Sometimes it seems not a week goes by without another scandal around unethical business practices.
High-profile cases include phone hacking, libor rate rigging, miss-sold PPI insurance, fictitious tagging of prisoners on release, pharmaceutical companies bribing doctors and many more.
Such notorious cases make the headlines, but I wonder how many more examples exist that never get highlighted?
And when these cases do come to prominence, the consequences, be it a fall in share price, lost contracts, prison sentences, huge fines or massive reputational damage, are so obvious it makes you wonder how and why businesses pursue such a course.
This was the premise of a session I held recently with a group of directors at our offices here in Newport.
We reviewed a number of high-profile cases and asked the question, why? In all cases, business pressures were the key driver. The need to win the contract, hit a target or break the story drove people at the top of the business to act unethically, which inevitably set the culture and essentially approved such behaviour throughout the organisation concerned. This was fuelled further when staff bonuses were at stake. Personal ethical values were seemingly side-lined.
This assessment is backed up in Business InThe Community’s (BITC) report, The Importance of Ethical Leadership.
This report, based on research that BITC conducted in conjunction with the Institute of Leadership and Management, found that 63 per cent of managers surveyed had been asked to do something contrary to their own personal ethical code, and 43 per cent had been told to operate in direct violation of their organisation’s own values. Amazingly, nine per cent of respondents report they had been asked to break the law.
In spite of the pressures that companies are under, it simply isn’t worth acting unethically when doing business.
This applies to the corporates I’ve alluded to here but also, and perhaps more so, to the SME and micro business community. Most of the big corporations have the scale and financial resilience to bounce back, although there are some high-profile exceptions. But, the loss of a key client who feels they’ve been mistreated, the loss of a contract, a court case or a fine could easily put a smaller company out of business.
For me the golden rule in business is the same as in life; that is to treat people as you would expect to be treated yourself. Business is, of course, competitive and we all need to make a return, but acting ethically is not to the detriment of this. In fact, the opposite is true.