As the public’s trust in brands continues to be compromised, it has become increasingly clear that companies must recognize behaviors that can damage brand and trust. The focus needs more scrupulous sensitivity to their customers’ needs. However, it is worth the effort as studies have shown that businesses prioritizing ethics can expect about a 7% increase in their profit margins.
When implementing an ethical program, the focus should be on employees. Leaders must clearly define the rules from day one for new hires and establish consequences for not adhering to ethical guidelines. Investing in systems that detect and address unethical behavior promptly is also essential. Finally, honorable behavior must be encouraged at all company levels to create a culture of ethics.
Ethics includes but is more than observing applicable laws. Business leaders must be aware of potential ethical issues and anomalies in corporate behavior, particularly as it impacts their customers. Examples of problems are misguided effects to save costs at the expense of quality of service or customer communications. Unfortunately, promptly discovering emerging ethical issues is not always easy—company processes usually do not highlight or provide immediate feedback on what’s happening.
Candor and truth in reporting are essential—both internally and externally. Developing a culture of leadership that prioritize ethics requires work but is achievable. Selecting the right ethical leaders and supporting their efforts is necessary. Diplomacy is also essential when addressing potential ethics violations. Finally, companies should be willing to take immediate action to address unethical behavior before it becomes an overarching problem. Prevention is even better.
The size of the enterprise can frame the strategies for ethical programs. Sometimes smaller businesses may have an even greater need for ethics than larger ones because customers will judge the company on their first interaction. On the other hand, larger companies often need to realize that what happens internally to the company shapes the market reputation.
It’s becoming increasingly clear that ethical business practices are no longer optional but necessary for success in today’s market. Companies that prioritize ethics see a positive impact on their profit margins because goals are more precise, agendas are more straightforward, and customers are more loyal. Creating a culture of ethics and investing in systems and processes to detect unethical behavior will encourage employees to proactively build a reputation for trust and commitment to doing the right thing. Prioritization of ethics is not just for corporate results but to improve society.
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ROB DOCTERS recently co-authored Ethics and Hidden Greed. Your Defense against Unethical Strategies and Violations of Trust. He is Partner at Abbey Road, LLP, leading their ethics practice, and formerly led BCG’s pricing practice in Asia/Pacific.
