Business ethics and its “partner,” corporate social responsibility, unfortunately, are all too often ignored. As a business ethics speaker, consultant and ethics book author, I have seen mighty companies topple because they disregarded what needed to be done. Don’t believe me? Let me convey just a partial list of organizations caught and nearly (or completely) brought to their knees: General Electric, Purdue Pharma, Bernie Madoff (and his funds), Enron, Deutsche Bank, Wells Fargo, Siemens, The Weinstein Company, Volkswagen, Turing Pharmaceuticals, Adelphia, Theranos, Barings Bank and WeWork.
For the companies I list above, every one of them allowed themselves to be lulled into a sea of arrogance because somehow, they had deceived themselves to believe they were above ethics. They were assuredly not.
Ethical Dilemmas: How Scandals Damage Companies
As an ethics motivational speaker and business ethics consultant and author, I often like to ask my business ethics audiences the following question: “What is the most important thing an unethical corporation risks losing?” Some will answer “money,” and others will say, “stock price,” or “customers.” None of those are bad answers. However, the real answer is reputation.
The consequences of unethical actions will potentially not only lead to firings, major fines, and jail sentences, but a loss of reputation that is almost impossible to repair. The executives in question will invariably be forever linked to the disgrace they brought to their organizations. Their disgrace will often damage companies beyond repair.
There are arguments to be made that strong companies will bounce back and go on as though nothing happened. I can easily make an argument to the contrary. Volkswagen, for example, accused in 2015 of falsifying its emissions data is still going strong, however it was forced to eliminate more than 3,000 jobs and pay out billions in fines.
Purdue Pharma is undergoing liquidation as we speak and had had to pay out more that $8 billion in fines. Though it was desperately trying to stay afloat, they will never recover from their role in the opioid crisis.
The Weinstein organization, once the darling of Hollywood with a veneer of glamour and class was a sewer of sexual harassment and abuse and it has sunk into shame, while Theranos founder Elizabeth Holmes now awaits sentencing (her partner-in-crime, Ramesh Balwani was found guilty on multiple counts).
Avoidance was possible
The main point about Ethical Dilemmas and How Scandals Damage Companies, is that it could – in every case – have been avoided. In society’s glorification of the so-called best and brightest, ethical behavior is far too often ignored.
Of all of the faults that can bring companies to their knees, it is unethical behavior that invariably is what breaks corporate backs. Wells Fargo in its creation of fake accounts to bill unsuspecting clients, resulted in firings, employees ultimately quitting in droves and a loss of business. Was such behavior worth it? Obviously not.
As a business ethics speaker, I can say with absolute certainty that the cost of ethical training and its reinforcement would have been a pittance of the organizational upheaval and money it cost the organization.
Why then, are some organizations so, seemingly “afraid” of becoming more ethically aware? Is it fear? Egotism? A lack of commitment? I believe it to be an avoidance of the ethical mirror. In training, attendees must reflect on themselves and often, their own “little secrets.” As such, an ethically aware organization must self-examine from the top-down. If the organization demands training of its “staff,” the “C-Suite” executives must view themselves in an equal light.
On the other hand, ethical organizations have been proven to be winners. The ultimately fare better and are more profitable. Reputation means something.
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