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New research has shown kinex that more than half of UK-based small and medium sized enterprises (SMEs) are yet to have established a code of ethics.
Also known as an ‘ethics policy,’ a code of ethics defines how staff within a company should interact with each other. Ethics policies also provide a guide for employees on how to communicate with colleagues, clients, suppliers and vendors, ensuring the business maintains a positive reputation.
A new study from Close Brothers Asset Finance, a firm which provides funding options to businesses, found that 55% of UK SMEs haven’t established a code of ethics. Meanwhile, 41% of those questioned admitted that they don’t have an ethics policy because they don’t believe their business needs one.
Commenting on the research, Close Brothers Asset Finance CEO Mike Randall 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.”
Whilst the majority of UK small businesses say they don’t need a code of ethics, 56% admitted that they’ve been subjected to unethical business practises in the past. Meanwhile a similar majority (52%) revealed that they’ve been questioned about ethics in their supply chain.
Continuing, Randall commented: “Nearly three quarters of the firms we talked to said that success is dependent upon 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 … they will inform business practice and greatly enhance the organisation’s reputation.”
Never underestimate the importance of trust. The 2015 Edelman Trust Barometer, which measures global trust in business, found that 80% of consumers buy products and services from companies they trust, while 63% refuse to purchase from businesses they distrust. Furthermore, 68% admitted that they’ve recommended a business they trust to a friend or colleague.
Good ethical behaviour can help small companies attract and retain customers. However, a majority of UK SMEs don’t believe it’s important to establish an ethics policy, despite the fact that they recognise the importance of trust and ethics. Without a strong code of ethics, SMEs could lose consumer trust and deprive themselves of essential revenue.
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