Romboy1

Richard Romboy
Tammie Neeley
ACCT 2010
19 October 2014
Ethics in Small Business
Ethics and fraud may only make national headlines when associated with large
corporations and major financial institutions but their effect on small businesses is no less
pertinent. I would argue in fact that the role of ethics and how it pertains to fraud is of utmost
importance to anyone working in or for small business. The difficulties in these operations deal
more with the intimate nature of owners and employees rather than the anonymity and sea of
numbers that make fraud in large companies possible.
My parents owned businesses long before my life received its start up. As a child I grew
up answering phones at my parents office and playing at the various office roles, my favorite was
always mail clerk. It was a small office with no more than a dozen full time employees and most
of them had worked together for years. My folks were the most honorable managers I have ever
had the pleasure to work for. At one point my father had sold the software development section
to a major national company for a tidy profit but in the final stages he discovered that his
software program would survive but not the employees who had built it. At that point, there
would have been no ethical problem with taking the money and running yet personally he felt a
moral obligation to his people. He bought his company back for a huge loss, just to save their
jobs. Many of my fathers friends and business associates derided him publicly for it. This is an
example of how close morals and ethics reside, for my father the ethical decision was the moral
one.
Nevertheless, one of the employees whose job he had saved was a long-time employee, a
woman who picked me up from school when my parents had meetings. She was the lynchpin of
Romboy2
the secretarial pool and had helped my parents grow their business. Several years after the
buyback it was discovered that the entire time, a period of over 6 years, she had been embezzling
money from the business. Our entire family was heartbroken but my father was devastated. That
is my first experience with fraud and it has affected my entire outlook on business. She too had
reasons for what she did however when confronted by my father about the theft, had the sense to
forego any sort of excuses. She resigned and returned the money over a period of many years. It
would be nice to imagine, as my parents still do, that she did this out of shame or a newfound
sense of right and wrong. I am more inclined to believe that it is because she was allowed to
resign, that my parents didnt prosecute and that she continued to work in the field. There is little
doubt that my father was lucky to get the funds back especially since I seriously doubt he had
any intention to prosecute and that if he had been less than faultless in the treatment of his
employees she wouldnt have thought twice about repaying the money.
As the manager of a small business now, I know all too well the pressure to perform and
show strong numbers. Ethics play a vital role in small businesses where often times there is little
or no oversight. It is heavy to carry the burden of financial ruin on ones shoulders, especially
with the previous several years economy. It is my strong belief that the road to fraudulent
actions is paved with small ethical dilemmas handled poorly or rashly. Holding a firm ethical
line in managements treatment of suppliers, employees and partners requires an almost
unthinking devotion to ethics. Crossing small lines lead to bigger ones. I have worked for owners
who fudge to cut costs, pocket a little extra and some who carry wheelbarrows of cash to the
trunk of their cars (figuratively). It has a tremendous trickle down effect throughout the ranks.
Good employees become ambivalent, bad employees harbor resentments, and managers lose
their compass. The lure of easy money is just that, and the hooks have large barbs.
Romboy3
Growing up as I did but also working in a variety of industries for an even greater variety
of managers has taught me grey where previously was only black and white. This too is an
important skill set for future business leaders. As small businesses struggle to get capital, the
money to be had is more increasingly in money itself. Immense wealth has piled up like
snowdrifts behind large corporations and financial institutions as less and less is in the driveways
of the average worker or small business owner. As an individual highly motivated by wealth
creation I am drawn to this huge pool as a mosquito to blood, furiously trying to siphon enough
to get my own start up capital. I will invariably be involved at some stage with financial
reporting, the opportunity to commit financial crime and the possibility to be victimized by it.
There are two main ways I plan to combat this in my own career.
I agree with Pope Leo XIII who said in 1891 at the height of the American Robber
Barons and the beginning of Marxism that Capital cannot exist without Labor, but I totally
disagree with Smiths position that profit comes from keeping wages artificially low. We face a
new dynamic for American business in the coming century with the rise of China and the
explosion of commerce and industry in developing countries like India. America will only self-
destruct if we continue to amass wealth in the financial sectors while neglecting the wages of
those who work for us. There is no way to artificially deflate wages to compete with developing
economies and there is no future in maintaining disproportionate domestic wages. I find it less
than coincidental that as the concentration of wealth continues, corporate and securities fraud
prosecutions have increased steadily since 2007(FBI). I firmly believe that corporations have
forgone the stocker for the stockholder and the stockbroker for the market itself. We face labor
market failure and it is the obligation of business leaders to correct the externality they have
created. The employees and middle managers have resorted to theft and deception as a reaction
Romboy4
to managements disregard of duty of care. Prosecuting more of such crimes does little to affect a
solution for the rationalization to steal that a corporate employee now has in abundance.
Therefore it will be my duty as an owner to properly compensate and reward the efforts of my
team.
The second way in which I shall attempt to dissuade financial crime is with my own
integrity and hard work. Building a business is as time consuming as building a reputation and
both can be destroyed in seconds, but only one can every truly be rebuilt. From my own desire to
play the game rather than win every single time, I have an advantage over others with less heart.
The art of living is to be engaged in the money game without being devoured by it (Moyers). In
the economy of the future, as personal relationship with customers and employees again rise to
the top of the priority ladder impeccable personal and financial management will be all that more
important. Creating a culture of honesty and accountability will be vital to the success of the
business and the careers of those who work within it.
As I prepare myself for further education and the expansion of my personal and
professional goals it is imperative not to lose sight of what fraud really is. It is stealing, whether
you are stealing from your boss, your investors or your employees is negligible. My goal is to
make money in business and do it without losing sleep over my actions; I will lose enough sleep
to decisions. There are a great number of extremely wealthy entrepreneurs who have failed at
numerous ventures before finally finding their niche. Underlying all of the entrepreneurs
strength is an unflappable drive to succeed, to beat the game not by cheating but by mastering
play. Quick fixes like fraud show the businessperson to be just that, a fraud and a fake,
undeserving of respect, title or success.

Romboy5
Works Cited


Federal Bureau of Investigation. Financial Crimes Report to the Public 2010-11 Publications
Dept. 2011. Web.
Moyers, B. (1989). A World of Ideas: Jacob Needleman. Bill Moyers Journal. Aired: 20 June
1990. Web.
Pope Leo XII On the Condition of the Working Classes. St. Peters Basilica, Vatican City. 15
May 1891. Address.
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Edwin
Cannan. 5
th
ed. London: Methuen & Co., Ltd. 1905 Print.