It is Management Monday and a good time to discuss managing company ethics
In our daily lives, generally we try to treat others well and live according to our moral compass. Unfortunately, somehow within an organization, these good values easily hit the back burner thanks to a groupthink mentality. The reality is that poor ethics always reflect poorly on the organization as a whole. Although ethically oriented individuals are becoming more and more a minority, thanks to the economical, technological and enterprise changes our society has experienced during the past decade, that minority is becoming even more strengthened and anyone on the fence about making “a small questionable decision here” or “bending the rules there” is floating to the surface more quickly for the same reasons as well. Which side of the fence is your organization on?
Photo Credit: Huffington Post
Good Business Ethics Facts:
1. Stronger Organization :
The strongest organizations are those that serve. They serve their leaders, their employees, their customers and the community. Huffington Post’s recent article Bangladesh Factory Safety Accord: At Least 14 Major North American Retailers Decline To Sign highlights which companies recently refused to sign the accord to increase fire and building safety in their Bangladesh operations. Though some companies claimed to be working on other methods of improving safety, these kinds of actions do not bode well with shareholders or consumers. It is often best to cling to the following advice “When we all help one another, everybody wins” (Jim Stovall).
2. Improved Financial Stability:
Profitability is often highly ironic in the context of business. Companies find themselves making what they perceive as cost cutting decisions that are really the equivalent of gambling. Any decision that has a shady connotation which could hurt image is a giant risk. Although many times those poor decisions are also illegal and can lead to giant ramifications in fines or law suits, nine our of ten times, they just stink of bad ethical practice. The recent fiasco involving the IRS targeting the Tea Party is one true example of such a measure. From a shareholder perspective, it is common sense that ethical companies attract ethical employees and clients, and take calculated risks, which are by nature warrant more reliable results than the alternative. According to Inc. Magazine, a 1997 DePaul University study revealed that organizations with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than companies that don’t. Therefore, ethical companies are likelier to experience long-term financial success.
3. Higher Customer Loyalty:
Value vs Values: The Myth of the Ethical Consumer, published by Policy Innovations, reveals that there will likely be higher levels of ethical consumers in the future. The article compares the projection to the example of Amazon’s transformation of e-commerce into a standard part of the shopping industry. Each generation seems to be more mindful of human rights issues and green initiatives. Keeping in touch with changing customer bases involves sharing the same concerns. It is much easier run a company on good ethics rather than having to back track or try to clean up an image. One excellent example is the recent apology Abercrombie & Fitch issued after their CEO, Michael S. Jeffries, made comments which were received poorly by the public. He was quoted as saying “We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong (in our clothes), and they can’t belong. Are we exclusionary? Absolutely.” Consumer attitudes toward the brand hit a slump while competitors such as American Eagle got a boost.
What looks like the easy road may not be the safer road any longer. Companies that employ the same positive values through their employment practices build a strong foundation. No matter how you slice it, good ethics is simply good business practice.
