Business ethics is a critical managerial skill set. For business owners and managers it’s important we step back and consider the ethics of how a decision can impact customers, employees, our community and the environment. Ultimately your moral fabric will determine if you do the right thing and make the world a better place. Here are seven reasons to do the right thing when making business decisions:
1. You have to look in the mirror when you get up: Most of us want to be judged as good people and strive to make decisions that positively impact the world. We have a conscience and our mental health is better when we make the right decisions. So when you make a decision, consider that you will get up every morning the rest of your life and have to look at yourself in the mirror. The value of having the ability to do this and feel comfortable with your decisions is priceless.
2. Your sleep may depend on it: I once had a finance person asked me about a situation where we needed to report less than good news and he wanted to know how to handle it. My comment to him was that what ever we do, it’s important that he and I could go home that night and sleep well. Let’s face it, one lie can lead to others and in addition, the truth will eventually find you. It’s best to do the right thing, what ever the short term consequences. If you don’t believe me, just ask a former Enron executive.
3. The well being of others hangs in the balance: Companies who are fair and open in their dealings with employee have a better chance of retaining the most talented people. Transparent accounting practices and an engaging, consultative relationship with your shareholders will encourage confidence in your business. It’s important to positively impact your employees and investors by operating the business ethically.
4. You enhance customer loyalty: One of the major advantages of behaving in an ethical manner is the opportunity to foster a sense of goodwill among your customers and the general public toward your business. Having a loyal customer base is one of the keys to long-range business success.
5. Our past often finds us: The degrees of separation between individuals in any given industry are minimal. What you do and how you behave will be remembered for years. I am often amazed at the number of resumes that cross my desk from people I knew twenty years ago. Your past can and will find you. It’s best to imagine that anything you do today will be on the front page of the newspaper tomorrow. Conduct yourself with this thought in mind and you will never fear the past finding you.
6. You avoid legal challenges: At times, a company’s management may be tempted to cut corners in pursuit of profit, such as not fully complying with labor laws, regulations, or using substandard materials in their products. The penalties for being caught can be severe, including legal fees and fines, in addition to the potential poor publicity. It is essential to train every employee about what ethical behavior is expected of them.
7. Employees will be more engaged: Companies who are ethical, fair and open in their dealings with employees have a better chance of retaining the most talented people. Importantly, productivity is highest when employees are engaged and able to focus on the mission.
In a business setting, being ethical means applying principles of honesty and fairness to relationships with coworkers, customers and investors. Ethical behavior can serve to differentiate your brand from those of your competitors, offering you a competitive edge. Last, but not least, the world is a better place when the titans of industry do the right thing.