In the fallout from Enron and
others, many investors are paying closer attention to a company's ethics, as
well as their profits. These investors realize that a corporate focus on
profits alone with little regard to ethical standards, conduct and enforcement—may
result in short-term revenue gain, but long-term profitability may be limited.
In cases like Enron, long-term viability is limited too.
Consider this balance between
profits and ethics to be "ethical profitability." Well-balanced
companies not only consistently reward owners, investors and employees with
profitable performance, they also genuinely focus on these five key areas:
The chasm between managing and
managing well is wide and deep. To manage is to merely lead employees. To
manage well is to lead employees effectively, ethically and without arrogance.
Company owners, executives and managers must set the highest examples of
attitude and conduct for their employees. "Do what I say, not what I
do," is a parental anachronism with no value in management.
Most employees, when not at work,
practice personal ethics in areas such as caring for others, being kind and
honest, and not harming others. Do these same people, when they arrive at work,
maintain their personal guidelines? In-the-office ethical behavior includes
demonstrating trustworthiness to managers and coworkers, respecting privacy and
avoiding conflicts of interest. Ethics knows no time clock.
Occasional classes can help, by
reminding employees of the simplicity of determining ethical behavior. In a
nutshell, examine questionable action and speech, and determine if it's harmful
to yourself or another. If it is, avoid that behavior. Employees with any sort
of religious background will recognize this ethic of reciprocity as familiar.
The Bible's Golden Rule is a good example.
Strong management of revenue generation and reporting
Corporate temptation to stretch
ethical behavior in revenue generation and reporting is universal. From excessive
cost-cutting to expand short-term market-share, to outright lies about revenue
to positively affect stock price, it's easy to see why an otherwise
intelligent, educated corporate officer can end up behind bars for condoning
To overcome these temptations,
revenue-related managers must establish and maintain a firm stance on ethical
marketing, advertising, selling and reporting. This requires regular
dissemination and enforcement of codes of conduct.
level of internal trust
The level of trust within a company
should reflect the level of trust the company solicits from customers. If
customers are encouraged to put their complete trust in the product or service,
then company teams must do the same with each other. Management must guide this
An increase in trust is a reduction
in risk and uncertainty, which in turn will keep the revenue generation process
flowing smoothly. Another advantage of running a high-trust organization is
improved internal flexibility and creativity. Instead of being constantly
monitored, the person to whom a task is assigned can accomplish it the best way
possible. The outcome is never in doubt because of the trust the team shares.
and active compliance program
Ethical profitability is far more
than merely operating within the boundaries of the law. Legal compliance limits
unethical behavior, but it does not define ethical behavior. An organizational
ethics doctrine does have legal benefits. Properly written, published and
disseminated ethical codes will reduce corporate risk if an employee creates a
criminal or civil problem because of poor ethical behavior. (Even federal
sentencing guidelines recommend lower fines if such violations occur contrary
to the existence and enforcement of compliance codes.)
The true test of ethical
profitability is whether or not the company is a positive example to its
employees, to its customers and even to other companies. Such companies
practice the truest form of leadership-by-example. They reach for a higher bar.