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Managing the complexities

by Simon Longstaff

Recent research suggests that a proper concern with the ethical environment of a corporation is essential to long-term business success.

Needless to say, many readers are familiar with an interesting book, Build to Last: Successful Habits of Visionary Companies. The authors, James Collins and Jerry Porras:

... took a set of truly exceptional companies that have stood the test of time – the average founding date being 1897 – and ... set out to discover the timeless management principles that have consistently distinguished outstanding companies.

(Collins and Porras, 1994, p. xiii)

One of their key findings is expressed thus:

Visionary companies pursue a cluster of objectives, of which making money is only one – and not necessarily the primary one. Yes, they seek profits, but they're equally guided by a core ideology's core values and a sense of purpose beyond just making money. Yet, paradoxically, the visionary companies make more money than the purely profit-driven comparison companies.

(ibid, p. 8)

A moment's reflection should suggest why the increased profitability enjoyed by ‘visionary’ companies is not all that paradoxical. Any organisation capable of managing the complexities associated with paying proper attention to the way in which values are expressed in practice will be well equipped to copy with the burgeoning complexity that defines the world in which we live.

Furthermore, an organisation that deals with the ethical dimension of all its activities will, at the same time, be building a high-trust environment. As we know, high-trust correlates with low-cost. This is especially so when ethical commitments are reinforced so that they become part of the deep structure of organisations. In these circumstances, blind rule-following is replaced by compliant behaviour based on the voluntary expression of dispositions that accord with desired practices. A certain degree of vigilance is still appropriate. However, far less supervision is required. And where rules are silent or ambiguous, there is still a basis for proper action.

All of this may seem to be suggesting that a commitment to ethical behaviour can be generated by quoting the misleading nostrum that “good ethics is good business”.

While the evidence suggests that good ethics is good for business, it would be misleading to suggest that narrow self-interest can generate a stable commitment to ethical behaviour. Instead, the values and principles that count most are those that will attract support – even if there is a cost. People should be ethical because this is the right thing to do. The fact that this may be a profitable course of action should be regarded as a collateral benefit. Returning to Collins and Porras (ibid, p. 73), core values are those which must not be “compromised for financial gain or short-term expedience”.

Needless to say, a great number of practical souls will be wondering about the detail of a programme designed to deliver the kind of results that I envisage. Those of a more sceptical bent may even doubt that such a programme can be devised.

The Ethicscan process developed by St James Ethics Centre is one such approach. It not only generates a base-line study but also assists organisations in the development and implementation of strategies designed to foster an inherently ethical culture – a culture which builds successful performance on a foundation of consistently applied values.

The kind of process applied by the Ethics Centre is essentially practical in nature. It not only maps a culture but, equally importantly, takes a hard look at the systems and policies so as to determine the nature of signals being sent in the organisation. The aim is ultimately to ensure that all the signals – values statement, remuneration policies and so on, are in alignment.

Collins, J & Porras, J (1994) Built to Last: Successful Habits of Visionary Companies, London, Century

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