Many people confuse ethical compliance with legal compliance. However, these concepts are not interchangeable and require different standards of behavior. The law is necessary to build and maintain a functioning society. Without them, our society would be in chaos. Compliance with legal standards is mandatory. If we violate these standards, we will be punished as required by law. Therefore, compliance generally refers to the extent to which a company conducts its business in accordance with applicable regulations, articles of association and laws. However, this is only a basic minimum. Ethical adherence builds on this foundation and reveals the principles of a CEO or organization. Ethical actions are generally seen as voluntary and personal – often based on our individual perception of what is right and wrong.
Research on the performance of the world`s most ethical companies (WMEC) indicates a positive association between ethical behavior and successful long-term financial performance. These companies often exceed their market expectations, both in times of market growth and decline. The WMEC company list has an average annual excess yield of more than 8%, which is profitability above expectations. This can be due to a variety of reasons, including what researchers call a positive impact on company culture, stakeholders, and reputation.6 In other words, ethical considerations influence employees, investors, and customers. Last year, a story broke out following a survey that asked children (and their parents) around the world what they wanted to do when they grew up. The biggest response among children in the US and UK was “YouTuber,” while China`s main response was “astronaut.” Most business owners don`t spend enough time and attention on boring and basic things, like making sure the right accounting and bookkeeping infrastructure is in place. I made this mistake and it took me thousands of dollars to go back and manually fix the accounting issues when they could have been handled with minimal care and the right software. – Patrick Vlaskovits, Superpowered Corporate Compliance affects companies in all sectors. It`s important to determine the type of records and other documents that you want your organization to generate and manage. The laws that apply to your business vary depending on a number of different factors, such as the type of business entity you are and the state in which you do business.
Therefore, it is generally important to consult with an attorney to ensure that your business complies with all federal and state laws that may apply to you. A conflict of interest occurs when a person (or company) has interests in several areas (financial investments, professional commitments, personal relationships) and the interests may conflict with each other. For example, employees have an interest in producing the work expected for their employer. A conscious or deliberate attempt to avoid, ignore or marginalize what an employer is legitimately entitled to by taking into account other interests would constitute a conflict of interest. This can be as simple as using the company`s time or resources to work on a personal project that hasn`t been sanctioned and doesn`t add value to the business. It could also mean using a company`s material and intellectual resources for something that benefits your private interests rather than those of your employer. This action is unethical because you do not give the employer what they are entitled to, namely your time, talents and services in exchange for agreed remuneration. Take the example of Mike Arrington, a lawyer and entrepreneur from Silicon Valley who started a blog called TechCrunch. Arrington has become the go-to place for tech enthusiasts and investors.
Its coverage of Silicon Valley-based startups could help ensure the successful launch of a new company or product. However, he has been criticized for regularly reporting stories about the companies he has invested in and advised in. Although he has fully revealed his interests, his rival critics have questioned his conflicts of interest. How could he be both an investor and a freelance journalist, blogging about the very companies he was financially involved in? He held a classic position of conflict of interest.10 Similar cases involving business journalists and potential conflicts of interest include the Wall Street Journal, Business Week, Time Magazine, and the L.A. Herald Examiner. The cartel concept is important for the entrepreneur`s ability to create new start-ups that can compete with larger, more established companies (which might try to prevent competition). Table 3.1 summarizes the contributions of these acts in support of antitrust efforts. It is important to note that any deviation from these laws can lead to lengthy and costly legal problems. A moral compass is a state of mind in which an individual has developed the skills to distinguish right from wrong, or between right and wrong in difficult circumstances.
When individuals are able to act systematically, habitually, and without deciding how to act or what to do in difficult situations, they have internalized this moral compass. It can be said that these people possess good character, can gain confidence and have qualities that are considered necessary for leadership. So what can you do about these issues? My advice is to find out which one is relevant to you personally, learn about the larger context, and join the conversation. While many entrepreneurs have at least a basic understanding of the law, most of them don`t think about the legal implications of starting a business. Many startups trying to save money on hiring lawyers turn to online legal services firms that offer low-cost “one-size-fits-all” contracts. Antitrust laws (or competition laws) have been developed to ensure that a competitor does not abuse its position and power in the market to exclude or restrict competitors` access to the market. Some examples of antitrust laws include the Sherman Act, the Clayton Act, the Federal Trade Commission Act, and the Bayh-Dole Act. These legal acts were created to promote competition and provide options for consumers. In fact, these laws make it illegal for a competitor to enter into agreements that would restrict competition in the market. When it comes to hiring employees and building a team, a new business can make many costly mistakes if they don`t follow the law. By understanding certain rules for classifying workers (e.g., employees or independent contractors), a business owner is much better able to make good decisions and meet important requirements. In addition, an entrepreneur should think about when and how to leave their own employer to start a new business.
If they are not careful, they run the risk of violating a non-compete obligation or, worse, losing ownership of intellectual property. For an entrepreneur, there are countless considerations when starting a new business, and legal issues aren`t always at the forefront. But an entrepreneur who understands what these problems are and how they arise (even without necessarily knowing how to solve them) is much more likely to solve these problems before they become big problems. Keeping track of these issues and knowing when to hire a lawyer can play an important role in the ultimate success of the business. Many new ventures fail because there has never been a well-drafted partnership agreement that spelled out the duties and obligations of each partner and covered problems that might have arisen in the future. For example, will shareholders agree unanimously or by majority in all company decisions? How much equity will each partner in the company have? How will the company`s assets be distributed in the event of dissolution? All these and many other issues need to be addressed and addressed in a comprehensive partnership agreement at the beginning of the partnership`s establishment. To make sure you avoid the negative effects of a preventable mistake, there are some common legal issues you need to be aware of: Intellectual property (IP) is the result of the creative work of one or more people to transform a unique idea into a practical, value-added product or service; This manifestation of original ideas is protected by law.