I believe most of us know ethical behavior pays off. It's the only way to go, but from time to time there are stories in the press about companies that cut corners and don't play straight with their employees, customers or shareholders. Many of us might disagree over what exactly constitutes being "ethical," but we know that doing the right thing, keeping your word and not taking advantage of people are part of an ethical business. Of course, some organizations don't believe in doing business this way, but they typically end up failing or paying heavy restitution for their sins. It's an individual's responsibility to live an ethical life, but much of the blame for unethical business behavior starts at the top. Unless the person who runs the outfit instills in colleagues the importance of ethics in everything they do, a dangerous vacuum forms. And that's when the trouble begins.
In the current issue of Business Ethics, published by Mavis Publications in Minneapolis, there's a story headlined "Does It Pay to be Ethical?" Examples are given of companies that did not conduct themselves ethically and paid dearly for their transgressions. When you hear such stories, it becomes clear why running an organization with a solid ethical foundation is critically important. Business Ethics offers some excellent data as evidence to back up the argument.
There's the Cone/Roper Cause-Related Marketing Trends Report, released this past January. The update of a similar report conducted in 1993 shows that three out of four consumers now use a company's community reputation as a tie-breaker in choosing what to buy and where to shop. In other words, customers obviously support companies that support a few good causes. Home Depot has latched onto this marketing trend by committing itself to community development and youth-at-risk programs. "This is as much a part of our strategy in growing our business as the products we carry and select," says Suzanne Apple of Home Depot. She contends the approach gives the company a "critical competitive advantage." Avon sponsors an awareness campaign about breast cancer and also pushes the Worldwide Fund for Women's Health. The cosmetics company claims these programs help develop bonds between customers and sales representatives and give customers another reason to buy Avon products.
Walker Research of Indianapolis has found that corporate character is critically important to both customers and investors. Its research shows 75% of consumers refuse to buy from certain companies because of their customer service or business practices. And 26% of those surveyed said social responsibility was extremely important to them in making investment decisions.
A study released in August 1996 by the Center for Corporate Community Relations at Boston College found that employees at two regional companies, Polaroid and Gillette, believe a company's community involvement is important. They said they feel more loyal to a company that has a strong community presence. Meanwhile, according to research by Vanderbilt University, low-polluting companies, compared with higher-polluting competitors, posted better financial performance in eight out of 10 cases.
Playing by the rules is just good business. Look around you, and the evidence is there. We still admire companies that honor their commitments, care about their communities, treat their employees fairly and don't cheat their customers. That's a pretty good definition of success.
Charles S. Lauer