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Handling Unethical Behavior

There are some company names that have become synonymous with scandal: Enron, Tyco International, Arthur Anderson, Global Crossing, Adelphia Communications, Bear Stearns.  In each of these cases corporate leaders created company cultures that were driven by exceptionally unethical behavior and produced devastating consequences.

Leaders need to learn about ethics

In any major business publication is common to see salacious and eye-popping headlines such as “CEO busted for insider trading” or “Accounting firm caught cooking the books” our “Government officials falsify key performance data” or “Whistleblowers blow open banking scandal”.

And you ask yourself hat the heck is going on? Where have all the good leaders gone? What ever happened to good old-fashioned business ethics?

Well,  business school discussions of ethics have a way of getting abstract, philosophical, and in a hurry. Before you know what happens your head is swimming with talk of utilitarianism and the deontology of Immanuel Kant and the justice theory of John Rawls and the virtue ethics of Aristotle.

All of these schools of thought have a great deal to say about how to make effective and ethical decisions but for purposes of this discussion on ethical decision-making leaders really need today when it comes to ethics is clear guidance.

The case for ethic in business

So, please accept some practical considerations instead of complicated theory and philosophies of what is moral and not and how to better define ethics in business. At the end of the day the question we need to address is how do I behave in the way I want business people to treat me? So, here’s what I claim:

  1. Good ethics are good for your business and for your career – there is a well-established link between an organization’s ethical behavior in its financial performance. Yes! Its financial performance. While there might be some short-term financial gain to be had by cheating over the long run ethical behavior delivers better financials.
  2. Having a reputation as an ethically responsible enterprise makes it easier to retain and attract customers as most people want to do business with an organization that they can trust and believe.
  3. Organizations that create ethical and trusting cultures have higher levels of teamwork and more effective communications. This makes it easier and faster to drive organizational change and transformation which can be a real competitive advantage in most industries.
  4. Organizations that act socially and ethically responsible ways have a leg up on attracting and retaining top talent. People want to work for organizations that they believe in and can be proud of.

A focus on ethical standards

When you evaluate companies that are considered as ethical you can’t help but notice that they’re all doing the right thing, but there also great places to work in their very profitable high-performance operations. Which, of course, does not mean that these organizations don’t have ethical challenges.

Every organization and employees people will always have ethical issues and challenges, but these organizations have senior leaders who place a high value on setting high ethical standards and developing organizational practices and policies that select, promote and reward ethical behavior.

And, conversely, when organizations and their leaders do not set high ethical standards it can spell real trouble. The reason you need ethical standards and policies of course is that people and organizations are fallible.

Even with the best of intentions they can sometimes drift into behavior that, well when viewed dispassionately, can be identified is simply wrong, and is easier for that to happen then you just might think.