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Effective measures can be taken to encourage ethical behaviour
Consider the following recent business cases:
* Several clothing retailers have been the target of consumer boycotts because of allegations that they failed to ensure that the workers who made the products were paid a reasonable wage - particularly in the case of Third World suppliers.
* Companies have been criticized for buying products that may have been manufactured by slave labour in the Chinese prison system, and in some cases, their market share has suffered as a result.
* According to a survey by the Retail Council of Canada, "shrinkage" due exclusively to internal causes - primarily theft by employees - cost the retail sector of this country $900 million in losses in 1995.
It is clear that business ethics is a growing area of concern in corporate Canada. Many companies have found, in their drive to address corporate governance issues, that ethical standards are a vital aspect of competition. Being ethical is important to the company's success. Those companies that are seen by the public as not paying enough attention to ethical standards often suffer as a result.
This marks a big change from only the recent past, when many companies thought proper concern for the bottom line meant that the best way to do something was the cheapest legal way, taking only the short term into account. Anything else, they believed, meant decreasing the company's ability to compete, reducing the bottom line, and taking money from the shareholders' pockets. That would be irresponsible, so the argument ran.
Certainly, maximizing shareholder return is still the proper raison d'etre for any company. Today, however, boards and managers are realizing that this means taking a longer-term view. What brings profitability in the short term may, in the long term, cost the company its image, its customers and sometimes its employees. This is definitely against shareholder interests and one reason why, increasingly, companies are paying attention to their public image and the ethical standards it reflects.
An old idea with new emphasis
Using ethics as a means of …