Can ethics really be the make or break of your business? Let’s explore why its always a good idea to choose an ethical path in your career and business.
Do the right thing
Consumers are increasingly basing their spending decisions on the ethics of individual businesses. Billionaire investor Warren E. Buffett once famously said, “It takes twenty years to build a reputation, and five minutes to ruin it.” Reputation is always fragile and can easily be ruined, sometimes badly enough to cause the demise of a business. Therefore, it’s crucial for businesses to cultivate a strong ethical compass, internal and external to the company. In 2019, and particularly in the age of social media, ethics matter more than ever.
What is a good reputation worth?
While the cost of poor ethics is difficult to quantify, there’s no shortage of examples illustrating just how ruinous it can be. In Australia, the financial cost for major banks following a Royal Commission into their poor ethical practices is in the hundreds of millions. It’s easy to observe how a poor ethical culture can prove expensive even for businesses with an annual turnover in the billions of dollars. A Diploma of Business (BSB50215) defines an understanding of what guiding principles an ethical business should work towards, and how best to implement them for a lasting effect. Having clear ethical guidelines for your business and employees ensures you’ll maintain a positive public and internal reputation, which could be the key to your success.
‘But everybody else is doing it.’
The Global Financial Collapse (GFC) of 2008 cost individuals their savings, jobs, and homes. Shareholders shelled out more than $200 billion in fines and settlements alone. What caused the GFC in large part was Wall Street bankers acting within the letter of the law, while simultaneously tarnishing those same laws.
Almost nobody was charged, much less prosecuted, for their role in the GFC. The defence that ‘everybody else was doing it’ remains a poor excuse for behaviour eleven years on. Business leaders must ensure the business has the right moral compass. In the long run, getting those ‘big picture’ decisions right is far more important than risking everything, including a company’s reputation, for short term gain.
‘It will cost us money to do the right thing.’
Using expenses as an argument ignores the reality of opportunity cost. What is it worth to turn a ‘blind eye’ to an employee behaving unethically, even if their actions are increasing profits? They may be acting as individuals, but ultimately their actions could cost the entire company its’ reputation.
Conversely, what is the value to a business that sponsors a charitable organisation, particularly if the customers are inclined to support that charity? The difference is clear. The world’s biggest companies understand that environment and sustainability are issues that customers care about deeply. They spend billions altering production processes to reduce their environmental impact and in turn make themselves more appealing to consumers.
Even recruitment is difficult if a company’s reputation is compromised. Almost nine in ten Millennials (aged 23 to 38) say their number one career priority is to work for a business that is ethical and responsible. These big picture items are core issues addressed in a Diploma of Business (BSB50215), not as an afterthought, but as a core component for business leaders now and into the future.
What’s in it for me?
A lack of ethics creates a culture of fear and distrust within a business and alienates potential customers. Consider the rise of ethical investment funds in recent years. Managers and leaders must consider environmental, social, governance and ethical factors before deciding to invest their clients’ money. In 2014, Australians had around $150 billion invested in ethical funds. By 2017, that figure had quadrupled to more than $620 billion.
More customers than ever demand that the companies they deal with don’t just meet their consumer needs but share their social values too. Having the knowledge base and the right education, as gained in a Diploma of Business (BSB50215), will teach you the importance of ethical values and how to be transparent with your consumers.