The Crossroads of Ethics

It takes less time to do things right, than to explain why you did it wrong. Henry Wadsworth
Longfellow

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Quite aptly, the statement above sums up the importance of doing the things right, what we call
an Ethical Business Practice. Ethics in business can be compared to the Sun in our solar
system. Like all the planets revolve around the Sun, businesses must revolve around, and
absorb the energy from Ethics; else theyll fall into a Black hole of defamation and losses. With
the world becoming a marketplace, and the competition growing day by day, following the path
of business ethics has become all the more imperative. While it is quite easy to slip into
unethical practices, which many businesses resort to in order to grow, sustainability of a
business is directly correlated to the moral values and promises the brands carry towards their
consumers.

Reputation is one of a companys most important assets, and one of the most difficult to rebuild,
should it be lost. There are examples of blatant, non-ethical behavior, and probably one of the
most high profile ones, is the Enron collapse. Enron, once a sleepy natural gas pipeline
company, grew to become the nations seventh largest publicly-held corporation. But its shoddy
business practices, aided by bankers and advisors feeding from the gravy train, brought down
the company in December 2001. Their stock dropped from $70.00 a share to $0.25 a share
within a year. Altogether, 16 former Enron executives including the then CEO Jeff Skilling had
been sentenced to prison (Source: Forbes.com).

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Enrons heyday has long ended. But its lessons will long endure. Surely, if there are profits to be
made, some type of scheme that attempts to skirt the law or even cross boundaries will occur.
Its been that way throughout history. But with each passing scandal, new rules and codes
emerge that surpass those of the past. And while Enron wont be the last caseof corporate
derelictions, its tumultuous tale did initiate a new age in business ethics. Another example from
our very own country is the loss of face and worth Nestle India had to suffer recently, following a
row on adulteration. Struck by an exceptional item charge of INR 451.6 crore on account of
withdrawal of stocks of Maggi noodles, Nestle India reported a net loss of INR 64.40 crore for
the second quarter ended June 30, 2015, its first quarterly loss in at least 17 years( Source:
The Indian Express).
Ethical behavior and corporate social responsibility can bring significant benefits to a business. For
example, they may:

Attract customers to the firms products, which means boosting sales and profits
Attract good talent and retain employees, reduce labor turnover, and therefore, increase
productivity
Attract investors, keeping the share price high, thereby protecting the businesses from
takeovers
- Sumit Chakravarty
Faculty, INLEAD
Courtesy: Google Images