Ethical Foundation: Why an Ethical Foundation is Important in Business?

“An organization’s ethical foundation provides the foundation for trust, collaboration, and commitment to action.”
Business enterprise’s existence and longevity are more a function of an organization’s moral compass for serving a marketplace than price, size, or product/service advantage. An organization’s ethical foundation provides the foundation for trust, collaboration, and commitment to action.

As the dynamic, global marketplace provides opportunities for businesses to succeed and fail, it is obvious that capturing potential of these opportunities will not be simple. Contemporary customers demand more than quality products and services. Today’s customers want to be respected and in charge of defining value, price and satisfaction.

This evolution in customer dynamics has made marketplace responsiveness, flexibility and adaptability high priorities. The provision of products and services has become secondary to branding and customer development. Contemporary customers typically don’t know what they need, want or desire. Therefore, it has become incumbent upon the managers and staff of contemporary business enterprises to engage all organizational stakeholders. Organizational stakeholders must be engaged in constantly making the possible happen by learning what is possible, making sure the possible happens through informed decision-making, and making sure to deliver products and services in a timely fashion to the satisfaction of customers.

To be successful in meeting these challenges, all stakeholders have to be involved. This means everyone (customer, employees, suppliers, etc.) must respect and trust one another as they navigate change and evolve their thinking and behaviors. To this end, the moral compass or ethical foundation every business enterprise stakeholder provides the focus and platform for collaborative learning, decision-making and action. Creating and sustaining an ethical foundation for conducting business requires managers to:

  • Instill a core set of principles or values that everyone is committed to as they make decisions, collaborate with others and celebrate results
  • Engage and include all business enterprise stakeholders in developing and sustaining a psychological contract of trust based on honest, factual and timely communications
  • Be value added in serving one another’s efforts to maximize potential for the common good and not allowing one another to fence site or play games in exploiting the opportunities customers define for a business enterprise
  • Establish a philosophy of change management that addresses both the emotional and rational nature of human thought and behavior.

Unless an ethical foundation is established and maintained by management, a business enterprise will not remain competitive and relevant in today’s globally driven, dynamic marketplace. Change is constant, customers are fickle, risk is always present, and learning is continual. A business enterprise’s ethical foundation determines it present and future. Its reality is shaped by the thoughts and behaviors of business enterprise stakeholders and its future by stakeholder’s sense of responsibility for the future.

INNOVA Group is a business consulting firm, in business since 1986, specializing in Business Enterprise Leadership and Governance Improvement, Project/Process Training Certification, and Organization Development. | | 919-792-3968

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