More than half of small businesses don’t have an ethics policy in place in their organisation, analysis by banking group Close Brothers has found.
Some 55 per cent of 500 SME owners who responded to a survey admitted they lack such a policy, also called a code of ethics, which outlines how an organisation’s people should interact with clients, suppliers, and each other.
Two fifths (41 per cent) of respondents said they don’t have an ethics policy because they feel they don’t need one, while one in 10 (10 per cent) didn’t know if they had one at all.
Mike Randall, CEO of Close Brothers Asset Finance said: “With business growth high on the agenda for many SME owners in 2016, the importance of good ethical behaviour will play an increasing role in how their businesses are perceived, both internally and externally. Discussions around ethical policies must be a priority if businesses are to reach their full potential.”
The figures revealed that many small business owners think a formal ethics policy is the remit only of larger companies; more than a third (37 per cent) said they believe their firm is too small to have to worry about the guidelines.
Experience, however, shows this not to be the case, with 56 per cent of respondents reporting that they have been on the receiving end of unethical behaviour in business.
Moreover, it seems that ethical practices are an increasing priority more widely, as more than half (52 per cent) of SMEs said they are asked about ethics in their supply chain.
Crucial for success
Randall added: “Nearly three quarters of the firms we talked to said that success is dependent on high standards of business ethics. With this in mind, it is clear that good trusting relationships with clients, employees, suppliers and the community are vital in business.
“Business owners and managers will also recognise the importance of trust and ethics when they are on the receiving end of ‘unethical business practice’.
“Even though many smaller organisations have an informal understanding about how business is done, there are clear advantages to having a formal code in place – not least because they will inform business practice and greatly enhance the organisation’s reputation.”