Shavonnah Roberts Schreiber is an independent board director, high-performance coach, advisor and Founder & CEO of SNR Creative.
In a previous article, “How To Build Ethics Into The Foundation Of Your Business,” I discussed why every business needs to prioritize ethics and how to include it as a bullet point in your business plan. Now, let’s talk about why ethics matters, not only morally, but also for a company’s bottom line.
To some, ethics may seem like “fluff” or obvious—something that’s not as important as other departments or focus areas. Founders might question if spending time addressing ethical guidelines is going to actually grow the company: Will it increase sales? Will it help recruit investors? Will it help drive ROI? These are the typical hard-hitting points that are included in a business plan. As a founder myself, the answer to all of these questions is a resounding yes. Here’s why:
Reputation
In the social media world we live in, a person’s and a company’s reputation could be destroyed in an instant with the click of a “post” button. Of course, having ethical practices in place isn’t a guarantee of preventing all brand crises, but it could make a huge impact on the likelihood of issues arising and the fallout during and after a crisis. Avoiding a crisis is also good for the bottom line. When your brand’s reputation takes a hit, it can influence stock prices and sales, but there’s also the cost of repairing your reputation—on average, reputation management services can be anywhere from $500-$2,500 a month for small- to medium-sized businesses and $10,000-$50,000 a month for large enterprises.
Let’s think about a company that thoughtfully hires, trains and has open communication with employees and leadership from an ethical standpoint. Compare that to a business that is just “winging it” and hoping for the best. There are clear differences in the moral structure of behavior inside and outside of the office doors. It seems to me that a company with an ethical foundation will be on a better path for brand protection as a whole if ethics is a founding principle and openly communicated with the whole team. And, if something did happen, turning to the company’s already prepared ethical roadmap can help get the organization back on the right path during crisis management and beyond.
Recruitment
Good businesses rely on good people. And many good people want to work for someone who is ethical, honest and focused. It makes sense: If you are doing the right thing, the right people will want to be on your team.
According to research from Co-operatives UK, Gen-Z, in particular, prioritizes ethics when considering career opportunities. In fact, 40% of the individuals surveyed said they have turned down or avoided applying for jobs at companies they considered unethical.
Sales
Research by Accenture found that 63% of global consumers surveyed “prefer to buy goods and services from companies that stand for a shared purpose that reflects their personal values and beliefs,” and they are moving away from brands that don’t align with their beliefs. In other words, today’s consumer values values. People want to feel like their dollars are going to a company that invests in something bigger than just themselves. If that number doesn’t tell you the importance of ethics in sales and prove something to investors, I don’t know what will.
In closing, ethics is good for business, but caring about a cause, your employees and your customers is also part of being a good person and a good leader. So, as you start your company and lay out the foundations of what it will look like, I urge you to rewire your thinking and add ethics to the equation. The foundational bones of your company are some of the most important decisions you will make and some of the hardest to change later. Be sure you are making the right calls, starting now.
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