A placard used to hang in the office of Milton Hershey, founder of the revolutionary chocolate company carrying a simple motto: “Business is a matter of human service”.

Hershey shaped his organisation around a progressive, generous employment model. In a time when corporate leaders were seen as villains and Theodore Roosevelt won the White House election on the promise of breaking up monopolies and regulating business more firmly, Hershey’s was seen by many as a model of responsible, prosocial business.

At the same time, Cadbury in the UK were making similar moves. Each company built a fully-serviced town for their employees, offered children an education, taking responsibility for supply chains, and gave the public tours of the facilities.

In Connect: How Companies Succeed by Engaging Radically with Society, John Browne suggests the companies “identified the potency of a corporate vision delivered through employees” – a message which is “as true today as it was in 1900”. Who said chocolate wasn’t good for us?

Today, we’d recognise elements of their activity – firm social purpose and activity driven by value rather than profit – as elements of an ethical framework, a central, defining expression of what a company believes in and seeks to uphold.

Ethical frameworks consist of three things: a purpose statement, values and principles.

They aren’t documents to be filed away or popped in a corner of the company website, never to be read. Writing a document about who we are and what we stand for means nothing unless those statements are lived and breathed in the company operation.

Like the confectioners of the early 20th century, the very best companies bring cohesion to their business decisions by showing staff the meaning of their values, purpose and principles. They work with them to show how these core ideals guide everyday business decision making.

Purpose statements can be long or short. They usually don’t focus on products or services but how, as Hershey recognised, your company is satisfying a community need.

Values and principles enable employees to distinguish between good and bad decisions. They help to frame business activity to ensure it stays true to its purpose and contract with society.

Together these form your ethical framework: the bedrock or ‘DNA’ of your organisation. A good framework will be:

  • Practical – able to be applied in practice and with consistency.
  • Authentic – it will ‘ring true’.
  • Stable – will not change much (in its essence) over the long term.
  • Understandable – by all of those required to apply it in practice.

Having an ethical framework isn’t designed to maximise profits. It’s designed to protect and improve the relationship between business and society – but it does often benefit the business as a commercial enterprise as well. By motivating employees and demonstrating the value and purpose of the business to them, they serve as ambassadors for your organisation.

What’s more, trusted organisations are more likely to survive the instances when they fall foul of public opinion. In 1909, Cadbury – until then widely respected – were accused of being involved in slave labour in Portugal. Despite the public outcry, Cadbury were able to survive the incident and restore their reputation because of the goodwill they’d earned through authentically living their ethical framework.

Although purpose statements, corporate values and organisational principles aren’t a guarantee of perfect ethical conduct, they are a crucial ingredient in building a culture in which bad behaviour is discouraged and dis-incentivised – and a flag of goodwill to stakeholders that your organisation is looking to serve humanity and not just turn a quick buck.

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