By: Eric Betts
A critical part of understanding what it means to have influence as a leader revolves around character and ethics. Neil Kokemuller has been a college marketing professor since 2004, and a marketing and education writer. Kokemuller has additional professional experience in retail and small business, and holds a Master of Business Administration from Iowa State University. In his research, he has detailed how ethics and marketability coincides. He contends that the ethics of an organization has a direct impact upon the company’s brand, and that this is truer today than any point in the past due to the internet. He suggests that covering up poor ethical practices may have worked in the past but not in the current environment in the digital age. Professor Kokemuller states the following:
The ethical nature of a business can enhance or degrade its brand in the same way an individual’s ethics affect his reputation… Due to the evolution of the Internet and digital technology, companies have had to adjust to the reality that poor ethical choices routinely get discovered and lead to negative company and brand effects. Attracting and retaining core customers is usually more possible for companies that operate honestly and ethically in their business activities.
While one may agree that good ethics equals good branding, one should practice good ethics because it is just and right. The good reputation and marketability that comes from practicing proper ethics is a beneficial consequence that stems from doing what is right. One should focus on right-doing and trust that the good will follow.
Author, economics expert, and scholar Stan Mack also writes about the important issues related to ethics. Mack has written for Houston Chronicle and USA Today on economics and ethics. Mack gives several examples of how an environment of low ethics affects a community. One notable example he offers deals with how businesses fail to respect the environment.
Some businesses unethically pursue temporary profits without considering the long-term impact of their actions on the physical environment. For example, if timber companies fail to plant trees to replace the ones they harvest, sooner or later the industry will destroy itself, as well as the world. Ethical businesses, on the other hand, recognize that sustainable practices maximize their future prospects and have the added benefit of minimizing environmental damage.
Mack contends that unethical business practices place everyone within a particular business setting in jeopardy. This ethical principle applies, for example, to the relationship between private for-profit water and wastewater delivery systems. Such private companies work in conjunction with municipalities who must place the public health and the environment above that of profits. Mack says bad ethics are on display whenever “a company is evaluating bids from several suppliers and accepts gifts from one candidate in exchange for the contract, this constitutes a bribe and unfairly eliminates other applicants from the bidding process.” It also occurs when safety rules are violated due to shortcuts in order to meet demand for the sake of profit. Everyone involved may ultimately be placed in jeopardy due to either employee injuries or company damages. Mack refers to the breach of public trust that occurs when “the bottom line” is the highest value. He refers to companies inflating fees and charges, in addition to billing clients for time they did not work, price gouging during natural disasters or crises, and failing to give customers all that they paid for. He cautions where such breaches may potentially lead.
They breach the trust of clients and the general public. Also, if companies knowingly sell inferior products or services, they violate ethical boundaries by fraudulently taking customers’ money and potentially placing them at risk, especially if the products are dangerous or don’t function as promised.
Mack also shows how bad financial ethics within a business environment hurt both employee morale and the reputation of the company. Mack applies the same for small or large businesses. Transparency is also an indispensable aspect of ethics within financial companies or any organization seeking investors. Livelihood, life investments, and retirement funds may be placed in jeopardy due to careless or intentional actions that are ethically irresponsible. Transparency is the window which allows others to make informed decisions that impact their lives for the future. Even if transparency exposes weaknesses or shortfalls within a financial institution, the company owes it to the community not to hide the truth of the matter. Hiding the truth is only a temporary fix that can lead to catastrophic results for both the company and the investors in the future. If investors can trust your truthfulness, they are more likely to trust your reliability in the future. Mack agrees that focus on profitability and financial success is not illegal or unethical, but when one compromises their duty to the community, it crosses the line. There is an invisible and unwritten contract between public organizations/businesses and the public itself. This should be understood and appreciated by those who have companies which serve the public interest. Mack says, “The public expects that the primary responsibility of employees and company management is to their customers, yet professionals sometimes place their personal benefit first or use their positions to gain favors or other perks.”
The public is not expecting too much in assuming that a business has their welfare, safety, and health in mind, and it should not be considered as offering too much to the public by being honest and forthright in one’s practices. The public assumes that they are equal partners in their interactions and exchanges and are disappointed when their personal welfare turns out to be less important than the personal benefit of the company management. They are disappointed when they feel exploited or manipulated due to their handicap, weakness, or ignorance.
Professor Kokemuller juxtaposes the idea of bottom-line profitability with the idea of bottom-line responsibility. He agrees with Mack on the idea of the unwritten public contract between the community and its organizations. He refers to the idea of bottom-line responsibility as social responsibility and views it as good business strategy. Social responsibility also goes beyond ethics as a business strategy and enters into the realm of community service and social uplift. He defines social responsibility as follows.
Social responsibility extends beyond basic ethics and emphasizes that companies act as good community citizens while also meeting shareholder requirements. Giving back to communities through philanthropy and active involvement in activities help companies meet the informal expectations stakeholders have.
Professor Walter Earl Fluker of Emory University, a professor of spirituality, ethics, and leadership, agrees with the concept of social responsibility in ethics. Fluker understands that this social responsibility is the spiritual side of ethics. Social responsibility goes beyond the legalistic perspective of ethics and introduces a spiritual dimension. He views this spirituality in leadership as revolving around leaders who view themselves as more than mere individuals but also as interrelated, interconnected, and interdependent members of the whole society. “What affects one directly affects another indirectly” is the idea. This spirituality goes beyond the rewards or risks of ethical behavior and discovers more of who we are as individual parts of a whole. Such spirituality views itself as indebted to the community because it has to a large degree formed who one is and what one has become. It understands that if one part of the community is hurt by unethical practices, we are all hurt. Whatever negative actions are inflicted on other members are inflicted upon ourselves in this reality. This spiritual side of ethics, according to Fluker, enables leaders to see themselves in other members of the community. This spirituality which Fluker identifies, “demands that leaders cultivate and nourish a sense of self that recognizes the interrelatedness of life or a sense of community in practical, everyday encounters.”
By: Eric Betts
Assistant Director, Curtis Coleman Center for Religious Studies and Ethics at Athens State University