Proper handling of ethical issues will help your plant thrive

Good policies are responsible for sustaining long-term business success

By R. Keith Mobley

Imagine that someone in your organization walks in brandishing a copy of your major competitor’s final bid on a big contract you’ve both been trying to win. The person swears the document was obtained legally, but you aren’t sure, and whether this is true or not, it’s still considered proprietary information. Are you going to use it in developing your own bid?

What if someone in your sales department, facing both a tight deadline and some tough quarterly objectives, can make the mandated sales quota by concealing from customers that the product being offered will be rendered obsolete by a new line within six months. Should your sales rep do it?

These cases have two things in common: they are ethical issues. How they’re handled can help or hurt your organization dramatically. How would you want the people in your company to handle these situations? More importantly, what have you done to let them know what they should do?

If you’re like the majority of the nation’s major corporations, your company has a code of conduct that might give employees help with some of these situations. On the other hand, your company might also offer ethics training that can help employees work through some of these difficult cases confidently on their own. But, if you require ethics training of all of your employees, you’re in a distinct minority. The more of these options your company offers, the better prepared your employees will be to handle ethical dilemmas. If you have none of these measures in place, you may be asking for trouble.

Corporations with a strong commitment to ethics have senior leaders who are the strongest advocates of corporate integrity. CEOs and chairmen of such companies are clear and vocal in forcefully demanding that everyone in the company look at not only how profitable an action might be, but how ethical it is. To the skeptics who hold that ethics and business go together as well as oil and water, the message is little short of heresy.

Despite the fact that most people probably think there are no financial benefits to doing business ethically, some senior managers argue there’s a direct connection between ethics and the bottom line. The heads of world-class corporations also are quick to point out the long-term financial costs of doing business unethically.

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More than anything else, however, the view from the top is that ethics is critically important for the organization’s health. CEOs of ethically committed corporations believe that regardless of any expected financial gain derived from doing something unethically, there will be an offsetting cost somewhere else in the business. Ultimately, ethical corporate leaders will stress that the activities of a business are simply the result of interactions among ordinary people. How these people deal with each other sets the tone for how, and if, they will do business in the future. Simply, CEOs who have committed their corporations to good business ethics have done so in the name of maximizing long-term profits and fostering the health of their organizations.

Net is more than profit
Everybody, except for truly successful companies, believes that making a lot of money is the sole measure of success. When asked about corporate credos and philosophies, most business leaders can parrot literate, concise statements of their corporate values. In each case, these credos set forth vividly the company’s guiding principles. They define the ways value is to be generated for customers, employees’ rights and responsibilities, and an overall affirmation of “what we stand for.”

A statement of beliefs alone won’t make a successful enterprise. Credos are an articulation of culture, not a substitute for it. The concept of corporate culture that has enthralled business writers, academics, consultants and executives has taken on the trappings of a fad. But committees and consultants can’t install or revise culture overnight. Culture is the articulation of well-thought-out, passionately felt values that give meaning to institutions. Among the winning companies that we studied, cultures are deeply rooted and widely shared.

Contributing Editor R. Keith Mobley is principal consultant at Life Cycle Engineering in Charleston, S.C. He can be reached at kmobley@LCE.com.

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