Whether they’re competing for customers or funding, private and public organisations alike need every competitive advantage they can get to survive and thrive. And as people become more savvy about where their money is going, one such advantage has become increasingly clear — doing the right thing.
Public shaming campaigns and consumer boycotts abound, so it’s more important than ever to avoid unethical behaviour that will impact negatively on your brand. If you care about the longevity of your company and its bottom line, your organisation must reflect the values of your customers, potential partners, clients and shareholders.
People are making decisions with their wallet about the types of companies they want to be involved with. Those organisations demonstrating ethics which align with the expectations of the community are going to be in a better position than those that do not.
Consider the banking industry. In the fallout of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, mere compliance with the law, when this was actually the case, wasn’t enough. Of course, some of the things exposed by the Royal Commission were clearly not legal — but now a light has been shone on the industry, even practices that are technically legal are causing the public to say, ‘Well, hang on, that’s not right; that’s not fair for the customer.’
The banking industry has learned just how short-sighted it is to engage in unethical practices for short-term profits, because the reality is that consumer trust is crucial to long-term success.
Being seen to do the right thing also affects your ability to attract talent, particularly from younger generations. Young people really want to understand the values of an organisation before they commit to becoming a part of it, and they like to feel those values are compatible with their own. As a result, companies which conduct themselves in an ethical way will be in a much better position to pick and choose the talent that comes to work with them.
But image isn’t everything
As important as it is to be seen in a positive light by the wider community, you shouldn’t do the right thing just because it looks good. Conducting your organisation ethically will also make it more efficient and effective, which can only be good for your bottom line.
For example, one of the most insidious forms of corruption is cronyism — manipulating the way in which people are selected for positions of authority due to your associations or connections with those people.
This is a particularly big problem in the public sector. When you select a close friend or a colleague for a government position without going through a process that would stand up to scrutiny, you’re essentially engaging in corruption twice — first by excluding the best people for the position, and secondly by giving a large amount of public money to a person who would otherwise not have been selected for the position.
Cronyism is a problem in the private sector, too, and it’s one that can be avoided very simply, by putting valid processes in place that exclude people from making decisions based on personal connections.
One of the problems we have to deal with as a society is the arrogance of people when they’re in senior positions. When you think your opinion is the only one that is valid, that’s how you end up in situations that would otherwise be identified as being clearly unethical and thinking to yourself, ‘Well, this is just how we do things around here.’
Of course, if you own a company and you don’t have any shareholders, you can make whatever decisions you like about who you appoint. However, when others have a stake in the outcome, it is essential that a fair process is put in place. It is likely, of course, that opening up positions to suitably qualified people is good business whether you own the company outright or have a responsibility to shareholders.
When it comes to stakeholders, including shareholders and the broader tax payer, you have an obligation to ensure they are getting the most meritorious people appointed to positions, and not just people you know.
In the long term, your organisation is always going to be better off when you step outside your immediate circle and bring in diverse views and diverse ways of looking at problems and opportunities.
The thing you need to realise when you’re teaching people about ethical behaviour is that you can’t be in the business of taking a ‘thou shalt not’ approach. It’s not about teaching people what not to do.
Rather, it’s about shining a light on the best practices and the most effective ways to get things done — which are, of course, the most ethical ways.