admincorporate ethics and positive financial performance. The inquiry, pertinent as it is, has significantly contributed to the growth of business ethics as a practising subject, and tremendous progress has been made in proving its contribution towards the financial performance of a business. The traditional philanthropic tag business ethics has carried over the years no longer take precedence as corporate ethics has risen to become a viable business choice companies cannot afford to ignore.
Corporate boards, CEOs and other business executives are right when they demand to understand the quantitative contribution of business ethics. Company leaders are the custodians of the well-being of their companies and, ultimately, they must bear responsibility for the impact of any management intervention they introduce to the business. Executives want to understand that business ethics can be embedded in the firm’s strategies to produce financially rewarding results. They must prove to company owners that corporate ethics impacts the bottom line and increases shareholder value.
To shore up the business case of corporate ethics, there is now in existence increasing and compelling empirical evidence both qualitative and quantitative that shows that an ethical culture benefits the bottom line.
Baumhart conducted the first empirical research on the impact of ethics on organisational performance in 1961. And a study carried out by the Institute of Business Ethics in the UK in 2003 and 2007 established a positive relationship between business ethics and financial performance.
At Wall Street, studies and ethics surveys that are carried out from time to time have always validated a direct relationship between ethical business practices with the strength of business success factors such as stock prices, customer purchasing patterns, and employee retention.
Perception surveys across different countries reveal that ethical companies are more successful than those that are not.
In response to this empirical evidence, businesses the world over are witnessing the growth of corporate ethics in business operations, and in Zimbabwe today, the debate on the business case for business ethics is clearly influenced by this new global reality.
The Zimbabwean economy should be seized by this global paradigm, and our organisations must understand that they have every reason to invest in corporate ethics particularly if they want to remain competitive on the international market.
Apparently proof of the existence of effective ethics programmes in business operational structures has become a new measure when a company wants to raise capital on the global market.
With effective corporate ethics management processes, companies are sure to set themselves apart from their competitors by using the resultant ethical culture to form a unique brand that is difficult to copy. Corporate ethics is a tool through which ethics risks and other company acts of misconduct can also be curtailed. Obvious bottom line benefits include reduced costs and risks, attracting skilled staff, gaining competitive advantage, attracting foreign investment, and developing a good reputation. Other benefits include increasing employee job satisfaction and morale, and increasing company productivity and profitability.
The high level of unethical behaviour in the economy demands business leaders to take a proactive approach in managing the ethics environments of their businesses. Company executives must as a matter of priority identify ethics risks as a top issue on their business agendas.
While a harsh economic environment tends to justify unorthodox means of doing business in the minds of some, the futility of doing so cannot be overemphasised as our experiences in the last decade can testify. Responsible business practices demand that there must be ethical rules of conducting business, for without these rules misconduct becomes prevalent leading to anarchy.
Ethical practices are clearly an investment for now and into the future. If companies behave ethically in their business transactions, they will get abundant returns on their investment.
l Bradwell Mhonderwa is an Ethics Coach and Trainer with the Business Ethics Centre. Send feedback to [email protected], or visit www.businessethicscentre.co.zw
Online Reporter