The phrase “corporate ethics” isn’t one that inspires a great deal of passion or interest. At most, the idea of corporate ethics conjures thoughts of long meetings with human resources, stodgy powerpoint presentations, and thick tombs of incomprehensible rules and standards. Corporate ethics, however, are actually vital to the long term health of your business. Companies, like people, rise and fall by their reputations. A person who develops a reputation as being untrustworthy will often struggle to find work and make friends. Likewise, the company that develops a similar reputation can lose clients, partnerships, and revenue. A company that truly earns a bad reputation, like Enron, may even have to declare bankruptcy and shutter it’s doors. Thus, avoiding ethical problems and developing a good name are critical to growing and sustaining any business. To that end, here are five steps a company can take to resolve ethical problems.

Cut the Ethical Issues Off at Their Root

In medicine, it is often said that prevention is the most effective cure. Likewise, developing and enforcing rigorous hiring standards is one of the best ways to avoid gaining a reputation as an unethical organization. People who pass high ethical standards to enter an organization rarely lapse into bad behavior once they’re in place. Further, when a department is staffed exclusively by people who have cleared tough ethical scrutiny at hiring, rarely becomes infected by a “culture of corruption.”

Create An Environment of Trust

The very nature of hierarchies can make it difficult for employees to report their superiors for perceived ethical violations. Unfortunately, it is often these same management level workers who have the most power to behave unethically, or to excuse the unethical behavior of their staff members. Employees must feel free to voice ethical concerns about their peers and superiors. Tools like anonymous hotlines are a good way to encourage reporting, but ensuring that employees who voice concerns privately or publicly are not punished for “rocking the boat” is the best way to keep the workspace free of hostility.

Institute a Formal Code of Conduct and Reporting System

Corporate ethics cannot be abstract. For an ethical system to work, it must be clearly spelled out and commonly referenced in the course of life in your employment community. Codes of ethics should be easy to understand, and constantly accessible. They should not be left unopened at the bottom of a filing cabinet. Likewise, codes of conduct and ethics are only as good as their enforcement. Mechanisms must be put into place (like anonymous reporting and ethical hotlines) that allow employees to police themselves and their superiors. This is the only way an ethical code can fully function in the workplace.

Go Beyond The Law

A great sage once said that the best way to avoid wrongdoing is to stay away from those paths which, though maybe legitimate, may lead to it. Put another way, many actions may be legal but not ethical. Or they may be both ethical and legal, but they leave open opportunities for later unethical temptations. A code of ethics that goes beyond the letter of the law to cut off the “paths” to unethical behavior is a code that will be effective in cutting off that bad behavior itself. In short, unethical behavior must be avoided–but also the appearance of unethical behavior must be avoided, too.

Punish and Reward Accordingly

The best way to keep ethics at the focal point of your corporate community is by punishing unethical behaviors and rewarding ethical actions and reporting. Encourage people to do right and report wrong by involving them in programs like training seminars and ethics audits. Putting into place a mandatory training schedule, but augmenting that schedule with optional tasks that lead to some positive outcome for the individual, is one of the best ways to encourage members of your organizational family to think, live, and work ethically.