Does it pay to do the right thing?
Or is it rather a case of “Profit today, principles tomorrow”?
When doing business, it might seem as if doing the right thing will cost more, so it’s a very valid question: Is there really a business case for doing ethical business?
Committing to doing ethical business can seem like imposing a handicap on the earning potential of both yourself and your company. Opportunities for making additional profit at the cost of relatively “small indiscretions” will frequently come across the path of any business leader.
Considering that some businesses seem to have refined behaviours such as exploiting people and taking chances into a successful business model, one could easily be fooled into wondering if it really is worth it to even try and do the right thing.
So, is it true then that no good deed goes unpunished?
It seems not. Various studies have clearly demonstrated that companies that commit to good and ethical governance bank more profit at the end of the day.
For example, one such study in the Journal of Business Ethics looked at the 26.8 percent of the 500 largest U.S. public corporations that commit to ethical behaviour toward their stakeholders or emphasise compliance with their code of conduct. The financial performance of these corporations ranked higher than that of those who do not.
Doing business the right way is desirable for a magnitude of reasons other than a pure profit motivation, however, once one realises that this is a key part of a high-performance strategy, there is no reason to hold back from doing business according to solid principles.
How does ethical business practices lead to improved performance?
The impact of ethical business on the bottom-line is driven by a number of factors:
- A reputation for ethical business activities can be a major source of competitive advantage.
- High standards of organisational ethics can increase profit by reducing the cost of business transactions, building a foundation of trust with stakeholders, higher levels of commitment and loyalty from employees, contributing to an internal environment of successful teamwork, and maintaining the company’s market-place image.
- And the above in turn contributes to higher levels of customer loyalty and retention – especially in the long term.
Setting the tone through leadership
Everyone in a leadership role in a company sets the tone for how things are run. Good leaders lead based on strong principles. Many high-profile companies, including Fortune 500 companies, have realised that principled leadership is the result of building people’s character. The character development of business leaders has thus become a larger focus in leadership development – a move away from “traditional” leadership skills courses – which often only result in expensive, low-impact retreats.
Principled Leadership = Good Leadership
In a local study by Camino Consulting associate, Karen Hendrikz, in partnership with Professor Amos Engelbrecht of Stellenbosch University, found that there are four key elements to leading with principle.
These elements represent sought-after aspects of leadership that are known to impact company performance directly:
Developing leaders with legacy
To support the development of these leadership elements, Camino Consulting created a programme that is designed to take a leadership team through a process that encourages growth in all four areas. This process involves self-discovery and group-, and individual sessions.
Camino Consulting prides itself in its ability to help companies develop a competitive advantage through the development of high quality, tailor-made, human system solutions, with the support of their team of professionals comprising of Psychologists, OD Practitioners and HR experts.
Sources:
https://link.springer.com/article/10.1023%2FA%3A1006020402881
