I’ve heard of many recent examples of organisations not operating ethically, so thought I would do some research into the area of business ethics. This is a passion of mine I follow through the International Institute of Project Coaching, where ethics drives practice.
With all the people I meet, I see that organisations globally are getting on board with having a business ethic approach. There are too many very public examples where organisations that have developed a reputation for its lack of ethics leads to many problems for that organisation and the individuals that work within it. It is a challenge for change leaders and managers.
In my research I started to see a number of themes as to the common impacts on organisations of not having an established and reinforced approach to business ethics embraced by all team members and leaders.
Firstly, the most well published are the legal issues. Businesses that fail to follow legislated guidelines often face large fines and other penalties. Sometimes larger companies decide that breaking laws and paying the fines involves lower costs than the financial gain made from breaking those laws. However, consistently breaking laws can lead to expensive legal cases that outweigh the initial gain. For small businesses it can mean bankruptcy.
The next is individual or personal cost, for example, senior leaders of businesses who break laws and act unethically could find themselves facing criminal charges and including time in jail. A lack of ethics has a negative effect on team members’ performance. In some cases, employees are so concerned with getting ahead or are wrapped up in personal drama that they ignore procedures and protocol.
A big one I see is team members’ moral and culture impacts. A negative organisational culture will often lead to greater unethical behaviour occurring. When a manager shows a lack of ethical behaviour, she or he faces losing the respect of their team members. Team members may also think that unethical practice is okay, so therefore might also ‘follow the leader’.
It is challenging to have a successful business without respected leaders. Unethical behaviour in the workplace also has the potential to lead to a lack of trust among employees, which can lead to low morale, low performance and no positive collaboration or a sense of team.
The next impact is company reputation or brand impacts. If a lack of ethics in a business becomes public knowledge, that organisation will lose credibility and, most likely, market share. This is especially relevant in our technological age of online forums and social media spreading bad news quickly. It takes time and money to get back in the good books with customers, who these days have so much choice and much more information at their disposal.
The impacts I have mentioned such as reputation, personal cost, team members morale and a positive culture and legal issues alone make the small cost of implementing a business ethics approach tiny compared to the gain you make.
This is the first of a three-part series on ethics.