Posted by Augie Ghilarducci at

The research seems clear, if not overwhelming. Ethical conduct is good for business on many levels, including profitability. I have written a White Paper “The Economics of Ethics” which will be on the website soon. (Contact me if you’d like an advance copy).

Ethics Enhances the Bottom Line

There are many facets which support the theory- ethics is good for business. In the interests of brevity, I will identify three:

  • An article by Barton, Manyika, & Williamson, (HBR, May-June 2017, p. 67), provided results for companies that followed the socially responsible orientation of long-termism:
    • Average revenue 47% higher.
    • Average earnings 36% higher.
    • Average economic profit 81% higher.
    • Average job creation 132% higher.
  • The 2016 Deloitte Millennial Survey reports that 25% of millennials cited ethics, trust, integrity, and honesty as the most important values a business should follow to reap long-term success. The Guardian reported 62% of millennials want to work for an ethical company.

There is presently a war for millennial talent, a group that is making clear that they are evaluating the ethical conduct of the companies they are contemplating for employment.

Parenthetically, Gallup’s research concludes that hiring top talent yields a 30% increase in profit.

  • The Huffington Post cites a survey where 55% of consumers are ready to pay extra for ethically produced goods. Must.Grow reports that 64% of customers prefer to buy from socially responsible organizations.

The Role of Leadership

If we accept the premise of the beneficial impact of ethics in a company, I’d like to now introduce the role of corporate leadership into the conversation. Leadership is a key driver of culture in any firm. I have seen culture described as the input and behavior as the output. That’s a pretty good description. It’s no great leap to recognize the vital role leadership plays in establishing an ethical culture.

I went to an event at Loyola University several weeks ago. The presenter cited a report from the Graduate Management Admission Council (GMAC) that really caught my attention. So much so that I rushed to the office the next morning determined to find the report. The GMAC 2017 Corporate Recruiters Survey Report had a study which provided the Skills Companies Seek in Graduate Business School Hires.  I found the results generally remarkable. They were, in order:

  1. Oral communication
  2. Listening skills
  3. Adaptability
  4. Written communication
  5. Presentation skills

Where is Ethics as a Desired Quality?

Where is ethics? Actually, integrity came in at number seven. It appears that company leadership values the individual’s ability to communicate, persuade, and present, while viewing integrity as an afterthought. Isn’t it better their integrity be in place to insure these communication skills are rooted to values? This helps explain why there is such a disconnect in some companies between their culture and millennials.

It also strikes me that the survey concerns business graduate school hires; presumably the next wave of leadership. Is this really the message leadership wants to send?

The numbers have spoken with respect to the benefits of an ethics based company.  The type of candidate companies is desperately seeking conveyed the same message. Likewise, customers have said they’ll pay more to do business with these companies.

It isn’t good enough that integrity is ranked behind skills generally related to selling. Company leadership needs to get on board and place ethics, trust, integrity, and honesty at the core of its culture and hire to that standard.


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