Essentials

In a struggling economy, business owners often must cut expenses to keep their businesses afloat. However, when cutting expenses or making other important business decisions, it is essential to determine who may be affected and how. By considering the effects of your business decisions, you also can determine whether your decisions are ethical.

For example, the owner of a California-based roofing company recently found himself in legal trouble because of several unethical business decisions. Rather than considering how his decisions affected others, the owner only considered the fastest way to earn a profit. Consequently, he was charged with involuntary manslaughter after a roofing worker fell from a four-story building to his death. The worker had removed his fall-protection equipment (a rope tied around his waist and attached to a roof joist) while installing plywood.

In addition, the company was cited for providing improper safety equipment on other jobs by the California Occupational Safety and Health Administration (Cal-OSHA). Therefore, Cal-OSHA proposed a $70,000 penalty for this accident. When a Cal-OSHA inspector emphasized the importance of safety to the roofing company's owner, the owner was quoted as saying,"Money first, safety second."

The owner faces additional felony charges because investigations into the roofing company's business records found gross sales were underreported by $4.3 million for five years, payment checks were cashed at a check-cashing company to avoid reporting income and employees were paid in cash. The company's owner now faces up to 19 years in prison and more than $3 million in fines and back taxes.

Although this case may seem extreme, it contains common ethical lapses, including encouraging safety infractions and illegal payment methods.

Ethical principles

There are many ways to ensure your company remains ethical. Consider the following ethical principles adapted from Inc. magazine:

Treat your employees as valuable team members. It is important to demonstrate that you value your employees' work and consider them assets to your business. You can do this by providing employees with proper safety training and equipment and compensating them with profit-sharing and retirement programs. When layoffs are unavoidable, help laid-off employees secure new jobs, offer severance pay or sustain health care for a time period.

Be safe and honest. Not only should you keep your employees safe with appropriate fall protection during each roofing project, you also should protect your customers by installing reliable roof systems. When installing a new product, be sure it thoroughly has been researched and tested. This will provide your customers with reliable roof systems and save you time and money on maintenance and repairs.

In addition, do not make false statements about products and services. Only promise what you can deliver, and be sure to follow through on all promises in a timely manner.

Carry reference materials. You always should have access to materials to assure prospective customers you are licensed and bonded (if applicable) and insured. Urge them to check your references, and provide telephone numbers to ease customers' investigations.

Research an accounting firm before hiring it. Recent scandals in the accounting world should convince you to check a potential accounting firm's background. Ask whether the firm has any outstanding malpractice claims against it and carries errors-and-omissions insurance. The firm also should be willing to give you names of clients who can discuss the quality of its services.

Encourage an ethical workplace. It is important your employees understand your company's ethics policies. Maintain these policies in an employee handbook, and explain them during new employee orientations. Also, post a telephone number for a human-resources employee or comment box in which anonymous remarks can be submitted about unethical behavior within your company.

Think about it

Business ethics are important every day and arise with every decision. The next time you face an ethical dilemma, think about how it will affect others within your organization. By considering others' needs, you will have an easier time making ethical choices.

Christina Koch is assistant editor of Professional Roofing magazine.