Points to consider:
- Studies show that with respect to stock value appreciation, "ethical"
companies significantly outperform the average of the S&P 500.
- One out of every ten dollars invested in the stock market is directed
towards companies considered to be "socially responsible."
- Employees working in an environment they consider to be positive
and energizing outperform all other employees.
- There is a significant correlation between those companies on the
Forbes 100 Best Places to work and profitability.
- There is a significant correlation between those companies on the
Forbes 100 Most Respected Companies and profitability.
Sustainable growth and the continuing ability to outperform competitors require the integration of a company's vision, mission, values, and ethical behavior.
Mission, Ethics, Values, and Core Competencies
In 1982, Johnson & Johnson bit the bullet and went against the "common market wisdom" by removing Tylenol from store shelves nationwide when evidence of product tampering occurred in Chicago. The message it sent was that its leadership cared more about their customers than about short-term profits. Ever since, the consuming public has held J&J on an ethical pedestal. Success, both internal and external, resulted.
Contrast this with two other classic examples. In the 1980s, Harley-Davidson was acquired by AMF. Harley had a long history in the marketplace for building a superior product. After the acquisition, AMF refocused the Harley operation to produce a greater number of motorcycles in less time. With the change in mission came a change in values, both in the executive suite and on the work floor. What followed was that morale suffered and quality slipped. Harley developed a reputation of building cycles that leaked oil. Profitability under AMF sank. It was not until Harley management repurchased the company from AMF that quality and innovation again took hold and its image once again flourished.
A more recent example of the change in corporate mission phenomena adversely affecting values and productivity occurred at Toyota. Toyota built its reputation and its sales upon putting out the best product within its price range. During the 1990s, Toyota's mission shifted being the world's best automaker to becoming the world's largest automaker. With this change in mission came the inherent shift in values. The vehicle recalls and image crisis which occurred in 2010 were inevitable. In his book Winning, Jack Welch equates this disconnect between the traditional mission and values as a primary cause of organization failure - pointing to Enron and to Arthur Anderson as extreme examples. The failure to keep focused on the ethical values that built the company is a portent of failure.
In contrast, Cisco Systems, a world leader in electronic switching equipment, has maintained its focus on ethical values. Because of consumer trust, Cisco's earnings and stock value have continued to rise. John Morgridge, its former CEO, attributes much of the Cisco's success to the positive corporate values and ethics that guided the company from its inception. Building a corporate culture that valued social responsibility and the fair treatment of all stakeholders led to success. The underlying concept here and the underpinning of business ethics is integrity. If employees, suppliers, customers, government officials, and other stakeholders trust your company, its products and/or its services, they are far more likely to deal favorably with you. As a result, you gain an important competitive advantage.
Long-term sustainability and profit growth are based upon core competencies. Core competencies are something that your company does better than its competitors and which it would be hard for your competitors to duplicate. In almost every case, core competencies are built upon the activities of people. People create products and services. People operating within a positive, ethical business culture are more productive. They work harder, get sick less often, and produce more and better ideas. Thus, integrity-based companies have a core competency that produces competitive advantages. Integrity is the outgrowth of an ethical business environment.
At Strategic Resolutions, we bring business approaches to ethics and values to life through workshops, seminars, and coaching. We work to build integrity-based corporate cultures that strike a practical balance between entrepreneurship, finance, and ethics. The bottom line is greater productivity, reduced likelihood of being involved in litigation, and market position growth and sustainability.
Contact Us
Phone: (414) 226-2495
Email: resolve@execpc.com
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