Profits, Ethics, and Trust
Recently, Thomas Friedman – the man who fired the imagination of world business with his book The World is Flat — wrote in his New York Times column: “We don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics, and regulations.”
The very next day, while announcing his nominee for head of the SEC, president-elect Barack Obama noted that there needed to be a shift in ethics in business and that “everybody from CEOs to shareholders to investors are going to have to be asking themselves not only, ‘Is this profitable?’ not only whether this will boost my bonus, but is ‘Is it right?'”
Much as we would have wanted to move beyond these sentiments and focus on navigating our ships through an already challenging environment, the disclosures made by Satyam have brought this issue from the US and Wall Street to much closer home. And yet, it only confirms a trend we have been witnessing among organizations to select partners with a track record of performance, innovation, and — above all — a robust corporate governance structure.
Credentials today run far beyond turnover, growth and profits. They extend deep into ethics, integrity, credibility, track record, domain experience, creativity, professionalism and corporate governance.
In other words, in addition to “what a company does,” it is equally important to focus on “how it does it.”
Looking ahead, sustainable business can only be built on a culture of trusted partnerships with each and every stakeholder group – including employees, customers, shareholders, vendors, regulators. Trust through transparency will finally gain its due recognition as the only way forward.
As customers move out of the economic turbulence of the recent past, there will be a clear shift towards companies that can create the highest business value while maintaining the highest ethical and governance standards. For the financial health of business can only be anchored in trust.
Originally posted on Vineet Nayar’s Blog site on Harvard Business Review: https://hbr.org/2009/01/no-profits-without-ethics