Don't chase success at the cost of business ethics
Most entrepreneurs face ethical and moral dilemmas on a daily basis when running their organisation. Whether you need to get a government clearance to get your business going or try bagging that deal worth crores with a potential client, it’s easy to succumb to the temptation of finding a shortcut to reap gains for your business. The temptation to compromise on ethics to grow the business can be far higher as a startup since you are just at the starting leg of your journey and there is a lot to accomplish to get anywhere close to your vision.
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While giving in to illegal or unethical practices could lead to short term gains, it is harmful for the growth of the company in the long run. As someone rightly said, “Success without integrity is failure.”
A successful company is not just about impressive financial statements; success also has a lot to do with an ethics based in management philosophy, organisation culture and business practices. This intangible aspect eventually becomes a part of your brand and has a direct impact on how you are perceived in the market. So, entrepreneurs need to realise that there can be no compromise when it comes to ethics and there are no easy shortcuts to success. Businesses that don't have a strong ethical culture and value system can face severe consequences in long run. Amoral or illegal practices can damage a company's reputation and make it unappealing to stakeholders leading to loss in profits in the long run. These companies are always at a risk of being fined for poor behavior or lawsuits. Whereas, ethical firms enjoy peace of mind and have nothing to fear.
Also, though you might be able to make more money by compromising on business ethics, ‘real respect’ for a business can only be earned if you uphold your integrity and principles despite the hurdles in the way.
Successful businesses may gain a lot of followers, but if the company's moral code is dubious, it will lose any respect in the long run. In order to succeed, you must gain respect both as an individual as well as a business. Nothing can ruin your influence and respect faster than lack of integrity. Businesses should consciously mold a culture of values and service in the fabric of their companies. Leaders who demonstrate these qualities are more likely to earn the respect of people.
A company with strong business ethics will earn the respect of the shareholders, as they know that their money is being used in a moral way. Employees are also comfortable in the knowledge that they are not, by their own action, allowing unethical practices to continue. Even customers are at ease buying products or services from a company they know to source their materials and labour in an ethical and responsible way.
Companies like Maruti Limited, Johnson & Johnson, GE and Tata Iron and Steel Company have a strong ethical culture and enjoy societal sanction which has allowed them to survive and last for so long. These companies are known to cultivate values leading to a favorable public image and consumers trust. Following ethical practices has allowed these companies to earn goodwill and gain more customers/market for the business.
In a Stanford University study of 800 MBA graduates, 94 per cent of the students said that they would willingly give up financial benefits to work for an organisation with a strong environmental and community conscience. A company with a strong ethics policy will have nine out of 10 employees (88 per cent) reporting violations, while companies that are lacking in a sound ethics policy will see only 32 per cent reports of wrongdoings. A good reputation also creates a halo effect as customers think that products made by ethical companies are better in quality. Such companies see an increased improved customer loyalty by nearly 85 per cent.
Ethics play an important role in today's organisations and are vital in determining their long-term success. A company's leaders should think long-term and avoid taking the easy way with regards to ethics compliance. Building trust among public, employees and customers can ultimately be a company's most valuable asset. More good or ethical a business becomes in its practices, the more social approval and respect it enjoys. Remember: 'Being good is good business.'
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory)