Small businesses implement ethics differently than larger firms due to their close-knit nature. Gaetano's Event Center, a small catering business, relies on informal systems rather than formal documentation to promote ethics. Gaetano's uses a values-based culture where the owner prioritizes honesty and integrity through personal involvement rather than written policies. While Gaetano's approach has been effective, combining formal elements like codes of conduct with their informal values system could help cultivate an even stronger ethical environment by providing clearer standards and reducing liability risks.

1. Gap Analysis - Michael Baker International
Katie Bozzo, Michael Burns, Aishwarya Gaje, Eliza Loftus, Bhakti Patel, Marty Waters
Small businesses are the backbone of the American economy. According to U.S.
Census Bureau data, there are 5.73 million employer firms in the U.S. with fewer than 500
workers accounted. Due to the vast percentage of Americans immersed in small business, it is
critical to study the nature of their ethical environments. Moreover, it is also essential to note
that the method of implementing ethical environments in small business vary greatly from that of
larger firms. That being said, the variance in many cases creates a stronger and more
powerfully integrated ethical environment, as is the case with Gaetano’s Event Center and
Catering.
Gaetano’s is a food provider located in Beachview just a few miles from downtown
Pittsburgh. The company is most famously known for catering local functions, fundraisers, and
hosting entertainment events. Being a small business, Gaetano has the unique advantage to be
thoroughly immersed and transparent about their business operations in the eyes of both their
employees, customers, and community. Gaetano's close connection with its community and
customers allows the company to easily promote and root a strong ethical foundation in their
employees and thus foster positive relationships all around.
As mentioned previously, many small business implement their ethical environment in
much differently than larger firms. Due to the differences in implementation, a gap is created
between the ideal ethical environment as defined by course materials and how small
businesses actually operate. Findings in our investigation of Gaetano’s method of integration of
ethics highlighted some of the key differences from what our team has learned in class. The
class materials heavily focus on formal and informal system and value based culture system
with a separation of ethics and morality.
Upon learning about Gaetano’s set business practices and systems that lead to the
success of the company, our team found it rather intriguing that there is no written publication
such as a hand book or training manual at Gaetano. However, it was even more fascinating to
learn that the company also does not have a written code for rewards and punishment.
Gaetano’s method of promoting ethics significantly contradicts from we have learned in class
because the materials in the class place a huge emphasis on the importance of having these
formal written documents to hold together the structure of an ethical environment.
While this may be the case for larger companies with a less personal employee
employer relationship, Gaetano’s is able to keep a consistent hold on their environment through
other means such as their strong values-based culture without such formal documents and
systems. The company has been able to uphold their values rather well without written
documentation. The owners feel no need for it due to the intimate nature of their relationship
with their employees which allows for constant open communication between the owners and
their employees. Additionally, Mrs. Gaetano’s dedication to the company as shown through her
full time commitment to Gaetano’s allows her to constantly watch over and communication with
the employees.The owners of the company rely heavily on an informal system in order to
reinforce ethics.
Companies choose to use one of the two main systems that foster the creation the
culture: compliance based systems and value based systems. The main difference between the
two is that a compliance based system is one based on a written law. There are obvious
penalties that are made known to everyone, making senior management’s involvement in

2. handling wrongdoing limited. In turn, a value based approach is rooted in culture and driven by
values.The main driver of the value based culture is the overarching commitment to senior
management. Based on Mrs. Gaetano’s dedication to the company, it is easy to understand why
Gaetano’s has chosen to use a value based system to promote an ethical culture.
Mrs. Gaetano’s contribution to the company is shown through her full time commitment
to the company. Furthermore, it also allows her to constantly watch over and communication
with the employees. The owner are firm believers in leading by example; Mrs. Gaetano shows
her commitment to the company by working long hours and always being readily available to
help employees and customers not matter the scale of a situation. Additionally, Gaetano’s place
a huge importance on doing what's ethically correct. Hence, its owners continually emphasize
honesty and integrity in their core values. They advocate employees to bring forth ethical issues
directly to them because as a small business owner, Mrs. Gaetano believes that maintaining
integrity and honesty is key in establishing business ethics.
Furthermore, the owners of the company are also very conscience in that they know
exactly how they want their employees to act, and hires employees accordingly. The company
has a performance measures that are subjective, yet effective in measuring employee
performance. Mrs. Gaetano is able create the culture she envisions within her company through
her charming personality, constant communication, and dedication to the company. Seeing this,
the employees to truly understand and accept the company’s ethical standards.
All things considered, Gaetano’s values based culture is less likely to be unethical
because of the strong moral ties to the business and the feeling of responsibility. However,
when looking at any company, there are always suggestions which can increase the
effectiveness of the company’s ethical environment. If Gaetano’s is able to combine their strong
value based culture with a formal written code of conduct along with a written code for rewards
and punishment, the company could combine its value based approach with a compliance
based approach, allowing to cultivate the most effective ethical environment possible.
In addition to combining formal elements to their ethical code and adding elements of a
compliance based culture system, another consideration for Gaetano would be separation of
ethics and morality. By definition, ethics uses systematic standards for assessing individual
behaviors. Contrastingly, morality is based on the individual and using personal empathetic
assessments of behavior. Ethics has rules for what is “right” and what is “wrong”. These rules
help to correctly and consistently apply punishment for different settings and situations.
Gaetano’s would benefit for the separation because ethics help make a decision without using
personal judgement.
After interviewing Mrs. Gaetano, it seems that in order to convey a stronger separation
of ethics and morality to employees, Gaetano’s could benefit from a systematic means of
conveying ethical standards. The approach would assist add boundaries and clarity to any
situations that presents a moral issue, especially because the close knit relationship between
Mrs. Gaetano and her employees. If implemented, Gaetano's would have a stronger ethical
framework. A document, in addition to a written code of conduct and code for rewards and
punishments, would be a convey appropriately covery company standards as well as lower the
risk of liability. Separation of ethics and morals combined with the a written code of conduct
would create a clear, concise, and unquestionable platform to guide Gaetano’s employees in
the right direction.

3. As of now, Gaetano's ethical environment is an adequate fit to their small business
model and has helped them successfully adapt to the changing environment around them in
terms of customer retention and satisfaction. However, we believe that the owners would benefit
from an effort to integrate the formal systems highlighted above in to Gaetano’s existing system.
Our over all recommendation is to place more of a focus on an formal system with written
documentation, and separation of ethics and morality. If Gaetano’s is able to implement the
suggestions we have made, they would be taking the steps to further invest in the company’s
long term goals relating to ethics and to ensure a successful ethical environment.