High-profile financial scandals on the JSE and the fallout from state capture have left us with many cautionary tales about how ethical lapses can damage or even destroy a business’s prospects. But the converse is also true: a company that holds itself to high ethical standards will often outperform its peers.
A business that earns a name as an ethical player will not only avoid getting tangled in the sort of reputational and legal troubles that will ensnare a less scrupulous company. Going beyond the minimum will create positive halo effects for its brand that will attract good talent, business partners and customers. Most people and organisations prefer to do business with someone they can trust.
1. Recognise that ethics is complex and evolving
2. Take a cultural temperature test
3. Codify and communicate ethics
4. Lead by example
5. Reinforce behaviours
Ethics as a strategic consideration
The conversation around ethics would be simpler if all issues were as clear-cut as giving a politician a bribe to get a tender. The ethical dilemmas we navigate today are nuanced and society’s expectations are evolving. Each business should consider whether its behaviour is not only compliant and legal, but also whether it meets its stakeholders’ expectations in terms of establishing an ethical culture and to act ethically in everything that they do. Setting an ethical tone at the top remains key to setting the correct foundation for doing business.
Customers and employees today might judge a business’s ethics on its diversity, social justice stance, how it uses customer data, how it treats all of its stakeholders and its environmental strategy—factors that might not have come up 20 years ago. A good way to shape ethics is to think of the values the company treasures and how they apply in a changing regulatory and consumer landscape.
Rather than assuming the business and its people are operating in an ethical manner, companies should regularly conduct audits. Surveying employees and customers about their experiences and beliefs is one way to get a feel for how well the organisation is living up to its ethical standards. These surveys can offer insight into whether employees experience bullying or discrimination or whether customers believe they are treated with fairness and integrity. Whistle-blower hotlines, including the quantity and types of reports, also provide an insight into how well an ethical culture is entrenched.
Every business, even those with a handful of employees, should develop an official code of ethics with practical examples. This document should encapsulate the ethical rules and values employees should follow. It is not a set of rules, but provides for principles that need to be adopted. Interactive learning can help the business to socialise its ethical standards. Workshops, for example, offer a way for employees to talk through the ethical dilemmas they encounter day to day.
Leaders and team managers will set the ethical compass for the rest of the business, better known as the tone at the top. It is important for those in senior positions to embody the ethics that they want the rest of the team to follow.
Develop a culture where people are rewarded for doing the right things. It is particularly important to ensure that there are protections for employees who blow the whistle on dishonesty and unethical behaviour. Also, ensure there are appropriate penalties for ethical lapses, whether it’s corrective feedback or a disciplinary hearing.
High levels of compliance risk, on the one hand, and the opportunities to boost business performance, on the other, mean that leading companies will manage ethics in a strategic fashion. They will track and optimise it as they do other core elements of the business. Sound ethics aren’t just morally correct, they are good business sense. An ethical foundation is driven by values of integrity, honesty and fairness. It does not only empower all of its stakeholders, including employees, but also retains all its stakeholders. These elements are potent drivers of productivity. Good ethics increases credibility, stakeholder engagement and overall commitment by everyone.
Reference:
https://www.i-sight.com/resources/are-ethical-companies-really-more-profitable/
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