Business ethics has grown globally over the years to become a strategic management discipline just as Information Technology, HR management, and other management disciplines have evolved to occupy key positions in the corporate planning jigsaw.
The role of business ethics in shaping the bottom line is now well documented.
The world over, the business sector is littered with cases of misconduct perpetrated by staff resulting in company collapses and closures that leave people whose lives are dependent on these companies vulnerable and without a source of income.
The effects of the recent world recession is a clear example of what can happen to whole economies when corporate misconduct goes out of hand without it being nipped in the bud.
It assists employees and companies to focus on the bigger picture instead of getting carried away by short-term benefits that compromise the sustainability of companies.
The importance of building a strong ethical culture in a firm is integral to the reputation, growth, and effective financial management in any firm. An ethical culture builds a brand that attracts customers and creates trust among employees, and an ethical culture built up through demonstrable leadership commitment significantly impacts the company bottom line.
The process of managing business ethics must be anchored on clearly articulated company values. Deliberate values management processes making sure they help to build a strong ethical culture must bolster these company values.
This must be so because a strong ethical culture is a forerunner to moulding a unique brand that attracts customers.
Properly managed company values are intrinsic to staff and tend to invoke a spirit of self-regulation in them, in the process inspiring them to work hard and ensure business success.
A diligently formed ethical culture is inspiring, difficult to copy, and is a clear source of durable competitive advantage.
And the development of an ethics code is the cornerstone of building that ethical culture.
The code is a company document that reminds staff of the company values that must inform their attitudes, actions, and the choices they make in their day-to-day work activities.
It is a clear guide to employees on what is expected of them in the workplace. An ethics code provides a formal, outside-the-chain-of-command way to communicate upwardly in the firm without fear of being accused of insubordination.
However, the code need not be allowed to work as a stand-alone. Supportive infrastructure must be built around the code to ensure it is effective.
Ethical business is indeed good business and, when you make it part of your company’s fabric and DNA, it really does pay off in the end.
The strategic benefits of actively managing ethics in a business include:
- Customer loyalty;
- Reduced misconduct such as theft, and fraud;
- Increased sales;
- Community goodwill;
- Attracting skilled staff;
- Access to cheap funding;
- Increased international reputation and
- Attracting foreign investors