Small-business owners are the moral and ethical leaders of their organizations. They are responsible for the behavior of their employees, both individually and as a whole. As ethical leaders, they create the codes of conduct that shape their organization's actions, which include everything from workplace behavior to customer relations.

Be a Role Model

A major aspect of ethical leadership is being a role model. For instance, if honesty with customers is a value you wish to instill in your workers, model that behavior in all your client dealings. If you don’t project the values you wish to promote in others, your employees will see you as a hypocrite and possibly ignore your ethical guidelines.

Importance of Standards

Setting ethical standards for your business is the first step in creating an ethical organization. Your general ethical values -- for example, the importance of fair and equal treatment for everyone -- should be clear to all your employees. You also might need explicit policies to ensure your employees know how to handle everyday business transactions. For example, your employees must understand clearly how you expect them to deal with customers and what behaviors you find unacceptable in the workplace. The goal is to deliver a clear and consistent ethical message to your employees so they can apply your ethical approach when making decisions.


After your policies are clear, your next role as ethical leader is to monitor your employees to ensure compliance with your standards. Encourage employees to report ethical violations, and survey customers to ensure their experiences with your staff were acceptable. Punish violations and reward compliance to motivate employees to remain ethical.

Expert Insight

An ethical leader recognizes when she is out of her depth and needs moral guidance. For example, suppose you learn a workplace feud is causing tension in the office. Firing one of the feuding employees might be unethical if no party is to blame, but allowing the divisive behavior to worsen could jeopardize your business. In such moments of crisis, hire an expert on workplace ethics -- for example, a relationship therapist or a human resources consultant -- to help you find your ethical footing.

Ethics Committee

In a larger organization, an ethics steering committee might be necessary to handle difficult cases for which there is no set policy. For example, you might create a committee made up of managers of each department, as well as employee representatives, tasking the group with updating ethical policies and ruling on difficult ethical issues.