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Good Business: Why Placing Ethics Before Profits Pays Off

Good Business: Why Placing Ethics Before Profits Pays Off

Ethics is a full time business and every firm needs to make an effort to be morally upright in all its dealings, writes the president and CEO of Philips, Middle East and Turkey.

Ethics is an admirable quality and a personal goal for many individuals, but does it work for organisations? Does an ethical business need ethical employees or can it managed by a single virtuos whip-cracker? On a stakeholder basis, in the world of multinational conglomerates, would investors rather hold their heads up high or revel in richer dividends? And are they mutually exclusive?

First, we should define ethics. Most dictionaries will include the words ‘right and wrong’ and to a large extent this is justified, but for businesses it is more than a simple black and white.

Not only must a business be ethical in order to conform to society’s standards, it sometimes needs to persuade its own internal society that it has a duty to do the right thing.

There is a real difference between being a company with ethics and a company with a corporate social responsibility (or “CSR”) programme. Many stakeholders may be ambivalent towards corporate social responsibility. They may see it – wrongly – as a handy label to add to a corporate profile. Ethics, however, often needs sacrifice on a grander scale.

It is not possible for a company to be ‘a bit ethical’ or ‘quite ethical’ or even ‘half ethical’; ethics is a full time business and every organisation needs to make constant efforts to be morally upright in all its dealings and decisions.

There is, without doubt, a sense of pride and a sense of justice that goes with being ethical. At the same time, any business needs to be viable in its operations and profitable in its results. Thankfully, these two attitudes are not mutually exclusive.

Ethical business can have a hugely positive effect on the bottom line and an invaluable effect in the long term.

Any manufacturer, service provider or product supplier which acts with consideration, honesty and integrity will be a far more attractive proposition than a competitor who is missing these qualities. A relationship of trust with customers who know that they rely on the honour of their business partner is worth a thousand discounts.

It is not right to say that every company which does not have a strict policy of business ethics is unethical, but I believe it may have its priorities wrong – and it is this philosophy which makes the difference between a good company and a great company.

In reality, there will always be companies which believe they will profit more by abandoning all ethics, from child labour and environmental responsibility to fraud and corruption, but there are now concerted efforts in this region to enforce transparency and accountability. This may not be the best way to instil ethics, but it is a start and best of all – ethics are contagious.

When a company begins to act responsibly and honourably it reaps the benefits and as its competitors lag behind, they too will feel the need – if not the desire – to embrace business ethics.

While it would certainly be preferable if these businesses felt the desire as well, for now it is enough that they say “if you can beat them, join them,” and for ethical businesses to say “welcome.”

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