Ethics in business #2
In my last article, I started investigating the idea of ethics in business. Today, I’m taking a glimpse into the practicalities of ethics in business, and the challenges businesses face in the strive to behave ethically.
All business enterprises, irrespective of the economic model within which they function, are experiencing more and more pressure from all their stakeholders:
- Shareholders want above average returns on investment.
- Clients want better and cheaper products and service.
- Staff want more reward, recognition, and the opportunity to contribute.
- Management want more loyalty, productivity, and commitment from their staff and from their suppliers.
- Unions and communities want greater participation and involvement in the affairs of business.
- The environment and the planet on the whole need more care and respect.
- And, last but not least, management face the reality of addressing all these factions.
Often, these stakeholder goals are diametrically opposed to one another.
The warring goals can only be aligned by a leadership that is skilled in the many disciplines that make up the modern enterprise.
Ethics Within the Business Ecosystem
Let’s assume that the following two models are a fair reflection of business:
- One model is Peter Koestenbaum’s leadership diamond.
- The other is that business is system.
Business is a system. No event within the system can be isolated from having an impact on the rest of the system.
Further, the skills required to create ‘greatness’ in a business are varied.
However, these skills need to be aligned and balanced. Ethical behaviour needs very specific conditions within which it can thrive and be of benefit within the business.
If the environment is not right, ethical values can be inserted into the ecosystem, but the values will not flourish. What’s more, these values will not sustain the growth and diversity of the ecosystem.
There Must be a DESIRE for Change
The implementation of ethics on their own is of little consequence if there is no desire for the values and ethical framework to be of significance within the system.
The role-players within the ecosystem must recognise the need for improvement, and actively seek change.
Invariably, it is the leadership of the business that creates the right ecosystem for an ethical ethos to thrive, and for those same ethics to facilitate the sustainability of the business in the long term.
Business Ethics Made Practical
When business ethics are applied consistently to the ecosystem in which a company operates, the benefits are measurable and exponential.
- Principled companies have better financial performance and greater long term sustainability.
- Broadly, leadership is significant to the success (or failure) of ethics in action within a business. Particularly, servant leadership serves all the stakeholders. In the weeks ahead, I will investigate how this is possibly the future, not only for business, but for individuals – and even countries as a whole.
- It is important to consider vocation (both at an individual and organisational level) in creating an ethical and sustainable business. Why look at at vocation within the context of ethics and business? Given the rapid and unpredictable nature of business today, one cannot create a sustainable strategy without taking into consideration the need to delegate responsibility as far ‘down’ the line as possible. This can only be achieved if the staff are highly motivated and knowledgeable. By approaching business in this way, it has a direct impact on the importance and significance of ethics.
When you think of business as a system, it becomes clear that all the components of a business need to be aligned in order to facilitate the greatest output from this business system. Applied business ethics become the conduit by which we can align that business system most effectively.