Quest for Honesty and Ethics

Start by deciding what ethical conduct means to you. Craft an ethics code and have new hires read it so they understand what you're about. During interviews, ask applicants ethics-minded questions. "Ask them to describe an ethical dilemma they have experienced or witnessed in the past 24 hours," Hooyman suggests. "Some people don't have any idea, and that's potentially a bad sign. It's saying their radar isn't tuned to what can be an ethical issue." Also, consider presenting applicants with real-world ethical dilemmas and asking them what they would do.

Be sure to communicate your ethical standards to everyone in the organization. Have employees read and sign the ethics code before being hired, and annually thereafter. And consider ethics in annual evaluations and compensation reviews. "The assessment has to be tied to performance-based compensation," Hooyman says. Train ethics-impaired but otherwise valuable employees to make decisions that follow company standards.

Although hiring and training ethical employees adds little cost, it's not perfect. "There's no 100% successful method," Williams notes. She pays for background checks on job applicants, and notices how cheerfully employees complete reports on personal investments, which detect conflicts of interest. Says Williams, "I think people are fundamentally good. But you need to establish a framework of expectations and monitoring."