Reputation

Reputation

Philippa Foster Back CBE, Director, Institute of Business Ethics

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett

Business has always depended upon trust and goodwill in order for commerce to flourish. Indeed, the word ‘credit’ has its origins in the Latin credere: ‘to trust, entrust, believe’. If trust is eroded – by dishonesty, greed, mismanagement, poor customer service – reputations are lost and businesses fail.

Reputations are based, not only on a company’s delivery of its products and services, but how it values its relationships with its stakeholders. Does it treat its employees with dignity and respect? Does it support them to ‘do the right thing’? Does it treat its customers fairly? Does it pay its suppliers on-time? Is it open to dialogue with its local communities? Does it acknowledge its responsibilities to wider society? Should an organisation which fails to treat these stakeholders fairly be trusted?

Business ethics is about how an organisation does its business. Ethical values need to be put at the heart of the way business is done. Compliance is not enough, it is the spirit of ‘doing business ethically’ which needs to be embedded within day-to-day business activities. Many companies make the mistake of only tackling ethical behaviour once a problem has arisen. But to protect a company’s reputation, investment must be made in training all staff (from the board down) in what it means to be ethical and to consider ethics when making decisions.

A healthy trustworthy culture is the basis of a sustainable business in the long term. Trust is an elusive commodity. We crave trust, yet sometime fail to recognise the need to work at being trustworthy day-to-day through our every action.

It is one thing to know the ‘right’ decision to make, but often another to be able to apply that decision. Factors such as fear, ignorance, and real or perceived pressure to meet business targets, or pressure from a more senior figure, can all render individuals or groups incapable of putting ethical decision-making into effect. Visible support from leadership is critical in this instance – the impact of leading by example should not be underestimated.

Creating a culture of integrity and openness – where ethical dilemmas arising from doing business are discussed, and employees feel supported to do the right thing – is a powerful way to help mitigate against the risk to reputation of an ethical lapse.

 

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