Should companies care about ethical behavior? Does it really make any difference to their bottom line? Simply put, yes. Yes, consumers and stockholders can and do care. And, yes, it does filter through to the bottom line. That was the consensus from a panel consisting of Barry Stowe, CEO of Prudential Corporation Asia, Marjorie Yang, chairman of the Esquel Group, and William E. (Chip) Connor, chairman and CEO of the Connor Group, at the inaugural Asia Ethics Summit held in Hong Kong late last year.
At the behest of their moderator, Turney Stevens, Dean of the College of Business at Lipscomb University, the group elaborated on some of the nuances of managing an ethical business environment in the East versus the West.
The headline issues do not differ, according to Connor. The notions of self-dealing, corruption and theft do not change from place to place. Pollution, for example, is recognized as such virtually everywhere. Approaches to the challenges, however, may differ, but the substance of the challenge remains unchanged. "In Asia, the need to preserve a harmonious work environment, to preserve 'face' ranks as a high priority," he said. "This usually demands a less direct approach to the problem. It doesn’t, however, change the problem itself."
So how do you foster ethical behavior and develop a culture of ethics within a company? It starts from the top. "Management must not only talk the talk, they have to walk the proverbial walk. Talk is cheap, and as senior management, you have to deliver," noted Connor. As Yang put it, "Leaders are meant to set standards above the norm."
Being an ethical organization isn’t just about doing things right, it's also about what you do when things go wrong. Mistakes are inevitable. When unintentional, mistakes introduce both the need for rectification and the basis for further learning. Management should be perceived as swift, effective and, perhaps most importantly, fair when correcting things that go wrong. Management should be perceived similarly when confronted with a breach of ethics, with the added provision of a clarifying message and the stomach for taking unpleasant action. Swift, effective and fair action must be augmented with words and deeds that support the ethos of the firm.
How can ethical standards be quantified? Is it even possible to measure organizational ethos in the same way companies measure profitability or set Key Performance Indicators? There are some indicators, and best practices that can help senior management gauge the effectiveness of good corporate governance. Good people want to work in good environments. Bad environments subsume the good. Does your company enjoy high levels of staff fidelity or is turnover high? How is this measured and acted upon? Is there a mechanism where ethical breaches can be communicated to management in a manner that is healthy and supportive of an ethical culture? If so, is this information formally tracked?
As Stowe put it, "When you come get down to ethics there is no difference. For most things, right is right and wrong is wrong, no matter which country you’re in."
Ultimately, when you take the long view, integrity and a strong ethical culture will reap dividends in any country. And that long view is essential because as Connor added, "you can never buy back your company’s reputation once it's lost."
