Does good ethics make good business? All the time, mostly, or sometimes? Why?
Doing what’s right makes sense all of the time. However, a business owner just explained to me that he had to do “pay offs”(monetary funds, sports events, restaurant gift certificates, etc.) to his client’s purchasing agent in order to win the deal — each time, each month. This is what the clients expected since his competition did it. It’s the only way he can survive while selling to the big businesses. I realize this has been going on for years, and in all honesty, it does help business. But is it ethical? No way. But if the competition is doing it, and it’s your only way to get the business, then you really have no choice. Right?
Most of the time good ethics makes good business. A good friend of mine was chief counsel at an Internet start-up. Due to hard times, they had to do a layoff. The CEO was considering offering the minimum legally acceptable severance. My friend’s legal counsel was that while it was permissible legally, it would be much better for the company if they offered more generous packages. In that case, good ethics (i.e. going above the minimum) helped the hard-working staff being redeployed feel better about their situation, which would also translate to more good will and less lawsuits and costs down stream. The CEO agreed.
On the basis of my business case study research over the past twenty years, I’d say that good ethics is good business all the time. The main difficulties for decision makers are: (a) situations involving ethical choices are often complex and difficult — “doing the right thing” may be neither clear nor easy; and (b) the rewards for ethical behavior and the penalties for unethical behavior may not present themselves until far in the future. The former requires intentional thinking about personal values and the values and purpose of a company before being faced with an ethical dilemma. The latter requires resisting the pressure for short-term gains and believing that without fail, what I decide — even about small things that “no one will ever see,” such as a slightly poorer quality part in a product — will sooner or later become known.
Our culture has become cynical about “squeaky clean” business; instead, many people assume that good and bad ethical choices depend on circumstances, such as “can we afford to pay that license fee?” rather than “is it ethical not to?” History shows that companies who succeed over the long run make “doing the right thing” part of their DNA. Thanks to IBTE for provide solid evidence of this fact in every issue of Ethix.
Having ethics always makes good business sense, but it won’t always appear to be this way in the short term. By having a “line” you won’t cross, it actually makes things a lot simpler. Not a lot of effort is wasted on worrying through a shady deal or decision. You just simply don’t go there. Others pick up on this and will be more open to you and more likely to do business with you when they know you’re trustworthy.
I think that good ethics ALWAYS makes good business. Experience in my current job has shown me that being a helpful person is good for job security. Those coworkers who are difficult to talk to, condescending, or who withhold information get laid off. Moreover, I believe being “shrewd” to get the “best deal” at the expense of suppliers or customers or employees by withholding information or exaggerating product claims ultimately catches up with you. (See Enron, WorldCom, Peregrine). Also, for those who think this behavior is okay in business but inappropriate for nonbusiness, I ask: “How does one operate with two ethical standards?” Of course, the sticking point is the definition of good ethics. Is a company required to keep operations in a higher-cost city, even though it can increase profits by moving to a lower-cost part of the world? Some would say that the ethical thing to do is to drive shareholder value via improved profits (move), while others would say it is unethical to deprive a community of good jobs (stay).
San Diego, CA
The short answer is good ethics makes good business all the time, because it’s all about fostering relationships in business and building trust. You can’t afford to compromise ethically and expect to be in business long term. If you cut corners, eventually word gets out that you are not trustworthy and people will not buy from you. The interesting part of the equation is when you know the rules are different, for example, bribes are common practice in the Middle East. But that is something that requires more than a few lines to answer!