Down To Business: Does Business Ethics Make Business Sense?

If character is what you do when no one is looking, then business ethics is how executives and other employees behave when customers, partners, and regulators aren't paying close attention--or when investors and bosses demand results at all cost.

If you've been keeping up with current events in high finance and technology, you might think business ethics took the winter off. But don't evaluate Wall Street based on the Ponzi scheming of Bernie Madoff or view Indian IT services in the context of the accounting fraud of Satyam's founder. They're the gross exceptions.

So how do you weed out the ethically challenged companies from the stand-up ones? Reputations matter. Ask your peers in other companies about their experiences. And re-evaluate the tech vendors you work with. Which ones are you eager to hang onto in a recession and give more business to when the upturn arrives--just the ones with the best products at the lowest prices?

InformationWeek recently asked 345 technology pros this question: If you could get vendors to start doing one thing, what would it be? The biggest response--from 34% of the pros we surveyed, more than twice any other response--had to do with honesty: being up front about how their products do--and don't--meet customer requirements.

For starters, the best companies define and enforce employee codes of ethics. For example, IT service provider MindTree publishes a 24-page book that lays out 20 situations that would constitute a "breach of integrity," then gives detailed examples of how the company dealt with specific incidents in the past.

Subroto Bagchi, a Bangalore-based MindTree founder, says some outsiders think the company's little red and white book is over the top. But Bagchi insists it's an important tool in creating a culture where doing the right thing is standard business practice. Every MindTree employee is compensated based on evaluations of performance and character, he says. And in the wake of the Satyam scandal, as customers cast a more critical eye on the practices of all of their Indian providers, MindTree can show that it had been paying attention to these ethical issues before it was commercially fashionable to do so.

Such policies are swell, you might say, but in the real world it's not in the best interests of vendors and their salespeople to conduct themselves completely above board. Before you lunge to that conclusion, at least consider the following perspective from a retired partner with a small IT consultancy:

"Character was not sufficient to be on our team, but it was necessary, and character is what made us rise to the top in client satisfaction and, as well, earnings. Although our insistence on doing the right thing placed us under stress now and then, it was a lot less stressful, and a lot less costly to the soul, than the alternative. You not only don't have to do bad things to be successful, you will be more successful if you don't. And then there is the fact that virtue is its own reward, but sadly not too many folks grok that today."

As I reported in this column last November, "ethics and morals" is the attribute business technology executives say they value most among both entry-level and midlevel hires. If we expect character from others, we must encourage it--by promoting high-performing employees who exhibit it, by embracing vendors that live it, and by terminating those who don't live by the same code.

Rob Preston,
VP and Editor in Chief
[email protected]

To find out more about Rob Preston, please visit his page.