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updated 9/22/2012 7:15:42 AM ET 2012-09-22T11:15:42

image credit: We Create NYC

Are business ethics in danger? A 2011 report from the Ethics Resource Center found that "ethics cultures are eroding and employees' perceptions of their leaders' ethics are slipping." Employees are experiencing increased retaliation against whistle-blowers as well as more pressure to break rules.

That doesn't surprise Michael Josephson, president and founder of the Josephson Institute, a Los Angeles-based nonprofit organization that delivers services and materials to increase ethical awareness, commitment and behavior. When the stakes are higher, such as they are in today's tough business climate, people may feel more pressure to act unethically to produce results, whether it's lying to customers, bad-mouthing competitors, or undermining co-workers.

That kind of behavior can cause significant problems with morale and could even lead to legal issues. Josephson says that it's critical for business leaders to take a stand when it comes to ethics and offers these three tips to do so.

1. Make your expectations clear. Teach employees what you mean by ethical behavior -- there's no simpler way to do so than to write down your expectations. Include your expectations when it comes to ethical decision-making in your employee handbook or in other documentation that employees receive during their first days on the job.

Related: Why Social Media May Weaken the Moral Fiber of Your Workplace

In addition to mapping out the behavior you expect, give employees some guidelines to help them when it comes to making ethical decisions, including when they should turn to their managers for guidance and how to report unethical behavior they see around them.

2. Enforce your policies. When ethical breaches happen, there should be consequences, says Josephson. If your top performer is cheating on an expense report or lying to customers, you're not just tolerating the behavior -- you're teaching your other employees to be unethical, as well, he says.

The behavior will likely multiply when others see what you'll overlook. Josephson also cautions that if your top performer is lying or mistreating others, it's likely only a matter of time before he or she does the same to you.

3. Be your own change agent. The best-laid ethics policies won't matter if you don't walk your talk, says Josephson. Employees watch you for cues about how they're expected to act. When you cut ethical corners, they notice and are likely to think the behavior is okay.

Related: How to Become a Better Leader

"Instilling ethics into your organization is probably going to cost more than you want to pay," says Josephson. It's tough to be a model citizen and rein in behavior that, while helping your business earn, isn't on the up-and-up. In the long run, however, the damage that ethical lapses can cause may cost you far more than letting go of an unethical employee or some bad business habits, he says.

Copyright © 2013 Entrepreneur.com, Inc.

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