The ethical advantage

This article handles a case study on the managerial duty to combine short term goals as well as long term achievements, while working by a certain code of conduct and following the ethical rules. Just like my previous post, i'll summarise just the most interesting part of the article. I believe the other parts could be usefull in the debate or the presentation, but it doesn't add much value on this blog.

Article


Summary

Even though companies post excellent short term results, the lack of ethical behavior could lead to a breakdown in the long run. This was illustrated in the past by companies such as Enron, Arthur Andersen, etc. Today’s leaders are facing the hard challenge of combining both short term results for investors and long term results for the multiple stakeholders. But does building an ethical culture really pay off?

There are two major arguments used to substantiate the use of ethics. The first one is the fact that you have to act right, because it is the right thing to do. Second one is that when you don’t act right, that you’ll get fined or sued. In this article, a third reason is described.

What does the ethical advantage actually mean?

-          Balancing the interests of various stakeholders

-          Leadership effectiveness

-          Process integrity

Balancing the interests of various stakeholders means that companies should think more in the long term, rather than the short term goals.

Leadership effectiveness means that managers and executives of a firm have to give the right example, they have to introduce the code of conduct throughout the whole company.

Process integrity refers to how well ethical behavior is incorporated in the firm. Whether or not all employees feel the same about doing the right thing.

Regards,

Olivier Goossens