Ethics RiskThrough the first 15 years of this century we have witnessed huge ethical blunders on many levels—both business and personal.  During 2015, a key PEO workers compensation insurance carrier collapsed due to the conduct of a large client.  This left the carrier’s other clients (PEO owners) in the position of having to scramble to secure coverage for whatever portions of their books of business another carrier would be willing to accept.  Some PEO owners were successful, some were not.  But, all of them faced the risk of losing the core of their business model through no fault of their own.  It is clear that ethical decision making (or the decision to ignore ethics) has contributed to events such as the implosion of large corporations during a robust economy, and to the collapse of weaker firms as the economy turned sour.  To be sure, other factors were involved in almost every case, but ethics remained at the heart of the problem.

Defined most simply, ethics is “a system of moral principles.”  There are various fields of ethics and several iterations of ethics (depending on particular historical eras), but at the end of the day, ethics is still a moral issue, and oftentimes decisions are required to be made at a personal level.

Many businesses are built on solid ethical foundations.  However, temptations remain.  In a strong economy the temptation may be to ignore ethical considerations to maximize profits.  In a weak economy, the temptation may be to ignore sound ethical practices simply to survive.

Irrespective of size or client base, does your PEO exhibit strong ethical behavior in its decision making and behavioral processes?  How do you know if you are adhering to a strong code of ethical conduct?  Does your PEO ever experience internal conflict or anxiety related to the ethical portion of decision making?

Below are six key questions that offer a basis for ethical decision making.  These were originally published in 1999 by Michael Rion.

The Six-Question Guidelines for Ethical Decision Making
1.       Why is this bothering me?

2.       Who else matters?

3.       Is it my responsibility?

4.       What is the ethical concern?

5.       What do others think?

6.       Am I being true to myself?

Michael Rion, The Responsible Manager, copyright 1999. Resources for Ethics and Management.


Aside from the glaring examples we have witnessed, businesses make ethical decisions every day.   Reputations are built and lost on the daily ethical decisions that are made.  Reputable people seek to engage with others of like reputation and ethics.  Reputable insurance carrier partners are attracted to highly ethical firms.

Risk Managers are charged with identifying, analyzing, and mitigating their company’s exposure to risk.  From a risk management perspective, a good business ethics code will help protect your clients, your employees, your assets, and your reputation irrespective of your industry group.

PEO risk management involves a series of sophisticated and complicated exposures to both the PEO and their client companies.    Success requires a thorough, intentional approach.  Feel free to contact us to learn more about our intentional and disciplined approach to PEO risk management.