Ethics is a popular and current topic discussed not only in the boardrooms but throughout corporate America at all levels of leadership and management. Companies have approached issues of ethics with a sense of responsibility and seriousness as they continue to seek a balance between innovation and profits and at the same time in doing it right. Good things tend to happen to those that consistently do the right thing, and bad things tend to happen to those that even occasionally do the wrong thing.

Being ethical is playing the odds. It’s easier to make a good company better than a bad company good. The key is to identify the myths that sometimes lead good companies astray. Some of these myths are alarming when one considers that there are leaders who face major as well as minor crises every single day and have to look beyond the fallacies of their ethical approach.

One myth is that the overriding objective of corporate leadership is to maximize profits. Undoubtedly, this is a critical component of good management; however, the better companies consistently place reputation and relationships over short-term profits and recognize obligations to stakeholders other than just the shareholders. Shareholder value is built on a foundation of values not on a single sale or the continuing profit margin.

Another fallacy that many believe is that corrupt activities exist primarily in the private (for profit) sector. Over the past year and a half, over 1,000 government employees were convicted of corrupt activities, and according to the FBI there are thousands more being investigated. Huge fines, forced resignations and hundreds of convictions are evidence that many scoundrels have worked their way to the top rung of the success ladder in business and government.

A third myth is that corporate scandals are perpetuated by corrupt expectations. People for the most want to be successful but they also want to be good. True, many have had their ethical compass distorted by decades of amoral thinking that focuses on what might be acceptable expectations and practices in business that make them successful rather than doing what’s right. People feel better about themselves when they are surrounded by an ethical organization that has leaders of high moral character who do not allow corrupt practices to be acceptable behavior at the workplace.

If it’s permissible, then it’s appropriate. We would be remiss in not clarifying that compliance with the law is certainly important – but it is not enough. Smart people can be clever and always find loopholes that literally thwart regulatory goals of laws. Such gamesmanship strategies may be legal, but ethics is not about what you have a right to do – it is what is right to do. Lots of legal conclusions are still wrong. Ethics based on self-interest is situational; ethics based on moral convictions is sustainable. It’s the major difference between acting ethically and being ethical.

An unenforced law really isn’t required; it’s a recommendation. There are numerous reasons why some laws are not enforced, especially in corrupt or under-resourced cultures. None, however, allow a company to disengage from the obligation to obey the law.

Business ethics is determined by the marketplace. If smart and successful people are doing it and making huge profits, it becomes necessary to fight fire with fire. Not! Ethics is not about the way things are; it’s about the way they ought to be. Conduct doesn’t become ethical because it’s an everyday occurrence as acceptable behavior. No matter what others do, the moral obligation to be honest, fair, respectful, responsible are personal and enduring. If you fight fire with fire you’ll end up in the ash heap of failed integrity.

CONCLUDING THOUGHTS

Many mistakenly believe that ethics is one factor to consider in a smart business decision. Ethics is not just a factor; it’s a ground rule. Over the long haul, ethics provides a competitive edge and people prefer to work with those they trust. Ethical companies have higher credibility and a credible advantage over others. Believe it for it’s a fact. Ethical companies attract and retain employees more successfully because they have higher morale. People feel better about themselves and their jobs. Research studies conducted in the past three years has demonstrated that ethical or unethical behavior is a direct result of the climate that leaders develop within the organization. For leaders in an organization, the strategic responsibility for changing the culture has to include the goals of creating and sustaining ethical climates within which employees act ethically as a matter of routine. Leadership sets the tone from top down and the end result is a culture based on the value system that is shared and supported by all. Moreover, avoiding the ethics myths breeds good will and loyalty from customers, vendors and employees.

So, in spite of the myths in ethics, the fact remains that good ethics is good business.