Goodwill hunting

Entrepreneur, July, 1998 by Gayle Sato Stodder

Because we believe they subject matter is so important, over the next two months Entrepreneur Media if running the following article, examining the question of ethics for small business, in three of our publications: Entrepreneur, Business Start-Ups and Entrepreneur's HomeOffice.

Charlie Wilson is trying to run an ethical business. He's made social responsibility part of the mission statement at his $1.6 million Houston-based salvage company, SeaRail International Inc. He's made ethics a consideration in putting together guidelines for his salespeople. And he's made "self-actualization" - not wealth - his ultimate goal as an entrepreneur.

But don't mistake Wilson for some born-again hippie or moralistic stick-in-the-mud. For him, it's all about success. "Ethics is what's spearheading our growth," says Wilson. "It creates an element of trust, familiarity and predictability in the business. We're in an industry where a lot of people cut corners. It's easy to misrepresent products and be less than upfront with customers about the condition of goods. I just don't think that's good for business. You don't get a good reputation doing things that way. And eventually, customers won't want to do business with you."

For years, ethics and business had a rocky marriage. If you asked entrepreneurs to talk about ethics, the responses would range from scorn to ridicule. It's a dog-eat-dog world out there, they'd say, and I'm just trying to survive. But it went even deeper than that. Here are folks who - by definition - like breaking the rules. Suggesting that entrepreneurs follow a predefined set of edicts was about as popular as asking them to swear off electricity.

But this attitude may be changing. Whether people are hung over from the freewheeling '80s or reflective about the coming millennium, talk about ethics, values, integrity and responsibility is not only becoming acceptable in the business community, it's practically required.

"This looks to me just like the quality movement of 20 years ago," says Frank Walker, chairman of Indianapolis-based Walker Information Inc., a research and consulting company that tracks customer satisfaction and business ethics. "In any free-enterprise system, customers need a way to differentiate one firm from another." For years, the dominant point of differentiation has been quality. Now, says Walker, everyone can deliver quality, so businesses need to step up to a higher plane.

Are the nation's entrepreneurs ready to ascend to new heights of ethical literacy and compliance? Well, sort of. Although most entrepreneurs still aren't trying to unseat the likes of Socrates and Plato, many are giving serious thought to improving ethics within their companies - and within themselves - with the hope that doing good business will be good for business.

ETHICS, SCHMETHICS

What's behind the current buzz about ethics? A number of factors, really. On the evolutionary front, the days when one could argue that conscience and business don't mix are gone for good. Although the social responsibility movement of the late 1980s and early '90s hardly qualifies as news anymore, its message has become part of our popular consciousness: Businesses need not exist for the sake of greed alone. Consider the bar permanently raised - Ben and Jerry, thank you very much.

As standards have gone up, public awareness has also intensified. "It's not necessarily that we care more about ethics today," says Laura Pincus Hartman, director of the Institute for Business & Professional Ethics at DePaul University in Chicago, "but that, because of [better communication], we know more about companies than we once did. With the World Wide Web, more information gets out to more people than ever before. Anyone can log on to the Internet and find out almost instantaneously about libel suits, harassment suits and all kinds of information that would have been difficult to uncover in the past."

Meanwhile, your company's ethics may have a direct impact on employee loyalty. In a 1997 Walker Information survey of 1,694 employees, 86 percent of respondents who had favorable opinions of their companies' ethics were strongly committed to their organizations; only 14 percent of those who rated ethics low felt likewise. A full 42 percent of respondents said a company's ethical integrity would directly influence their choice of employers.

No longer can you assume that your competition is ethically challenged, either. Of 747 human resource professionals interviewed for a 1997 Society for Human Resource Management/Ethics Resource Center survey, 73 percent of respondents said they work in organizations that have written standards of ethical business conduct. Nearly four in 10 work for organizations that provide ethics-related training; 31 percent work for companies that have either an ethics office or an ombudsperson.

And there's more. When Walker Information polled 1,037 consumers in 1994, 47 percent indicated they would be much more likely to buy from a "good" company if quality, service and price were equal. On the other hand, 70 percent of consumers would not buy - at any price - from a company that was not socially responsible. "Apparently you get some credit for being good," says Walker, "but you really get clobbered for being unethical."