Here is another profound grasp of the obvious – all companies need to make a profit.
However, as companies begin to focus on long-term performance rather than short-term quarterly objectives, innovative leaders believe that profitability can be achieved without sacrificing social, environmental and moral considerations. To the contrary, the long-term success of a business may only thrive when it reflects the needs of its stakeholders such as employees, government, suppliers, communities, and customers.
The link among ethics, productivity, performance and ultimately profits is inextricable. I have written and spoken extensively on the subject. The link is backed by extensive research and common sense. (e.g. Here, Here and Here).
Managers and employees want to believe in their company. It is a natural human instinct – we want to believe that our work is important and contributes to the overall good. In this case, the company’s mission, if defined in a positive way, will incentivize employees who want to believe in the greater good. Employees want to believe in what the company believes and share the common objective. Of course, employees want to be treated fairly and compensated but when the link between employee morale is enhanced, employee productivity increases and employee misconduct rates decline (significantly).
Ethical behavior improves performance – financially and personally. To put it simply, ethical conduct is good business. But ethical conduct cannot be imposed by detailed rules and requirements. Ethical conduct is built on principles and values, exemplary conduct, communications and observation.
Ethical business can also be a lot easier than running an unethical business. Assuming that people operate with a conscience (sometimes I wonder), unethical conduct requires worrying, rationalization and efforts to hide or disguise the conduct. In other words, unethical conduct takes energy and effort.
It is easier to run a business with honesty and integrity as your cornerstones. An ethical business owner can harness the company’s passion, drive and energy. A leader who believes in the company’s business can inspire others at the company to believe in the business. Such an attitude can extend beyond the company to interactions with external stakeholders and exponentially increase positive benefits to the company.
Consumers share the common desire to believe in a company’s product or service. Consumers who display brand loyalty make purchasing decisions based in significant measure of belief in a company and its mission. Simon Sinek, a fascinating speaker, has outlined this connection. See here for a fascinating discussion on great leaders and successful companies such as Apple.
The message from the company should be that the company’s ethical values encompass not just what the company does but how the company does it. This is an important building block to achieving a sustainable business. Of course, some consumers will embrace unethical companies, especially if there is a price discount that goes along with the transaction. But research has shown that companies that communicate ethical conduct may be able to charge consumers an ethical premium.
In this era of so-called “fake news” and other controversies surrounding information accuracy and misleading behaviors, we will inevitably (or at least hopefully) demand a return to honesty, especially when it comes to our corporate business leaders and employers. It is a turbulent time, for sure, but employees and consumers desire honesty and integrity in the workplace. Consumers and the general public are ready to reward honesty and businesses need to take account of this trend.
Companies will find that trust and integrity are the bedrock principles that foster sustainable corporate business. Trust demands accountability by management in its relationship with employees. If accountability is ignored, then the fabric of trust will be stretched. Corporate leaders only have one chance to ensure trust – once broken, it is nearly impossible to restore.
This article was originally published in Corruption, Crime & Compliance. It is reposted here with permission.