Business development · 4 January 2016

Britain’s small firms advised to develop ethics policies to aid growth

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Over half the UK’s small firms have experienced bad ethical practice in business

Good ethical business practice is increasingly the concern of the UK’s micro and small business owners, with over half the nation’s small firms claiming to have been on the receiving end of unethical practices, and a similar proportion having been questioned over the ethics of supply chains.

Research revealed this week by banking group Close Brothers demonstrated that 56 per cent of small firms have experienced such practices, whilst 52 per cent have been quizzed on suppliers. Close to one in ten small businesses claimed to have experienced unethical practices “a lot”, whilst 27 per cent claim that it happens “on occasion”.

However, the research has also found that many small business owners don’t see the need to develop an ethics policy, with 41 per cent claiming such a policy to be unnecessary.

With high growth expected for the UK’s small business sector in 2016, Close Brothers Asset Finance CEO Mike Randall said that ethical behaviour “will play an increasing role in how businesses are perceived, both internally and externally.

A business’s ethics policy acts to advise employees how best to interact with customers, suppliers and other business partners, as well as one another.

Despite being as important to smaller firms as they are to larger companies, 37 per cent of respondent business owners to the Close Brothers survey claimed to be in charge of firms that were too small to need ethical guidelines, with 12 per cent stating that concerns surrounding ethical best practice was the domain of larger businesses.

Randall added: “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 – not least because they will inform business practice and greatly enhance the organisation’s reputation.”

“Nearly three quarters of the firms we talked to said that success is dependent on 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.”

Segura Systems is one UK firm looking to promote ethical enterprise. As reported on sister website Real Business, the company raised £2m in December to expand its retail technology and deliver supply chain insights across more sectors.

“In recent years consumers have begun to ask more of their retailers – people want to know that the goods they’re buying have been ethically and responsibly produced,” said Peter Needle, CEO and co-founder of Segura Systems.

“There has also been a clear and necessary realisation that modern slavery is a real issue, posing both a severe supply chain and wider ethical risk, and we certainly welcome the government’s commitment to tackling these issues”.

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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