It pays to be ethical [JUNE 2012 PRINT EDITION]

The business case for doing the right thing

July 3, 2012
by By Michael Power

Crime doesn’t pay, or so the old expression tells us. But there is certainly a return on investment—beyond feeling good and keeping your nose clean—for corporations that choose to behave ethically.

Our editorial focus this issue is on ethical procurement, and page 10 features a report on the subject. It’s certainly important to strive to follow an ethical path, simply because it’s the right thing to do. But there are also some real business benefits to having an ethics policy or code of conduct in place.

For one, doing so helps to attract and retain talent. As we mention in our feature story, it’s no longer just a decent paycheque or prestige that draw young workers to an organization. Those workers also want to feel connected to the values of the company where they work. And since many employees may have few qualms about changing employers—or even careers—at little notice, employers do themselves a favour by making themselves and their organzations as attractive as possible. Having an ethical framework—including sustainability and corporate social responsibility (CSR) policies—in place can be part of that process.

It’s not just young workers who now pay attention to how ethically an organization behaves—it’s also those who buy their products. Today’s consumers are often willing to reward companies for acting ethically. But they’re also willing to punish those that don’t. Behaving ethically can be a way to help win business.

And in today’s world of instant communication, bad new travels faster than ever. Oscar Wilde was displaying his wit to great effect when he said “The only thing worse than being talked about is not being talked about.” But few organizations look forward to being the subject of negative press due to perceived ethical lapses. Apple Inc still sells plenty of iPhones, but its public image took a beating when charges hit the headlines of poor working conditions at its main component supplier, Foxconn, in its manufacturing facilities in China. In other words, there is such a thing as bad publicity.

As the economy (and therefore procurement and supply chains) grows more international, ethical practices have in some ways become tougher to monitor. Organizations must be aware of what suppliers are doing two or three tiers down the road, lest they be caught in an ethical quandry on the other side of the world. Although there are definite rewards, it also takes a certain amount of vigilance.

There’s no shortage of reasons for organizations to behave ethically, as well as a clear ROI for companies that behave well. And hey, beyond any tangible results you realize, it’s also nice to feel good about the choices you and your organization make.