Ethics enhance competitiveness
Bradwell Mhonderwa Business Ethics
THE expansion of the global economy demands businesses to adapt to global standards in order to remain competitive.
The business case for ethics is built on this global paradigm, and business ethics is clearly assuming a strategic role as firms seek to remain competitive in the expanding global economy.
Ethics is the new competitive advantage on the international marketplace. Anchoring business operations on ethics helps to develop among staff a mindset that values honesty, integrity and hard work.
Business ethics helps companies to focus on the bigger picture and stop pontificating on short-term gains.
Business growth anchored on longevity and sustainability enhances shareholder value and attracts investors.
In a recent study by Arthur Andersen and the London Business School, company secretaries and other senior executives of leading UK companies reported that business ethics initiatives have a positive influence on profit, winning new business, productivity and business growth.
And a Global Investor Opinion Survey in 2006 which interviewed over 200 institutional investors revealed that investors are willing to pay a premium for companies that demonstrate high ethics and governance standards across the globe.
The importance of building a strong ethical culture is thus integral to the reputation, growth and financial well-being of the company.
Ethical practices in business help to build a brand that attracts customers and skilled personnel, making ethics a source of competitive advantage.
The process of embracing managed ethics in corporations starts with a resolute corporate reckoning to transform workplace behaviour and grow “that unique ethical culture” which must become pivotal in building a new corporate brand.
In examining the role of corporate ethics in multinational companies, Bowie and Vaaler (1999) noted that the ethical climate of a corporation is knowledge-based and embodied in individual employees or in company routines.
This reinforces the fact that an ethical culture is intrinsic to a particular organisation, and it is difficult to duplicate, making it a source of competitive advantage. An ethical culture is thus an intangible asset which can assist companies to become business partners of choice.
Developing a corporate ethics programme is the surest means through which a company can embed a sound ethical culture in its operations.
And one of its key components which is at the centre of growing the ethical culture is the code of ethics.
The code enables employees to understand what is expected of them in the workplace in terms of behavioural guidelines.
It provides a device through which employees can communicate to customers and suppliers the expectations of the firm. An ethics code provides employees with a formal, outside-the-chain-of-command way to communicate upwardly in the company without the threat of being accused of insubordination.
An ethics code covers areas that range from responsibilities to customers and other stakeholders, questions of health and safety in the workplace, relationships with other staff members, etc.
It is a positive document that reminds employees of those enduring values that influence attitudes, actions, and the choices and decisions they make every day in their work stations which subsequently create that corporate uniqueness to drive competitiveness.
Ethics is indeed good business, and when it becomes part of your company’s fabric and DNA, it really does pay off in the end.
Some of the strategic benefits of actively managing ethics in an organisation are:
- Building employee loyalty, hence reducing hiring and training costs.
- Reducing theft, fraud and other illegal activities in the firm.
- Driving sales up and building customer loyalty.
- Enhanced community goodwill.
- Substantial improvement of society through poverty alleviation.
- Attracting cheap funding and enhancing investor confidence
Bradwell Mhonderwa is an ethics coach and trainer with the Business Ethics Centre. Send feedback to [email protected], or call 0772 913 875