Goodwill Hunting

Ethics, Schmethics

What's behind the current buzz about ethics? A number of factors, really. On the evolutionary front, the days when one could argue that conscience and business don't mix are gone for good. Although the social responsibility movement of the late 1980s and early '90s hardly qualifies as news anymore, its message has become part of our popular consciousness: Businesses need not exist for the sake of greed alone. Consider the bar permanently raised--Ben and Jerry, thank you very much.

As standards have gone up, public awareness has also intensified. "It's not necessarily that we care more about ethics today," says Laura Pincus Hartman, director of the Institute for Business & Professional Ethics at DePaul University in Chicago, "but that, because of [better communication], we know more about companies than we once did. With the World Wide Web, more information gets out to more people than ever before. Anyone can log on to the Internet and find out almost instantaneously about libel suits, harassment suits and all kinds of information that would have been difficult to uncover in the past."

Meanwhile, your company's ethics may have a direct impact on employee loyalty. In a 1997 Walker Information survey of 1,694 employees, 86 percent of respondents who had favorable opinions of their companies' ethics were strongly committed to their organizations; only 14 percent of those who rated ethics low felt likewise. A full 42 percent of respondents said a company's ethical integrity would directly influence their choice of employers.

No longer can you assume that your competition is ethically challenged, either. Of 747 human resource professionals interviewed for a 1997 Society for Human Resource Management/Ethics Resource Center survey, 73 percent of respondents said they work in organizations that have written standards of ethical business conduct. Nearly four in 10 work for organizations that provide ethics-related training; 31 percent work for companies that have either an ethics office or an ombudsperson.

And there's more. When Walker Information polled 1,037 consumers in 1994, 47 percent indicated they would be much more likely to buy from a "good" company if quality, service and price were equal. On the other hand, 70 percent of consumers would not buy--at any price--from a company that was not socially responsible. "Apparently you get some credit for being good," says Walker, "but you really get clobbered for being unethical."

Not wanting to get clobbered in court is another motivation for cleaning up your act. According to ethics consultant Victoria Wesseler, president of Ethics & Compliance Strategies, a consulting firm in Indianapolis, federal sentencing guidelines that went into effect in 1991, which apply to companies with as few as 10 employees, provide financial incentive to companies that make a concerted effort to prevent and police unethical conduct within their organizations. (See "Code Of Conduct" on page 121.) "I would hope the primary motivator for improving a company's ethics would not be to meet these guidelines--there are other reasons to become more ethical," says Wesseler. "But [companies that meet the guidelines] may see a reduction in [criminal] fines of up to 95 percent."

For ethicist Robert C. Solomon, professor of philosophy and business at the University of Texas, Austin, and author of It's Good Business: Ethics & Free Enterprise for the New Millennium (Rowman & Littlefield), these various threads weave together into a single truth: Ethics is at the very core of successful commerce. "Ethical managers and ethical businesses tend to be more trusted and suffer less resentment, inefficiency, litigation and government interference," says Solomon. "[Being ethical] is just good business."

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This article was originally published in the July 1998 print edition of Entrepreneur with the headline: Goodwill Hunting.

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