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Part 3: Profits and Ethics

Many people offer many reasons why people act ethically. There are many examples of intentionally poor behaviour and it is easy to get discouraged. At a critical time, remembering the Big Idea of Create Value may save your soul without requiring too many philosophical terms: ethical lapses caused by an accidental omission, laziness, or tiredness can be stopped. Even better, the ability to clearly state the source of that value offers a natural defence. Wal-Mart’s experience demonstrates that having a clear idea helps to turn undecided or unconvinced people into allies and to reduce the suspicions of enemies.

These perspectives illustrate why the ethical dimension runs through our courses in various ways. Their relevance to a new employee or junior manager may not be so obvious. If under pressure to “Fix this! NOW!”, a junior manager is probably not thinking of what Aristotle or Jesus would have done. Every manager needs to set priorities and they can choose whether or not those priorities create value from the customer’s perspective.

Companies which have a long tradition of acting ethically tout this tradition to potential employees; they know that ethical behaviour requires a group effort. Martin Castellan is the CEO of Skyline (one of the REITs located in Guelph) and he tells employees that, when given a choice between “Do the right thing” or “Do the thing right”, they should do the former: well-intentioned mistakes can be fixed later in ways that a damaged reputation cannot. Good ethics can be profitable (because it lowers various types of costs), it makes sense to select employees who have that characteristic and encourage others to behave similarly.

If you think that your soul is not worth much on the open market then you may wish to think of others because the real estate business is built on relationships with people, not bricks, wood, cement, or rebar. The real estate business in Canada is relatively small and is full of people with long memories: I have been at industry gatherings and talked to senior executives who refuse to deal with particular individuals because of something that person did many years ago.

So, while having good intentions sounds good, a good understanding of how to prevent ethical lapses can also be a key to success.