Military Education at Olympic College, oversees the operation of the Kitsap Business Assistance Center (KBAC). For partnership opportunities, contact her at 360-475-7786. For KBAC counseling services and workshops contact Rand Riedrich at 360-307-4220, rriedrich@oc.ctc.edu.).