the bottom 20. Here's what he found. The top 20--the companies with integrity--the spirited workplaces--averaged 571% higher earnings than the dispirited workplaces. The top 20% averaged a 417% higher return on investment. The top 20% enjoyed an increase in stock prices of 363% in the same period. One of American's most successful CEO's was right when he said, "the soft side is the hard side.” - Restoring Integrity To Business , By: Thompson, William David, Vital Speeches of the Day, 0042742X, 10/15/2002, Vol. 69, Issue 1.
Is Ethical Behavior Good for Business? • An investment of $1,000 ten years ago in each of ten companies highly regarded for ethical behavior (G.E., Coca-Cola, Hewlett- Packard, Microsoft, Intel, Southwest Airlines, Berkshire Hathaway, Disney, Johnson & Johnson, and Merck) would have resulted in a return nearly three times as much as an investment of $10,000 in the Standard & Poor’s 500 stock index. (Fortune)
Is Ethical Behavior Good for Business? • An exception: In response to numerous lawsuits, gun manufacturer, Smith & Wesson's former CEO Ed Shultz decided to start including locks on its handguns in March 2000. Although the decision was clearly ethical, customers especially the NRA) were unhappy with the change. Sales declined, employees were laid off, and Shultz resigned. In this case, the ethical decision did not have a positive financial impact on the firm. Nonetheless, despite jobs lost, lives may have been saved by the change in product design.
Is Ethical Behavior Good for Business? • Reputation Management • A reputation for integrity enhances customer loyalty (e.g. Johnson & Johnson Tylenol Case) • Conversely, damage to a company's reputation can mean a sharp and often irreversible loss of market share.
Is Ethical Behavior Good for Business? • Social Capital – Experts say most people forgive mistakes made by leaders who have both conviction and a good heart. - Del Jones, Leadership lessons from the Reagan years, USA Today, June 11, 2004, p.6B.
Is Ethical Behavior Good for Business? • Decreases Costs - Though initiating and ethics program sometimes involves significant up front costs, it generally helps to avoid other larger costs later.
Is Ethical Behavior Good for Business? • Encourages Investment - A Conference Board of Canada poll revealed that 77% of Canadians are most likely to invest in, 81% to purchase from, and 79% to work for companies they view as socially responsible.
Causes of Failures in Business Ethics • Decreased Authority of Moral Standards • Empty Gestures/Insincerity • Situational Ethics/Moral Relativism/Expansion of Cultural Diversity • Rapid Expansion and Decentralization of Control • Company/Personal Immaturity • Parties Perceived as Enemies or Not Worthy of Ethical Treatment/Moral Exclusion (e.g. Lying to the IRS, cancer causing pajamas and other defective products dumped on 3rd world markets, etc.) • Narrow View of Stakeholders • Failing to “Count of Cost” before committing to a particular course (see Luke 14:28-30) • Lack of “Owner” Accountability/Spin • Actual or Perceived Pressures •
You've reached the end of your free preview.
Want to read all 179 pages?
- Summer '16
- DWI MARTANI
- Business, Ethics, moral principles, Responsibility Theory