Ethics is a very important issue in business. Not everything that is legal is ethical, and just because you can do something doesn’t mean you should do it. Creating an ethics policy for your business will build a god ethics foundation, but it also must be enforced to be effective.

I like the three questions that Kenneth Blanchard and Norman Vincent Peale, authors of The Power of Ethical Management, recommended to ask when faced with an ethical dilemma:

1. Is it legal? In other words, will you be violating any criminal laws, civil laws, or company policies by engaging in this activity?

2. Is it balanced? Is it fair to all parties concerned both in the short-term as well as the long-term? Is this a win-win situation for those directly as well as indirectly involved?

3. Is it right? Most of us know the difference between right and wrong, but when push comes to shove, how does this decision make you feel about yourself? Are you proud of yourself for making this decision? Would you like others to know you made the decision you did?1

These three questions should be used as the foundation of building an ethics policy. All three must be used for the dilemma in question, not just one or two of the questions. The great part about these three questions is that you can put any decision to the test. This is important because many times people don’t even think there is an ethical issue with a decision or action, so they won’t bother to scrutinize it. These three questions can be a litmus test to any and all decisions and actions made on a daily basis. The key to this is to make sure that the ethics policy is not just a separate document but integrated with the core “mission, vision, and values” of the organization. In other words, your company’s value statement should link to the ethics policy; the ethics policy should link to the mission, etc. This will create a company culture of ethical behavior and not just make the ethics policy seem like a statement of laws or a wish list of “recommended” behavior.

The most important part of the ethics policy in a company is example by behavior. The leader(s) of the company need to instill an ethical culture not only by creating policies, but by living them out. They need to build trust in the organization and act fairly with their customers and their employees. They also need to be passionate about doing business ethically. Good entrepreneurs are usually very passionate about the work they do and the business that they run; they need to relay that same passion to making sure their business is ethical and that all people representing their business are ethical.

Lastly, the ethics policy of the company needs to be enforced. There need to be specific consequences for breaking any part of the ethics policy and action must be taken. If this does not happen then the ethics policy will become useless. Unfortunately, there are going to be times when people make unethical decisions. Making sure that there are consequences for the unethical behavior will ensure that your employees know that the ethics policy is for real and deter them from making unethical choices.