COMMENTARY: Good Ethics is More Than Good Business 759.2

Ethics is a popular topic at corporate meetings today because managers correctly see the benefits. Good things tend to happen to companies that consistently do the right thing, and bad things tend to happen to those that even occasionally do the wrong thing. Being ethical is playing the odds.

Ethical companies have a competitive edge because people prefer to deal with firms they trust. They also benefit from high credibility; being believed is an enormous asset. In addition, ethical companies attract and retain employees better because they have higher morale. And finally, good ethics generate a good reputation, good will, and loyalty.

So it’s true: Good ethics is good business.

Still, I question the strategy that most companies use to motivate employees to be ethical: stressing how their ethical behavior will benefit the corporation. The problem rationale is grounded in self-interest rather than morality; it is essentially amoral. It has nothing to do with ethics.

Doing the right thing to get something in return is an investment, not a demonstration of character. Ethics based on self-interest is situational; ethics based on moral convictions is reliable. It’s the difference between acting ethically and being ethical.

Trying to motivate people to do the right thing by stressing benefits rather than values and virtue turns decision making into a cold cost-benefit analysis rather than a reflection of what’s right.

But if a company encourages employees to make decisions based on the supposed advantages, why should anyone put the firm’s interests above his own? In the absence of authentic moral conviction, why should employees refrain from unethical or illegal conduct if they think it will save their job or enhance their compensation? Clearly, what’s good for an enterprise is not always good for its employees.

My point is, it’s foolish and fruitless to expect most employees to sacrifice their financial well-being for the good of the company. On the other hand, many will do so in the name of honor, as a matter of conscience, and to earn the esteem and admiration of family and friends.

Corporations have a much better chance of deterring improper conduct by appealing to conscience and principle rather than to risks and rewards.

This is Michael Josephson reminding you that character counts.

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Comments 10

  1. One of the best ways to have an ethical company is to hire ethical people-those with a moral compass, demonstrating the character values we all respect and appreciate, honesty, kindness, compassion, etc.
    Too many employers just don’t want to do the necessary background checks required to sniff out the less than ethical candidates. Often the circumstances of being “let go” or of their “resignation” are hid as they move on to the next employer. Certain industries protect their own. Because employers either don’t do their homework, or simply look the other way, we have ended up with pedophiles working in school settings, doctors with numerous malpractice suits working on patients, and convicted criminals working within corporate settings, not to mention candidates with a history of infidelity running for political office!

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  2. As a Past District Governor of Rotary International which uses the 4 Way Test as an ethical guide for the business men and women who belong to this organization, I am struck by the Test’s use of BOTH sides of the business transaction. Is it the Truth? Is it Fair to ALL concerned? Will it build Goodwill and better friendships? Is it beneficial to ALL concerned? By following these tenants one can avoid the one sidedness of doing it to benefit yourself or your company alone. This approach definitely appeals to conscience and principle rather than risks and rewards. Nice job Mr. Josephson.




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