An Ethical Approach to the Bottom Line

By Mark Fulton

Once upon a time there was a company named Wonder Widget. Its motto — When You’re Widget Won’t Work, It’s No Wonder — was the mantra of widget buyers everywhere. In addition to making world-class widgets, Wonder Widget prided itself on having a customer-service policy that made Nordstrom look like the General Sherman of general merchandisers. Meanwhile, vendors played dueling discounts for Wonder Widget’s business because it always paid on time.

Then one day Wonder Widget fell under the spell of a new CEO. Pressed by the grand poobahs of profit (the board of directors) and the disciples of Dowism (the stockholders), the CEO started pumping up production and cutting corners on Wonder Widget’s quality control. It wasn’t long before customers complained about wobbly widgets. The CEO responded to the growing number of returns and phone calls from frustrated account reps by telling the customer-service department to dole out excuses crafted by the artisans of artifice (the marketing department).

Profits began to plummet as Wonder Widget’s diehard customers baled out. It wasn’t long before the company’s vendors were jumping through hoops to get partial payment on 90-day-old invoices. Staff morale was lower than the Titanic’s boiler room. When layoffs became inevitable, key employees began looking for greener pastures and less-than-key employees started stealing whatever they could get out the back door.

Finally, after they realized that the stockholders were going to hold them accountable for Wonder Widget’s misfortunes, the board of directors took decisive action — they fired the CEO.

What went wrong at Wonder Widget? In the cutthroat business of widget manufacturing, increasing production and lowering costs seemed a good way to boost the company’s bottom line. Other product manufacturers had pulled it off without starring in “Honey I Shrunk The Profits.”

Perhaps more attention to the ethics that went into the decisions at Wonder Widget would have made a difference. What if the company’s high muckamucks had asked themselves some hard questions about the impact of their decision to make more and cheaper widgets? Questions like: Who will be affected by this decision? What do we owe each of these parties? What decision will produce the greatest benefit for all parties? Would we want to explain our decision on national television?

To many average Americans, the concept of business ethics is an oxymoron. Thanks to an often antagonistic press and all too common episodes of unscrupulous corporate behavior, many people view the world of business, especially “Big Business,” as an evil empire populated with cigar-smoking tycoons who would rather take a can opener to their Porsches than treat their employees fairly or give their customers a real value. After all, the average consumer believes, the business of business is the bottom line. Business leaders have one mandate: Make a buck. Just do it. And don’t sweat the details of doing it right.

Regardless of whether that perception is warranted or not, there is growing evidence that the average consumer is beginning to fight back against what he or she views as blatant disregard for the customer’s best interest and outright corporate shenanigans. There is growing evidence that the buying public is using the power of the purse to vote against unethical business practices and in favor of companies that operate according to a clear set of ethical standards.

And it appears that businesses are getting the message. Writing in a January 1998 edition of USA Today, Norman E. Bowie, the Elmer L. Andersen Chair in Corporate Responsibility at the University of Minnesota, points to a growing realization in corporate America that “there frequently is a positive relation between ethics and profits; normally, ethics enhances the bottom line, rather than diminishing it.”

In the next few columns, we’ll take a closer look at the subject of business ethics and consider how following a clearly defined ethical code is not only the right thing to do, but also the bright thing to do for your bottom line. We’ll also discuss a sound method of ethical decision making that can revolutionize how your business tackles a thorny problem.

Taking a good hard look at how we do business at every level can be an eye-opening experience. It can even be painful. But it is always productive. Facing ethical issues head on will make it less likely that our businesses will wind up with wobbly widgets — or worse.

© Copyright 1999 Mark S. Fulton