In the years I have built and managed businesses, I gave little thought or considered ethics a business strategy. Of course, I understood that honesty and integrity were necessary, and businesses that did not operate with those qualities almost always did not survive over the long term.
When I took over the operational leadership of the World Referral Network, I was introduced to Richard Messing, who operates Kotel Group LLC, a consulting firm specializing in ethics-based solutions for chronic problems that resist conventional intervention methodologies and methods. He has also founded the World Ethics Organization, dedicated to unifying the world through the power of ethics, bridging the conversation about ethics into mainstream discourse.
Richard opened my eyes to seeing ethics as a foundation of business strategy. Looking back over my career, being dedicated to the principles of integrity, service, excellence, justice, and harmony could profoundly affect the operations and fortune of any business.
Integrating ethics into the core of a small business strategy can significantly contribute to its competitive advantage in several ways.
Ethical practices, such as honesty and transparency, build trust with customers, employees, shareholders, and other stakeholders. Customers who feel a company is honest and responsible are likely to remain loyal and become brand ambassadors.
Ethical businesses will help attract and retain better employees who appreciate a principled work environment. Employees working for a company that aligns with their values can enhance their motivation and productivity.
Since suppliers and partners may prefer to work with businesses that operate ethically, fostering stable, long-term relationships is not an imaginary stretch. Ethical sourcing and supply chain management practices often lead to better product quality.
A moral stance ensures adherence to laws and regulations, mitigating legal risks. Operating ethically minimizes the risk of reputational damage due to potential scandals or negative publicity.
A reputation for ethical behavior will distinguish your business in a crowded market. Sometimes, consumers are willing to pay a premium for products or services from companies that engage in ethical practices.
A focus on ethical business practices often translates into positive social impact. Some customers specifically seek out businesses that demonstrate corporate social responsibility.
An ethical orientation can also help drive innovation in products and processes by considering sustainability and social impact. A business is more likely to identify evolving consumer needs and demands by being attuned to ethical considerations.
Ethically-operated businesses can attract investors who prioritize environmental, social, and governance (ESG) factors. It has been my experience that some government and non-government organizations offer financial assistance or priority consideration to businesses that operate ethically and sustainably.
Consumers value ethically produced goods and services in some international markets, particularly in the EU. Ethical reputation might facilitate partnerships with global businesses and organizations.
Setting up a plan to train employees to understand and implement ethical practices is critical to building a culture of ethical behavior. Leadership dedication to ethical practices is crucial for developing a sustainable culture for a small to medium-sized business. Being transparent about business practices, sourcing, and production processes is an excellent place to start.
Transforming your organization’s implementation of ethical practices can be relatively inexpensive. An ideal place to start is getting the employees and management together to discuss and arrive at a set of core values that can be universally applied to all stakeholders, including employees, shareholders, suppliers, and, most certainly, customers. Once established, constant monitoring and improvement will imbed your company’s core values and practices, which will not diminish as the company scales.
For ethics to be an effective competitive strategy, you must sincerely integrate ethical practices into a company’s core operations and values rather than simply being used as a marketing tool or meaningless platitudes. A genuine commitment to ethical practices can resonate with stakeholders—creating a positive cycle of value creation for customers, employees, and the broader community, thereby enhancing the small business’s competitive positioning in the market.