Why Ethical Behavior is More Profitable and Energizes Employee Engagement

4 min read

Leaders who act unethical and dishonest are destined for failure. Some of these leaders in their zeal for sales believe that “failure is not an option”.  Furthermore, they do whatever it takes to win sales. And to them, “winning at any cost” is justified.

However, consider the destruction that the “win at any cost” attitude did to corporate giants Volkswagen, GM, Enron, Wells Fargo, and most recently Theranos. Those corporate giants lost their focus and turned a blind eye to unethical and dishonest practices.

Therefore, they lost profit and the confidence of many of their employees and consumers. There is probably no way to calculate the full loss of profit. Nor the degree of employee engagement lost that occurred from their unethical and dishonest actions.

The Values of Honesty and Ethical Behavior Were Prevalant in My Hometown

I first experienced How Ethical Behavior is More Profitable and Energizes Employee Engagement in my youth. For instance, the values of honesty and ethical behavior were prevalent in my hometown. And practically everyone in my hometown left their homes and car doors unlocked. High values and ethical practices were the fabric of my hometown society.

This fabric was pieced together by trust and honesty, not fear. In addition, we also witnessed first-hand business leaders practice the values of honesty and ethical behavior.

For example, I remember asking our local banker if I could get a car loan. He said sure, if Hugh (my dad) says that you can have the loan, it’s yours. This example was probably the first time that I ever recognized the true value of a good reputation for ethical behavior. My dad was a good role model.

I have discovered a solution that leaders should consider. If they want to increase ethical behavior for greater profits and increase their employee engagement activity, they should consider these four insights. First, here is some research by Ethisphere Institute to consider.

40 Percent of the Ethical Companies Achieved more than Double the Profits

What should leaders do? Ethisphere Institute conducted research in 2020 on ethical behavior and profitability. Similar profits or higher profits were achieved in ethical ran companies. 40 percent of the ethical companies achieved more than double the profits of their peers.

So, companies that practice ethical behavior are more likely to see increased profits. Dave Pickens, formerly president of Olive Garden Restaurants, said, "Culture is what guides behavior when no one is looking."

Also, consider what the common traits of great leaders might be. Rick Pitino, coach and author reminds us to “Look at the great leaders of history and one of the most common traits is integrity, believing and sticking to principles. From George Washington, whose famous saying is “I would never tell a lie,” to Franklin Roosevelt, who began one of his famous fireside chats by saying there is no good news to report this evening to Martin Luther King Jr., who marched through the South for his principles.”

Second, research-based organizations like Gallup indicate that engaged employees make a positive difference at work. So, employee engagement is good for the company and the employee. A busily engaged employee is a happy employee.

Third, we find additional proof from Dr. Jim Harter is Gallup's chief scientist of employee engagement and well-being. He makes the case that engaged employees are the most productive workers in a Gallup report "How Employee Engagement Drives Growth."

Employees Are More Productive and Less Likely to Leave a Company If It Practices Ethical Values

In 2020, Gallup conducted its tenth meta-analysis on the Q12 using 456 research studies across 276 organizations in 54 industries and 96 countries.

Finally, in 2020, Gallup conducted their 10th study of Gallup Q12 Meta-Analysis. Gallup researchers statistically calculated the business-work, unit-level relationship between employee engagement and performance outcomes. The researchers studied 112,312 business and work units that included 2,708,538 employees. They examined 11 effects:

  • customer loyalty/engagement
  • profitability
  • productivity
  • turnover
  • safety incidents
  • absenteeism
  • shrinkage
  • patient safety incidents
  • quality (defects)
  • well-being
  • and organizational citizenship

There is a Strong Relationship Between Employee Engagement and Well-Being

According to Gallup, doing what is best for employees does not contradict what is best for the business or organization. There is a strong relationship between employee engagement and well-being. They came up with a formula of Per-Person Productivity = Talent x (Relationship + Right Expectation + Recognition/Reward.

Per-Person Productivity = Talent x (Relationship + Right Expectation + Recognition/Reward) Source: Gallup Q12 Meta-Analysis 2020

Consumers respond positively to companies perceived as ethical. From my own business experiences, I can prove that working with honorable clients is more rewarding. Peace of mind and greater profitability is the reward received by all stakeholders.

We need to continue setting ethical standards and implementing high values at home and work. Modeling this type of behavior will increase family ties, provide employees purpose and improve the financial health of our organizations.

Our financial health will be strong, as ethical behavior is more profitable. And such behavior energizes employee engagement. This behavior leads to increased transparency, honesty, and a culture of trust, not fear.

Now, what can you do? Or, what are you doing to improve ethical behavior and employee engagement in your organization? I would love to hear from you.

Here are some links to other recent blog posts.

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How To Combat the Great Resignation and Win the Battle for Talent

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How Career Maintenance is More Effective and Less Expensive Than Career Repair

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