Ken Sterling, LA Attorney & Talent Agent. EVP Business Affairs BigSpeak. Principal Sterling Media Law. USC researcher on media and law.
Doing the right thing isn’t just a warm-tummy feeling. It’s also a smart way to make your company profitable over the long term.
As an attorney, law professor and seasoned entrepreneur, I’m passionate about business ethics. I advise companies and teach courses on how to build a stronger ethical culture at work. In a commoditized marketplace where companies generally have the same access to capital, technology and human resources, a strong ethical framework could become your competitive advantage.
Here’s how to start incorporating ethics into your corporate strategy.
Start with leadership.
Incorporating ethics into your business strategy starts at the top—with your leadership team.
I believe ethical leaders create ethical companies. And not-so-ethical leadership can contribute to scandals like those we’ve seen at Enron, Purdue Pharma and Theranos. If your leadership strategy is to cut corners, obscure activities and focus on the profits of shareholders rather than all stakeholders, the long-term results can be failed businesses and even potential legal ramifications.
On the other hand, when ethical leaders lead the way, they can improve the company’s fortunes and prospects. For example, in 2014, CVS leaders made the decision to stop selling tobacco products, including cigarettes, because they were unhealthy and didn’t align with the company’s purpose. Afterward, the company’s share price dropped. But then something interesting happened: The sale of alternative, healthier options at CVS stores ultimately better positioned the company to form alliances with healthcare providers and rebrand as a healthcare company, per the New York Times.
All of the leaders in your business need to champion and enforce policies based on ethical values and hold everyone accountable for adhering to them. When you do so, you start a virtuous cycle—a cycle where leadership supports policies and policies support leadership initiatives. And the business benefits.
Establish clear guidelines for ethical conduct.
Once you have your leaders on board, you need to align the company’s core values with its strategy. This does not mean just creating a nifty mission statement. You want to create a culture of transparency that promotes open communication and results in positive outcomes for all your stakeholders.
First, you’ll need to create guidelines.
• Develop your core values with a small team (e.g., environment, fair labor, diversity, etc.).
• Include employee input on the core values and make any necessary changes.
• Remember to be specific about how you define ethical conduct. Be clear in what’s a company value, what’s prohibited, what’s a conflict of interest and when you need to ask for clarification.
• Ensure compliance. Encourage employees to voice concerns and empower employees to act when they see something being done that is counter to the company’s ethics or values. If it’s not spoken about, then it will be difficult to change the culture.
• Invest in training. This can be done through online training, in-person workshops and managers modeling and explaining ethical training in one-on-one meetings and team meetings.
• Lead by example.
Prioritize ethics in your strategy.
Every company’s strategy is to make a profit, but you don’t have to be a jerk to do it. However, you will need to answer tough questions for your strategy. For example, how do you ensure fair labor practices in your supply chain? How do you handle diversity or respecting the environment? Ethics should never be an afterthought. I believe they’re the foundation of a successful business strategy and happier employees.
From a financial perspective, companies that operate ethically and prioritize compliance can reduce the risk of certain legal issues. They could also see less employee turnover. Additionally, many investors are more likely to support companies with a strong record of ethical behavior.
Many companies manage these questions successfully and show that you can do well by doing good. Are you ready to get started?
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