Ethical Advantage
In a keynote speech at The Society for Business Ethics annual meeting in 1999, Frank Walker emphasized the following: “It’s just common sense that if two organizations can deliver like products of similar quality for the same price, the majority of shoppers will want to reward those organizations that are most responsible, most caring and who are perceived as being concerned with more than just making a profit.”
Twenty-seven years later, those words ring truer than ever. A new entity to help Hoosier organizations fully experience the benefits of doing business the right way is the Indiana Center for Business Ethics (ICBE).
The non-profit was founded by Walker, chairman emeritus of Indianapolis-based Walker Information. It is led by Melissa Barnes, retired chief ethics and compliance officer at Eli Lilly and Company and a long-time state, national and international leader in the world of business ethics.
Ethics, of course, is much more than following the law. Barnes says, “I am a firm believer that if you aim for compliance, you may get it, but you will not necessarily also get ethics and integrity. However, if you work toward integrity, it will very naturally include compliance.”
Business ethics focuses not just on what we can do, but also on what we should do.
Behaving ethically also builds trust, a crucial business asset. Building and maintaining trust is critical for all organizations, but particularly for small businesses and their relationships with stakeholders. Along with product and service quality, reputation management is key.
Leadership tone at the top along with intentional strategies focused on ethical decision-making helps establish companies — such as Better Business Bureau accredited firms — as trusted sources.
And it’s not just the right thing to do, it’s the smart thing to do. Research shows that companies that invest in ethics and integrity:
- Outperform peers: Organizations on Ethisphere’s World’s Most Ethical Companies list enjoyed a five-year financial premium of 7.8% over a comparable index of global companies. That advantage in performance reached as high as 25% in a single year.
- Experience less employee turnover: Employee of companies with perceived ethical issues are twice as likely to leave (48%) than stay (24%), according to the ICBE’s inaugural Indiana survey.
- Enjoy enhanced customer relationships and make a difference beyond their own doors. Survey data from AFLAC reveals over three-quarters (77%) of consumers say they would be motivated to purchase a company’s products or services if the company shows they are committed to making the world a better place.
Companies must also ensure they are communicating clearly with their employees on these crucial topics. The ICBE employee survey, combined with business leader research, revealed stark differences in perception. Leadership viewpoints on four business ethics statements find a positive range from 86% to 93%; employee attitudes on the same questions reveal a considerably less favorable range of 60% to 74%.
Barnes points out that business ethics apply no matter the size of the company. Smaller businesses can take right-sized practical steps to help ensure their long-term success. Key steps include:
- Measure company culture to identify and close any ethical perception gaps between leadership and employees
- Provide training that helps employees apply ethics in everyday decisions
- Treat trust as an asset and make it visible in how the organization communicates, operates and leads
- Strengthen safe reporting by being clear about how employees can raise concerns and ensure there is visible follow through
The ICBE will continue to focus on helping Indiana firms by expanding the knowledge base through ongoing employee and leadership surveys with a variety of companies. It will use the data in targeted educational publications and statewide workshops.
Learn more and download the inaugural State of Business Ethics in Indiana report at indianabusinessethics.org.
Connect at linkedin.com/company/indiana-business-ethics
